Rule Against Perpetuities

The common law rule against perpetuities forbids some future interests (traditionally contingent remainders and executory interests) that may not vest within the time permitted; the rule "limit the testator's power to earmark gifts for remote descendants". In essence, the rule prevents a person from putting qualifications and criteria in his will that will continue to control or affect the distribution of assets long after he or she has died, a concept often referred to as control by the "dead hand" or "mortmain".

The rule is often stated as follows: “No interest is good unless it must vest, if at all, not later than twenty-one years after the death of some life in being at the creation of the interest.” For the purposes of the rule, a life is "in being" at conception. Although most discussions and analysis relating to the rule revolve around wills and trusts, the rule applies to any future dispositions of property, including options. When a part of a grant or will violates the rule, only that portion of the grant or devise is removed. All other parts that do not violate the rule are still valid. The perpetuities period under the common law rule is not a fixed term of years. By its terms, the rule limits the period to at the latest 21 years after the death of the last identifiable individual living at the time the interest was created ("life in being"). This "measuring" or "validating" life need not have been a purchaser or taker in the conveyance or devise. The measuring life could be the grantor, a life tenant, a tenant for a term of years, or in the case of a contingent remainder or executory devise to a class of unascertained individuals, the person capable of producing members of that class.

The rule against perpetuities at common law has been amended by statutes. In England, the Statute of Uses (1536) and the Statute of Wills (1540) and the consequent rise of flexible future interests made the rule a significant judicial tool in defeating the intent of landowners in grants and devises. Major alterations to the common law rule in the United Kingdom came into effect under the Perpetuities and Accumulations Act 1964, including the application of traditional 21-year limitation on options.

The rule is notoriously difficult to properly apply, as pointed out by a 1961 decision of the Supreme Court of California which held that it was not legal malpractice for an attorney to draft a will that inadvertently violated the rule against perpetuities. Therefore, in the United States it has been abolished by statute in Alaska, Idaho, New Jersey, Pennsylvania, Kentucky, and South Dakota. The Uniform Statutory Rule Against Perpetuities validates non-vested interests that would otherwise be void under the common law rule if that interest actually vests within 90 years of its creation; it has been enacted in 29 states (Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Florida, Georgia, Hawaii, Indiana, Kansas, Massachusetts, Minnesota, Montana, Nebraska, Nevada, New Jersey, New Mexico, North Carolina, North Dakota, Oregon, South Carolina, South Dakota, Tennessee, Utah, Virginia, Washington, West Virginia), the District of Columbia, and the U.S. Virgin Islands, and is currently under consideration in New York. Other jurisdictions apply the "wait and see" or "cy-près doctrine" that validate contingent remainders and executory interests void under the traditional rule in certain circumstances. These doctrines have also been codified in the United Kingdom by the 1964 statute.

Read more about Rule Against Perpetuities:  Historical Background, Common Law, Statutory Modification, Illustrations, Applications, Charity-to-charity Exception, Saving Clause, Related Rules

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Offshore Trust - Rule Against Perpetuities
... Trusts in general are subject to the rule against perpetuities which, in practical terms, puts limits on the length of time within which all trust property must be distributed ... Because of the strictures of the rule, a number of trusts have been struck down in wildly hypothetical circumstances because of possible infringement of the ... laws, which mean that trusts which might potentially infringe the rule against perpetuities are no longer automatically invalid, but instead the trust remains valid unless and ...

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