Rule against Perpetuities

• Author: Jeffrey Lehman, Shirelle Phelps

Page 416

Under the COMMON LAW, the principle that no interest in property is valid unless it vests not later than twenty-one years, plus the period of gestation, after some life or lives in being which exist at the time of the creation of the interest.

The courts developed the rule during the seventeenth century in order to restrict a person's power to control perpetually the ownership and possession of his or her property after death and to ensure the transferability of property. The rule includes the period of gestation to cover cases of posthumous birth.

Vesting

A property interest vests when it is given to a person in being (someone who is currently living) and is not subject to a condition precedent. For example, if Donald Smith transfers his real property to his son Howard for life and then to Howard's children who are alive at the time of Howard's death, the children's interest is not vested. Their interest is subject to the condition precedent that they survive their father Howard. If Donald transfers his property to his son Howard for life, and then to Howard's children Ann and Richard, the children's interest is vested. Although the children's right to possess and enjoy the property might be delayed for many years, the rule does not relate to the time when property vests in actual possession but only when the property vests in interest. The interest that the children possess is known as a future interest.

Under the rule, a future interest must vest within a certain period of time. This period is limited to the duration of a life or lives in being (the "measuring lives") at the time the interest in the property is transferred, plus twenty-one years.

The period of the rule can be extended by one or more gestation periods. For purposes of the rule against perpetuities, a person is in being at the time of conception if he or she is born thereafter. Therefore the measuring life, or lives, might be the life of a person who has been conceived at the time the instrument takes effect but who is born afterward. For example, a testator?one who makes a will?leaves property "to the descendants of Jones who are living twenty-one years after the death of my last surviving child." Six months after his death, the testator's wife gives birth to their only child. This child is the measuring life, and the descendants of Jones who are alive twenty-one years after...