What Happens When the Rule against Perpetuities Is Violated

The complexity of the rule against eternity is also highlighted by the problem of the unborn widow. Let us say that John, according to our examples above, wants to give his property to his son Joseph and Joseph`s wife, and then to their children. Although the rule seems simple, for this reason it has become one of the most complicated legal rules: the rule requires with absolute certainty that an interest in the property be transferred no later than 21 years after a certain life in the creation of interests. If it is possible that the interest is not acquired during this period, the donation will fail from the beginning, that is, from the moment the document creating the interest takes effect. For wills, it is time for the death of the testator. For trusts, this is when the transaction is completed. Of course, this sentence is loaded with complex and often hidden meanings that make it difficult for most law students and lawyers to fully understand the rule. Many jurisdictions have laws that completely repeal the rule or clarify it about the period and who is affected: the rule also applies to property acquisition options. Often, one of the objectives of postponing the time of acquisition is to avoid or reduce taxes of any kind.

For example, a bequest in a will may be addressed to grandchildren, often with a lifetime interest in the surviving spouse, and then to children, to avoid paying multiple death contributions or inheritance tax on the testator`s estate. The rule against eternity has been one of the ways developed to at least limit this strategy of tax evasion. 2. In Freeman Estate, 404 P.2d 222, 228 (Kan. 1965) („It is sufficient to breach the rule if interest can be earned beyond the qualifying period.“). [Back to text] Under the common law, the term was set at 21 years after the death of an identifiable person who was still alive at the time the interest was created. This is often expressed as „life in more than twenty-one years“. Under the common law rule, the question is not whether an interest is actually transferred more than 21 years after life. If, at the time of grant, there is a possibility, however unlikely or distant, that interest outside the indefinite period may be acquired, the interest shall be void and shall be withdrawn from the grant. The rule against eternity is a legal norm in Anglo-American common law that prevents people from using legal instruments (usually an act or will) to exercise control over private property for a period far beyond the lives of people who were alive at the time of the instrument`s creation.

In particular, the rule prohibits a person from creating future interests (traditionally conditioned remains and enforceable interests) in property that would be transferred more than 21 years after the life of those living at the time of the creation of the interest, which is often expressed as „life in more than twenty-one years“. Essentially, the rule prevents a person from including qualifications and criteria in an act or will that would affect ownership of property long after death, a concept often referred to as „dead hand“ or „mortmain“ control. The basic elements of the rule against eternity originated in England in the 17th century and were „crystallized“ into a single rule in the 19th century. [1] The classic formulation of the rule was given in 1886 by the American jurist John Chipman Gray: Of all the rules that have evolved in terms of limiting the ability to transfer property, the rule against eternity is today the rule against perpetuity that has the strongest effects. While the implications of this rule are the most important when it comes to creating trusts (which will be an important topic in the course on wills, trusts, and estates), we will discuss it in this section as it has evolved as a property rule. Unfortunately, the rule against perpetuity is also quite complicated. We will try to break it down into as simple terms as possible. Essentially, the rule was created to „prevent the practice of tying up family property for generations“ and to prevent other forms of restriction of alienation. [22] However, the modern trend is to „mitigate the rule to the extent possible where its severe application would impede an intentional plan for the disposition of property or exert violence.“ [23] In other words, the courts have refused to apply the rule in certain circumstances. For example, in ConocoPhillips Co.c.

Although the court came to the right conclusion, the decision does not offer many clues for the future. In Little, the court had the advantage of looking back, but if a lawsuit is filed immediately after the transfer, the effects of the rule on alienation will be less clear. The District Court issued a summary judgment to the fellows. [14] The Court held that the grantor`s intention was clear and that a licensee`s intention should prevail over all other rules for interpreting promotions. [15] The District Court wrongly analyzed whether the grantor`s current participation – and not the future interest of the fellows – was contrary to the rule. [16] The grantor`s heirs appealed and their request to transfer to the Kansas Supreme Court was allowed. [17] But no property right – in fact, perhaps no other concept studied in law school – is more complicated or feared by law students than the rule against eternity or the „RAP.“ Now suppose that Joseph was not married at the time of John`s death and that Joseph married afterwards. Again, Joseph`s wife would not be a life in being for the purposes of enforcing the rule – and it is possible that she could outlive Joseph by more than 21 years, preventing Joseph`s children from falling into the property during the measurement period. The rule against eternity is an important point in the plot of the 1981 film Body Heat.

He also played a subplot in the 2011 film The Descendants. The common law rule against perpetuities is of English origin and was first proclaimed centuries ago. The modern version of the rule has been changed by law in California. California has adopted the Uniform Statutory Rule Against Perpetuities, which replaces the old common law rule. Furthermore, the court concluded that there was no gap in appraisability or acquisition. Each sub-trust must end and be divided into the two lives of being at the death of the deceased, and so the rule against eternity has not been violated. The interest was transferred within a reasonable period of time, even though the distribution of the remaining interest at the end of the trust was not expressly stated. Instead of living in this eternal gray area, whether the rule applies or not, Kansas should abolish the rule altogether. Although Little`s rule has not been officially abolished, Kansas lawmakers now have the opportunity to act and follow the example of other states that have abolished the rule.

For example, Idaho has abolished the rule of law, declaring that there is „no rule against eternity that applies to real or personal property.“ [50] Similarly, the South Dakota Legislature enacted a law stating that „the common law rule is not in effect in this state for eternity.“ [51] Other states have taken less drastic measures to weaken the effect of the rule, such as. B the wait-and-see approach, which „allows you to wait a certain amount of time to determine whether“ an interest is acquired. [52] Instead of potential events invalidating a promotion, the wait-and-see approach is measured against actual events. [53] Although the rule is not completely abolished, the wait-and-see approach to the rule takes away some of its power […].