A review of the most complicated damn legal rule ever!
No future interest is valid unless it can be shown that it will necessarily vest, if at all, no later than 21 years after some life in being at the creation of the interest.
For posterity, that is our plain language contribution to the hundreds of definitions now out there on "the rule against perpetuities." Perhaps we could have said: "hey man, if you goin' to delay some gift, either by will or while you're still alive, full title has to land fair and square within 21 years after the death of a person alive at the time of the gift."
The rule is a clear expression of the common law's abhorrence of things uncertain. The rule attempts to limit the duration of legal documents which split property rights in perpetuity. The common law prefers that property be fully owned by just one person. The common law will tolerate temporary contingent interests (i.e. legal time bombs which are attached onto property titles like a leech) for a certain time only, and that is no longer than 21 years after the death of a person alive (including those not born but conceived) at the time the document takes effect.
The "time the document takes effect" will vary depending whether the document is a will or an inter vivos transfer. For wills, the date is the date of death. For inter vivos transfers, it is the date when the transaction is completed. It is at that time that the transaction is measured.
The rule is very unforgiving.
One legal article on it was aptly entitled "Perpetuities: Staying The Slaughter Of The Innocents."
Some places, like the Canadian province of Manitoba have abolished the rule altogether. Others propose replacing it with a much easier 80 or 90 year vesting rule. Still others, such as British Columbia (in 1975), have passed a Perpetuity Act which removes only some of the harshness of the rule against perpetuities.
But the rule, for all it's apparent simplicity, is one of the most complicated in the law. For example, in Lucas v. Hamm (1961), a California lawyer was excused from a charge of professional negligence due to his misunderstanding of the rule!
So if you want to attach some lingering interest onto property, such as a trust or a life tenancy, it must come to an end within the perpetuity period of "the lives in being at the date the instrument takes effect plus 21 years."
The rule does not shoot down normal or full property title; just those which are lingering and contingent.
The rule is very aggressive too. It does not apply on a wait-and-see basis. It must be apparent from the date the document takes effect that it will eventually rid itself of all lingering and contingent interests and finally vest completely in one person. In the Lucas v. Hamm case, the property was to vest five years after the will was probated. But the court said that even though virtually all wills are probated within 21 years (even the most hotly contested ones are usually resolved in a few years), it was not impossible that probate takes more than 21 years. The gift of the property was voided.
The "if at all" part is the law's way of saying: "I don't care if it ever actually vests or not. We're not going to wait and see. It is enough if it may vest." But legislation in many states has changed this to a "wait and see" policy, where the courts will decline voiding an interest just because it might fail by not vesting during the perpetuity period. Instead, they will let it carry-on and void it when the time comes if, in fact, it transpires that it has failed.
Understanding the "rule against perpetuities" game is only possible if you work through a few examples:
| THE FACTS |
ANALYSIS |
| • To the first child of Adam to attain the age of 21 years." |
This is the same as the 21-year limit of the perpetuity period and it is therefore certain that the threshold of 21 years will be attained, if at all, within the perpetuity period.
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| • In 1997, Greg, who is still childless, sets up an inter vivos gift "To my sons who marry." |
Greg is the only life in being at the time of the transfer so the perpetuity period is his life plus 21 years. It is feasible that Greg has a son in 1998 and dies in 1999. There is no guarantee that the child will marry on or before 1999+21 years or 2020 so the gift is void. This shows how strict the rule is and why is has been called the "slaughter of the innocent."
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| • "To the first child of Adam to marry." |
Void. There is no life in being to attach the perpetuity clock to. It is not certain that Adam's first child to marry will do so within 21 years of any person living at the time of the will or transfer taking effect.
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| • "To the first of my grandchildren to marry during the perpetuity period." |
No problem because the gift is so closely attached to the perpetuity period and, by definition, expires when it does.
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| • "To all my grandchildren to marry." |
No dice! It is conceivable that a marriage might yet occur after the last of the grandchildren in being at the date of the testator's death, dies and 21 more years have passed.
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| • "To the first great-great-grandchild of Adam to go for a walk with Barbara." |
Ok because it must occur, if at all, during the lifetime of Barbara. |
| • "To the first child of Adam to attain the age of 18." |
Adam's first child must reach 18 within 21 years of Adam's death.
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| • Harry makes an inter vivos transfer in 1990 "to my first grandchild to turn 21." |
No dice because the following is possible: let's assume Harry had only an 18-year old daughter, Katey, at the time of the transfer so the perpetuity period is Katey's life plus 21 years. Another daughter is born two years later (in 1992), Kerri. Both Harry and Katey die in 1994. The 21-year clock is started and is set to expire in 2015. Kerri's child can't possibly reach 21 by or before 2015 so the gift is void.
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| • A 1992 will from Shane's father: "To Shane for life, remainder to Shane's widow for life, remainder in fee simple to their eldest surviving daughter." |
Shane was not married when his father died so the remainder to his widow is contingent but the gift remains valid on that ground since Shane is a life in being. Consider, though, that Shane marries Nicole in 2013 (who was born in 1993) and they have a child, Celine, born in 2014. Shane dies the next year, 2015, and Nicole, in 2037. At that time, Celine is still alive but let's look at the perpetuity period. It started from the date of the transfer in 1992. The life in being was Shane so from his death in 2015, there is an additional 21 years to count. That brings us to 2036. Since all of this was possible from the date of the transfer, the remainder gifts are void as against the rule against perpetuities.
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| • "Unto and to the use of Kay, in trust for Jane's first grandchild to turn 21." |
At the time the instrument takes effect, Jane is already 65 years old, and she has two children, Mary and Michelle.
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| • "When a candidate for the priesthood comes forward from St. Saviour's Church, St. Alban's." |
Void. There is no life in being to which the perpetuity clock can be set. |
| • "When a house ceases to be a dwelling house." |
Void. Again, the time of vesting does not relate to the life of any living person.
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As a sample of how legislation, in some jurisdictions, has modified the rule against perpetuities, readers are invited to consult the legislation in place in British Columbia.