Legal Definitions - Rule Against Perpetuities

The Rule Against Perpetuities is a historical legal principle in property law designed to prevent property ownership from being tied up indefinitely in the future. Its fundamental purpose is to ensure that property interests will become certain and transferable within a reasonable period, rather than remaining uncertain for generations.

In essence, the rule dictates that a future interest in property is only valid if it is guaranteed to "vest" (meaning the ownership becomes certain and unconditional) within 21 years after the death of someone who was alive when the interest was created. If there is any possibility, no matter how remote, that the interest might not vest within this specific timeframe, the future interest is considered void from the outset.

Because of its intricate nature and the difficulty in applying it, many states have either significantly modified this rule or abolished it entirely, often replacing it with more straightforward statutory provisions.

• Example 1: A Conditional Gift in a Will

  Scenario: A will states, "I leave my vacation home to my great-niece, Sarah, but only if she graduates from law school before her 40th birthday."

  Explanation: When the will takes effect (upon the testator's death), Sarah is alive. The "life in being" could be Sarah herself. The rule would assess whether Sarah's ownership of the home is guaranteed to become certain (vest) within 21 years after the death of anyone alive at the time the will was created. If Sarah is very young, it's possible she might not graduate law school until well beyond 21 years after the death of all relevant "lives in being." If there's a chance this condition might not be met within that specific timeframe, the gift to Sarah could be deemed invalid under the Rule Against Perpetuities, making the property's future uncertain.

• Example 2: A Long-Term Charitable Trust with a Future Condition

  Scenario: A wealthy donor establishes a trust that will distribute funds to a specific charity "when the first cure for a rare genetic disease, affecting only descendants of my great-grandnephew, is discovered."

  Explanation: At the time the trust is created, the great-grandnephew might be alive, but his descendants are unknown, and the discovery of a cure is an event that could occur far into the distant future. The rule would invalidate this future gift because the condition for the charity to receive the funds (the discovery of a cure) is not guaranteed to happen within 21 years after the death of anyone alive when the trust was established. The uncertainty surrounding the timing of the cure means the property interest would be tied up for an excessively long and indefinite period.

• Example 3: A Future Right to Purchase Land

  Scenario: A property deed includes a clause granting a specific family, the Millers, the "right to purchase the adjacent undeveloped parcel for a fixed price, whenever the current owner's youngest grandchild decides to sell any portion of their inherited estate."

  Explanation: The current owner's youngest grandchild might not even be born when this right is created, and their decision to sell could be many decades away. The Rule Against Perpetuities would likely invalidate this right. The event triggering the Millers' right to purchase (the grandchild's decision to sell) is too remote and uncertain to occur within the legally defined time limit (21 years after the death of anyone alive when the deed was created). This prevents the property from being encumbered by a future right that could last indefinitely, making it difficult to sell or develop.