Description of the legal term Rule Against Perpetuities:
The Rule Against Perpetuities is a legal doctrine in the British common law system that aims to restrict the ability to control property for an excessive period after one’s death. This rule is deeply rooted in public policy considerations, favouring the free alienation of property and preventing long-term restrictions on the use and development of assets. The rule operates on the principle that interests in property must vest, if at all, no later than twenty-one years after the death of a life in being at the creation of the interest.
The classic formulation of the rule is that certain future interests in property must vest, if ever, within the “lives in being plus twenty-one years.” A life in being is any individual who is alive at the time the interest is created. The policy rationale behind the rule is to prevent property from being tied up indefinitely and to ensure that legal control over assets is not dictated by long-deceased individuals, potentially in a manner that is out of touch with current societal needs and values.
Future interests that typically come under the scrutiny of the rule are contingent remainders and executory interests. A contingent remainder is a future interest which is dependent on the occurrence of a particular event. An executory interest is similar, but will cut short or divest a previous estate rather than waiting for it to naturally expire.
If an interest violates the rule, the interest is void and the property will pass as if the offending stipulation were never included in the instrument (such as a will or trust). Over time, the rule has become complex and the subject of much legal uncertainty, due to its reliance on predicting future events and identifying lives in being. Jurisdictions have evolved different methods of statutory reform or have adopted the “wait and see” approach that allows for the actual circumstances to unfold before determining the validity of an interest. Some regions, including England and Wales, have significantly reformed the traditional rule, making it more predictable and less restrictive, such as through the Perpetuities and Accumulations Act 2009.
Legal context in which the term Rule Against Perpetuities may be used:
Consider an example where a grandparent, upon their death, leaves a piece of property in trust, stating that the property is to be held for the benefit of their grandchildren but only to be fully transferred to them when they each reach the age of 40. If the grandparent has a grandchild who is born after the grandparent’s death, it could take more than twenty-one years after the death of a life in being for the interest in property to vest, which would breach the traditional Rule Against Perpetuities.
As another illustration, suppose a will states that a parcel of land is to be held “in trust for A for life, then to A’s first child to reach the age of 25.” If A is alive at the time the interest is created, then A is a life in being. The interest to A’s first child to reach 25 must vest, if at all, within 21 years of A’s death. If A has a child after A’s death, or A’s youngest child does not reach 25 until after the period of A’s life plus 21 years, the executory interest would fail due to the Rule Against Perpetuities.
The Rule Against Perpetuities remains critical in British jurisprudence because it enforces the principle that the dead should not indefinitely control the resources and economic utility of the living. The rule serves modern society by balancing respect for the intentions of those who wish to leave legacies with the public interest in the free and productive use of property. Although reformed, its spirit is crucial in mitigating potential stagnation in the use and transfer of assets within the legal framework.
