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Rule Against Perpetuities
The rule against perpetuities is a rule of law in effect under the property, trusts, estate, and contract law of many common law jurisdictions. The rule invalidates certain future interests (traditionally contingent remainders and executory interests) that may vest beyond the perpetuities period. In essence, the rule "limit[s] the testator's power to earmark gifts for remote descendants."
The perpetuities period under the common-law rule is not a fixed term of years. By its terms, the rule limits the period to at the latest 21 years after the death of last identifiable individual living at the time the interest was created. This "measuring" or "validating" life need not have been a purchaser or taker in the conveyance or devise. The measuring life could be the grantor, a life tenant, a tenant for a term of years, or in the case of a contingent remainder or executory devise to a class of unascertained individuals, the person capable of producing members of that class.
The rule prevents the property owner from distributing and controlling her assets for too long a period of time after her deathâ€”a concept often referred to as control by the "dead hand" or "mortmain." When a part of a grant or will violates the Rule, only that portion of the grant or devise is removed; all other parts that do not violate the Rule are still valid conveyances of property.
Although most discussions and analysis relating to rule revolve around wills and trusts, the rule applies to any future dispositions of property, including options.
The rule against perpetuities is a common-law rule and has been altered by later law or statutes. In England, the Statute of Uses (1536) and the Statute of Wills (1541) and the consequent rise of flexible future interests made the rule a significant judicial tool in defeating the intent of landowners in grants and devises. Major alterations to the common law rule in the United Kingdom came into effect under the Perpetuities and Accumulations Act of 1964, including the application of traditional 21-year limitation on options. The rule is studied in Australian trust and property law. In the United States it has been abolished by statute in Alaska, Idaho, New Jersey, and South Dakota. Exactly twenty-six other U.S. states have adopted the Uniform Statutory Rule Against Perpetuities, which validates nonvested interests otherwise void under the common law rule if that interest actually vests within 90 years of its creation. Other jurisdictions apply the "wait and see" or "cy pres" doctrines that validate contingent remainders and executory interests void under the traditional rule in certain circumstances. These doctrines have also been codified in the United Kingdom by the 1964 statute.