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2013년 5월 7일 화요일


 

The Rule Against Perpetuities

  

Rationale

The Rule Against Perpetuities (RAP) reflects the idea that property should be controlled by the living, not by the “dead hand.” Thus, an interest that remains contingent once the perpetuities period expires is void.
 
 

The Rule

No interest is good unless it must vest, if at all, no later than 21 years after some life in being at the creation of the interest.
 
 

Application

Olivia devises Blackacre “To Arnold for life, then to the first child of Arnold to marry and the heirs of that child.” Arnold is alive on the date of this devise but has no children.
Consider the following questions when analyzing the Rule Against Perpetuties:
  1. Does the RAP apply to the interest involved?
    • The RAP applies only to contingent remainders, executory interests, and certain vested remainders subject to open. The RAP does not apply to any future interested created in the grantor.
    • Arnold has a life estate, and his unborn child has a contingent remainder because the child is not ascertainable and must meet a condition precedent.
  2. When does the perpetuities period begin?
    • The beginning of the perpetuities period depends on the effective date of the instrument that created the interest.
    • Olvia “devised” Blackacre, so the instrument is a will. A will becomes effective on the date of the testator’s death.
  3. What is the condition precedent to vesting of the future interest?
    • Consider what must happen before the interest will vest in the grantee, not what must happen before the grantee has possession. If a class gift is involved, all class members’ interests must be valid.
    • The condition precedent is that Arnold must have a child who gets married. If Arnold never has children, or has children who never marry, the interest will fail.
  4. Who are the lives in being?
    • The lives in being that are relevant are those people who are alive (or in gestation and later born alive) on the effective date of the instrument and who can affect vesting.
    • The relevant lives in this example are Olivia and Arnold because they were the only relevant people alive on the day the will became effective.
  5. Will the interest be validated?
    • Determine whether the interest could vest or fail for the lives in being during their lifetimes plus 21 years. Presume that anything is possible. If the interest could vest during any of their lifetimes, it is valid under the RAP.
    • Arnold must have a child who marries within Arnold’s lifetime plus 21 years. Is this possible? Arnold could die tomorrow, or 40 years from now, without children. Arnold could have one child or many children over the next few years, and within 18 years of that time, one of his children could be married. It is possible that Arnold could have a child who marries within his lifetime plus 21 years. Therefore, this contingent remainder is valid under the RAP.
 
 

The Rule in Shelley’s Case

The Rule in Shelley’s Case, which now has been abolished in almost every jurisdiction, was applied to conveyances that created a life estate in one person and a remainder in that person’s heirs. For example, if Olivia conveyed Greenacre “To Arnold for life, then to Arnold’s heirs,” the two interests would merge, and Arnold would have a fee simple absolute. Arnold’s heirs would have nothing.
 
 

Reforms in the Rule Against Perpetuities

  • Some states have adopted a “wait and see” approach to determine whether the interest vests during the perpetuities period.
  • Under the Uniform Statutory Rule Against Perpetuities (USRAP), an interest is valid if it vests during the common law period or within 90 years of its creation.
  • The cy pres doctrine allows courts to attempt to match the grantor’s interests “as near as possible” to validate the interest.
 
 
Previous: Future Interests
Next: Concurrent Estates 
 
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Understanding The Rule Against Perpetuities

Written by Michael Pancheri, Esq,
0 Comments
chessmenThe "rule against perpetuities" is often described as one of the most complicated legal rules ever!
It's origin stems from the days of feudal England - some say as early as 1680 - when landowners often tried to control the use and disposition of property beyond the grave - a concept often referred to as control by the "dead hand."
The rule against perpetuities was intended to prevent people from tying up property - both real and personal - for generation after generation. In feudal England, the practice was to put land in trust in perpetuity, with succeeding generations living off the land without actually owning it. The catalyst for this practice was the avoidance of certain taxes which were being levied upon the transfer of land upon the death of the owner. Perpetual trusts avoided the tax, but many people argue that the practice had the deleterious effect of concentrating large amounts of wealth among a few members of society.
The rule against perpetuities, then, was designed to insure that some person would actually own the land within a reasonable period of time after the death of the transferor. To accomplish that result, the rule stated that no interest in property would be valid unless it could be shown that the interest would vest, if at all, no later than 21 years after some life in being at the creation of the interest.
Although the rule appears to be straightforward, it has become one of the most complicated legal rules for this reason: the rule requires, with absolute certainty, that an interest in property will vest no later than 21 years after some life in being at the creation of the interest. If there is any possibility that the interest will not vest during that period, then the gift fails ab initio, i.e. from the time the document creating the interest takes effect. For wills, it is the time of the Testator's death. For trusts, it is the time the transaction is complete.
Let's consider a few examples illustrating the application of this rule:
1. John's will provides that Land A is to be given to the first child of Joseph to reach the age of 21. If Joseph is to have any children at all, they certainly will reach the age of 21 within 21 years after Joseph's death. Therefore, the gift does not violate the rule against perpetuities.
2. John's will provides that Land A is to be given to the first child of Joseph to marry. The gift is void under the rule against perpetuities because (a) it is possible that Joseph will have children during his lifetime and (b) if he does, there is no certainty that any of them will marry within 21 years after Joseph's death.
3. John's living trust states that, upon his death, his friend Mary has the right to live in his house for her life, then the house is given to Mary's oldest child. The measuring period is Mary's life, plus 21 years. Since the gift to Mary's oldest child will vest, if at all, immediately upon Mary's death, the gift does not violate the rule against perpetuities.
4. John's living trust states that, upon his death, his cottage in Vermont will go to the first member of his boy scout troop to earn the eagle rank. The gift is void under the rule against perpetuities because it is possible that no one will earn the eagle rank from his boy scout troop during the lives in being at the time of John's death, plus 21 years. For one thing, the troop may cease to exist before anyone reaches that rank.
The complexity of the rule against perpetuities is further evidenced by the problem of the unborn widow. Suppose that John, from our examples above, wants to give his property to his son, Joseph, and Joseph's wife, and then to their children.
The provision in John's trust or will would look something like this:
To Joseph for life, then to his wife for life, then to Joseph's children. This is a reasonable gift upon John's death, yet it violates the rule against perpetuities.
Let's suppose that Joseph was married, but had no children, at the time of John's death. This would mean that Joseph and his wife are Lives in Being. If Joseph's wife were to die or if Joseph and his wife divorced and if Joseph remarried to someone who was born after John's death, then Joseph's new wife could not be a life in being. As such, she could outlive Joseph by more than 21 years and so the transfer to Joseph's children after the death of Joseph's wife would be outside the measuring period, thereby violating the rule against perpetuities.
Now suppose that Joseph was not married at the time of John's death and that Joseph got married afterward. Again, Joseph's wife would not be a life in being for purposes of applying the rule - and, it's possible that she could outlive Joseph by more than 21 years, thereby preventing Joseph's children from vesting in the property within the measuring period.
If you think that the rule against perpetuities is something that does not apply to you, think again. If you have a will or a trust that provides for a contingent beneficiary in the event something happens to the primary beneficiary, the rule against perpetuities comes into play. For this reason, if you have a will or a trust, it probably has a clause addressing this rule. Most are simply entitled, "Rule against Perpetuities."
In the last few years, many states have moved to either modify the rule or abolish it all together. Part of the reason, of course, is owing to the complexity of the rule itself. But, there is also a growing trend in the country to remove any barriers to the accumulation and perpetuation of wealth, which the rule against perpetuities has been steadfast against for over three hundred years.
With several states abolishing the rule against perpetuities altogether, we now see the rise of estate planning vehicles designed specifically to perpetuate wealth from generation to generation. We'll take a look at one of the more popular of those vehicles next time
michael-pancheri-96
About Michael Pancheri, Attorney, CEO, Living Trust Network, LLC
Michael maintains a law practice in the State of Connecticut with an emphasis on trusts and estates.  He is also the founder and CEO of the Living Trust Network.  Contact Michael at (860) 693-1376 or at info@livingtrustnetwork.com.

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per·mis·sive

  [per-mis-iv]  Show IPA
adjective
1.
habitually or characteristically accepting or tolerant of something, as social behavior or linguisticusage, that others might disapprove or forbid.
2.
granting or denoting permission: a permissive nod.
3.
optional.
4.
Genetics. (of a cell) permitting replication of a strand of DNA that could be lethal, as a viral segmentor mutant gene.
Origin: 
1425–75; late Middle English;  see permission, -ive; compare French permissif

Related forms
per·mis·sive·ly, adverb
per·mis·sive·ness, noun
non·per·mis·sive, adjective
non·per·mis·sive·ly, adverb
non·per·mis·sive·ness, noun

Synonyms 
1. indulgent, lenient, lax.
Dictionary.com Unabridged
Based on the Random House Dictionary, © Random House, Inc. 2013.
Cite This Source   Link To permissive
00:06
Permissive is always a great word to know.
So is quincunx. Does it mean:
a calculus or concretion found in the stomach or intestines of certain animals, esp. ruminants, formerly reputed to be an effective remedy for poison.
an arrangement of five objects, as trees, in a square or rectangle, one at each corner and one in the middle.
LEARN MORE UNUSUAL WORDS WITH WORD DYNAMO...
Collins
World English Dictionary
permissive  (pəˈmɪsɪv) [Click for IPA pronunciation guide]
 
— adj
1.tolerant; lenient: permissive parents
2.indulgent in matters of sex: a permissive society
3.granting permission
4.archaic  not obligatory
 
per'missively
 
— adv
 
per'missiveness
 
— n
Collins English Dictionary - Complete & Unabridged 10th Edition
2009 © William Collins Sons & Co. Ltd. 1979, 1986 © HarperCollins
Publishers 1998, 2000, 2003, 2005, 2006, 2007, 2009
Cite This Source
Etymonline
Word Origin & History

permissive 
c.1600, "allowing to pass through," from O.Fr. permissif, from L. permissus (see permission). In sense of"tolerant, liberal" it is first recorded 1956; by 1966 it had definite overtones of sexual freedom.
Online Etymology Dictionary, © 2010 Douglas Harper
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Estoppel by deed

From Wikipedia, the free encyclopedia
Property law
Part of the common law series
Types
Acquisition
Estates in land
Conveyancing
Future use control
Nonpossessory interest
Related topics
Other common law areas
Estoppel by deed is a doctrine where rules of evidence prevent a litigant from denying the truth of what was said or done.[1]
In the context of real property transfers, the grantor of a deed (generally the seller of a piece of real property) is estopped (barred) from denying the truth of the deed. The doctrine may only be invoked in a suit arising out of the deed, or involving a particular right arising out of the deed.[2]
In contract law this can refer to a representation in the recitals to an agreement. Once the agreement is made, one party may claim that the other party cannot enforce certain rights under the agreement due to representations made in the recitals.

[edit]Examples

1. If O conveys property she doesn't own to A by warranty deed, but O later acquires title to that land, then title immediately passes to A.
2. However, if, as above, O conveys property she doesn't own to A by warranty deed, but O later acquires title to that land, A may elect to treat O's lack of title at the time of the conveyance as a breach of the covenants of seisin and right to convey (two of the six traditional forms of Covenants for Title that are contained in a general warranty deed), and sue O for damages. A cannot be forced to accept O's after-acquired title if she wishes instead to receive damages.[3][4]
3. If O conveys property she doesn't own to A by quitclaim deed, but O later acquires title to that land, then A owns nothing. This is because O passed her interest to A with a quitclaim deed; at the time of the conveyance, O's interest was nothing, so she passed nothing.

[edit]References

  1. ^ Wallace v. Pruitt, 1 Tex. Civ. App. 231, 234, 20 S.W. 728, 728 (1892): "That the maker of a deed may be estopped to deny the truth of recitals therein is a well-settled doctrine of the common law."
  2. ^ W. E. Coldwell Co. v. Cowart, 138 Ga. 233, 75 S.E. 425, 427 (1912), citing 16 Cyc. 699: "A recital works an estoppel only in an action founded on a deed, or brought to enforce rights arising under it."
  3. ^ King v. Gilson's Adm'x, 32 Ill. 348, 354-55 (1863): "The covenants of seizin and of good right to convey are broken, if at all, when the deed is delivered. They are personal covenants, not running with the land, and are in presenti. Their breach depends upon no future contingency. They are, that the grantor is then seized, and has good right to convey. If he is not well seized, or if he has not the power to convey, when the deed is delivered, an action at once accrues, and a recovery may be had."
  4. ^ Reece v. Smith, 276 Ga. 404, 406, 577 S.E.2d 583, 586 (2003), citing Yaali, Ltd. v. Barnes & Noble, Inc., 269 Ga. 695, 697(2), 506 S.E.2d 116 (1998): "[A] grantor who conveys by warranty deed an interest that he does not then own, but later acquires, will be estopped to deny the validity of the first deed. It is generally understood, however, that this doctrine cannot be used to transfer title or to cure flaws in the legal requirements for the creation of a property interest."
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