1. RULE AGAINST PERPETUITIES

2. NO INTEREST IS GOOD UNLESS IT MUST VEST, IF AT ALL, NOT LATER THAN 21 YEARS AFTER SOME LIFE IN BEING AT THE CREATION OF THE INTEREST-
John Chipman Gray

3. If, at the creation of a nonvested interest, there is some life in being within 21 years of whose death the nonvested interest must absolutely vest or fail, the nonvested interest is good (valid).
If there is no such individual, the interest is bad (invalid) Sheldon F. Kurtz

4. WHY HAVE THE RULE?

5. What kind of interests are NOT subject to the Rule?

6. Indefeasibly vested remainders
Vested remainders subject to divestment if limited to an individual
These are vested from the moment they are created.

7. What kind of interests ARE subject to the Rule?

8. Contingent remainders
Executory interests
Future interests in a class whether vested or contingent

9. When is an interest created under the rule?

10. Lifetime transfers
Irrevocable transfers
Revocable transfers

11. Testamentary Transfers

12. Transfers resulting from exercise of power
GPA (inter vivos)
GPA (testamentary)
SPA (inter vivos or testamentary)

13. How nonvested interest vests under the rule

14. Remainders vest either:
By becoming vested, i.e, not be subject to a condition precedent
Class closing and all conditions precedent occurring for each and every member of the class

15. Executory interests vest either:
In the case of shifting interests by becoming vested remainders or becoming possessory
In the case of springing interests by becoming possessory

16. Rest

17. The lives in being (Must be Human Lives)

18. Relevant lives
Validating lives

19. Relevant Life:
A relevant life is a person who can affect whether or not the interest vest

20. Validating Life:
That relevant life or lives IF ANY within 21 years of whose death the interest is absolutely guaranteed to timely vest or fail to vest

21. An interest if valid if it must:

22. vest or fail to vest during the lifetime of the validating life; or
vest or fail to vest at the death of the validating life; or

23. vest or fail to vest within 21 years of the death of the validating life, or
vest or fail to vest within 21 years of the creation of the interest

24. A validating life cannot be a member of a class unless the class
is closed at the time that the
non vested interest is created

25. Steps in Doing a Perpetuity Analysis

26. Determine when interests are created.
Classify all interests
Determine which if any interests MIGHT violate the rule

27. Determine if there is a relevant life
Determine if there is a validating life
Assess validity

28. In order to determine whether a disposition is “good” or “bad” under the Rule you must know:

29. The language of the disposition
Its construction (i.e, what do the words mean) or Construe First
Cont’d

30. Facts about who survive at the time the nonvested interest is created (relevant and/or validating lives)

31. T devises property to A for life, then to A’s children who attain age 21. Good or Bad Under the Rule? Question: Is their a validating life

32. Good or Bad Under the Rule? Hint: Is their a validating life
T devises property to A for life, then to A’s children who attain age 25.
Good or Bad Under the Rule? Hint: Is their a validating life

33. THE MIGHT HAVE BEEN RULE (what might happen)

34. T wills property to A for life, then to B if anyone returns from Rome
Scenario 1: At the time of T’s death, someone had already returned from Rome
Scenario 2: At T’s death, no one has yet returned from Rome. However, two weeks later C returns from Rome

35. Problems Pages
To A for life, then to B for life if any person goes to Saturn
To A for life, then to A’s first child to pass the bar
What does the phrase “first child” mean?
Options
First child born to A and then only if he/she passes the bar
First child of A whenever born who passes the bar

36. ASCERTAINING THE MEASURING LIVES

37. T wills property to A for life, then to B if B attains age 75

38. T wills property to his wife for life, then 25 years after her death
to such of his (T’s children)
as are then living

39. T wills property to A for life, then to A’s oldest surviving child for life, then to that child’s oldest child for life, then to B
A, B and A’s son S survive T
A, B and no child of A survive T

40. FERTILE OCTOGENARIAN

41. Fertile Octogenarian
T devises property to Trustee to pay income to A for life, then to A’s children for their lives, then to A’s grandchildren who are then living
Scenario 1: At T’s death, A is living. A is age 80.
Scenario 2: At T’s death, A is incapable of having children.
Scenario 3: At T’s death, A’s children but not A are living

42. Problem 3, 800 Problem 4, page 800

43. PRECOCIOUS TODDLER

44. Precocious Toddler
T by will to A for life, remainder to such of A’s grandchildren who survive T or are born within 5 years of T’s death if they later reach the age of 25.
Survived by child A but no children or grandchildren of A
Survived by child A and 2 grandchildren and 3 children of A
Survived by 2 grandchildren of A but not by A or any children of A

45. The Unborn Widow See, Dickerson v. Union National Bank of Little Rock

46. T devises property in trust to pay the income to Son for life, then to Son’s widow for her life, then to S’s then surviving issue. At T’s death:
Son and his wife, Jane survive T.
Is gift to issue good or bad under the rule?
Could T’s will have been interpreted in such a way that it does not violate the Rule?
If T’s will violates the rule, how might it have been drafted initially to be valid?

47. SLOTHFUL EXECUTOR

48. T wills the residue of T’s estate to T’s spouse to be paid to the spouse one year after T’s will is probated.

49. Alternative Contingencies Doctrine

50. Gift to vest (by express words in instrument) on one of two events
One event could occur beyond permissible period (first event)
One event can only occur within permissible period (2nd event)
Gift VALID if second event is the one that ACTUALLY occurs
Gift VOID if first event is the one that ACTUALLY occurs

51. T devises property in trust to pay income to daughter A for life, then to A’s widower for his life, then, upon the death of the widower, OR upon the death of A, if no spouse of A survives A, to A’s surviving issue

52. The All of Nothing Rule (Limited to -Class Gifts)

53. If a gift is bad as to one member of a class, it is bad as to all, including those members of the class whose interest would timely vest or fail.

54. For a class gift to be valid under the Rule within the permissible period:
the class must close
and all conditions precedent must have to occur for EACH AND EVERY member of the class

55. T wills property to A for life, then to such of A’s children as attain age 25. At T’s death
#1: A has three children, all of whom are age 25.
#2: A has three children, one of whom is age 25
#3: A has three children, all of whom are under age 25

56. T wills property to A for life, then to A’s grandchildren
At T’s death, A has:
A has no grandchildren
A has one living grandchild

57. O deeds property to O’s daughter, A, for life, remainder to O’s grandchildren.
At the time of the conveyance, O has:
No living grandchild
One living grandchild

58. O deeds property to O for life, then to O’s grandchildren
O deeds property to O for life, then to O’s grandchildren. At the time of the conveyance:
O has three living grandchildren and two living children.
O has no living grandchildren and two living children.
O has no living grandchildren or children.

59. Ward v. Van der Loeff What are the facts of this case?
Is the gift in the will valid?
Is the gift in the codicil valid?

60. Problems on Page 813

61. Infectious Invalidity

62. THE SUBCLASS EXCEPTION American Security & Trust Co. v. Cramer
T wills property to A for life, then to B for life, then to B’s surviving children for life, then upon the death of each child of B, the percentage share of the principal from which the child was receiving income shall be distributed to his/her surviving issue. At T’s death A, B and two children of B--C and D are living. Five years later, B has two more children--E and F
Is the gift to A valid?
Is the gift to B valid?
Is the gift to B’s children valid?
Is the gift to issue of B’s children valid?

63. POWERS OF APPOINTMENT

64. When period begins to run:
General inter vivos power
General testamentary powers
Special (non-general) powers

65. Is power validly created:
Is it possible for power to be exercised by a person who was not a life in being and beyond the perpetuity period

66. Is power validly exercised:
Second look doctrine
Rewrite appointment back into instrument creating power
Consider facts relating to survivorship at time of exercise.

67. T’s will: T wills property to A for life, remainder to such of A’s issue as A appoints by will, if no appointment to A’s grandchildren who attain age 21.
Appointment by A: “to child (grandchild of T) B for life, then to B’s surviving issue”
Rewrite of T’s will: T wills property to “A for life, remainder to B for life, remainder to B’s surviving issue.”
B was alive at T’s death
B was born after T died

68. O conveys property to A for life, s/p/a/ issue as A appoints by will, ida to A’s children for life (grandchildren of O), then to A’s grandchildren (great-grandchildren of O). A dies and does not exercise the power.
At A’s death:
Grandchild B is living. B was also alive when O created the trust
Grandchild B is living but was born after the date O created the trust
Grandchildren B, C and D are living:
All were alive at the time of the conveyance
All were born after the time of the conveyance
B and C were alive at the time of the conveyance; D was born after the conveyance

69. Savings Clauses
Notwithstanding the foregoing any trust created hereunder shall terminate, if it has not terminated sooner, no later than:
21 years after the death of the survivors of all of my issue living at the (time of my death) (date the trust created)
21 years after the death of the survivors of all of my grandparents’ issue living at the (time of my death) (date the trust created)
21 years after the death of the survivors of all of the descendants of Queen Victoria (or Joseph P. Kennedy) living at the (time of my death) (date the trust created)

70. Wait-and-See
A gift is valid under the rule if it actually vests or fails to vest no later than 21 years after the death of the survivor of lives in being living at the creation of the nonvested interest.

71. T wills property to A for life, then to A’s children who reach age 25.
T wills property to the first child of A who graduates law school
O wills property to O’s first grandchild who graduates from law school

72. T wills property to the X Church so long as the premises are used for church purposes and if not so used, then to B.
120 years after X Church ceases using the premises for church purposes B’s estate claims the property.
Should B’s estate prevail if B is then living
Should B’s estate prevail if it can show that Z is living (or died within the preceding 21 year period but Z was alive at the time of T’s death

73. CY PRES

74. T wills property to A for life, then to A’s children who attain age 25.
At A’s death, A’s youngest child is age 18
At A’s death, A’s youngest child is age 3
At A’s death, A’s youngest child is age 1
At A’s death, A has no child under age 25

75. The Iowa Reforms
Iowa Code

76. States common law rule
Adopts wait-and-see (Statutory List of Lives
creator
persons selected by creator
living beneficiaries of present and future interests
living grandparents of such beneficiaries
living issue of such grandparents
living grandparents and their issue who are objects of special power
donee of special and general powers
Cy pres

77. Charitable Trusts Trust for benefit of recognized existing charity
Trust for a charitable purpose which include:
Relief of poverty
Advancement of education
Advancement of religion
Promotion of health
Governmental or municipal services
Other purposes the accomplishment of which is beneficial to the community
Can last in perpetuity
The Cy Pres Doctrine

78. Goodbye and Thanks
Good Luck on your Exams