Rule Against Perpetuities

Jurisdiction
June 22, 2015
Unrelated Business Income
September 8, 2015
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Rule Against Perpetuities

The Rule Against Perpetuities is an ancient and perhaps archaic body of rules established ad hoc over centuries by kings, courts and statute to prevent certain property interests from lasting forever.  In general, at some point in time, any property interest must terminate as to one party (who is typically then dead) and vest in another (who is typically then living).  Under this rule, so-called non-vested future interests in property are not valid, and future interests must vest in a specific person at some discrete point in time.  This rule is little understood and greatly disparaged.  It has been abolished or modified by a growing number of jurisdictions.  Where there is no Rule Against Perpetuities, a Trust or other entity may hold property for the benefit and enjoyment of certain persons indefinitely without that property ever distributing from the Trust and actually vesting in any particular person.

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