History
The Rule Against Perpetuities and Modern Trust Planning
Quick fact
The Rule Against Perpetuities famously requires that a future interest must vest, if at all, within 21 years after the death of some 'life in being' at the creation of the interest. Yet, many modern trusts are designed to last for hundreds of years, often by using perpetual trust jurisdictions that have abolished or modified the rule.
Why this is interesting
You might think you can leave your fortune to your great-grandchildren forever, but a centuries-old legal rule limits how far into the future you can control your property. What is this rule, and why do modern lawyers find ways around it?
Read the full explanation
Understanding The Rule Against Perpetuities and Modern Trust Planning
Imagine you own a piece of land. You want to give it to your eldest child, but you also want to control who inherits it generations later. The law generally allows you to give property to someone outright, but it also allows you to create future interests, like 'to my child for life, then to my grandchild.' The Rule Against Perpetuities (RAP) steps in to ensure that you cannot create interests that vest (i.e., the person becomes entitled to possession) too far in the future. The classic rule says: 'No interest is valid unless it must vest, if at all, not later than twenty-one years after some life in being at the creation of the interest.' This means that when you create a future interest (for example, in a will or trust), you must be able to say exactly who will get the property, and that person must exist (or be knowable) within a specific time frame: the lifetime of anyone alive at that moment, plus 21 years. This prevents you from creating a trust that ties up property for, say, hundreds of years, because the interests would not vest until way beyond that period. The rule is intentionally strict—so strict that a famous legal scholar called it 'a public nuisance' because of its complexity.
A deeper explanation
The Rule Against Perpetuities was developed in English common law to promote the free alienability of land. The idea is that property should not be 'dead-hand controlled' for too long, because that would prevent it from being sold, developed, or used productively. If a trust could last forever, the beneficiaries would have no incentive to improve the property, and the economy would suffer. The rule works by invalidating any future interest that might not vest within the allowed period. This is determined at the creation of the interest, using the 'what if' test: you ask, 'Could there be any scenario, no matter how improbable, where the interest fails to vest within 21 years after the death of the last life in being?' If yes, the interest is void. For example, a trust 'to my grandchildren who reach age 25' would fail because some grandchildren might be born after your death and not reach 25 within 21 years of the last life in being (you, or your children, if they are alive). This 'possibility of remoteness' invalidates the interest. Over time, states and countries have either abolished the rule or replaced it with a 'wait-and-see' approach (where you wait to see if the interest actually vests in time, rather than speculating about possibilities). Modern trust planning has taken advantage of these changes. Many jurisdictions, like South Dakota, Delaware, and Alaska, have abolished the rule for trusts, allowing 'dynasty trusts' that can last for centuries, as long as they are set up correctly. These perpetual trusts are designed to avoid triggering the rule by making the interests vest quickly, or by using the rules of the jurisdiction. The result is that the rule against perpetuities, once a cornerstone of property law, now mostly serves as a historical and legal principle that has been largely circumvented by modern strategies, raising questions about the balance between dead-hand control and the public interest.