Friday, March 29, 2013

The Rule Against Perpetuities: When It Applies

Should you come across a Rule Against Perpetuities problem on the MBE, an initial step is to determine whether the rule even applies. I want to stress this because much time can be unnecessarily spent applying the rule to an interest that is not subject to the rule (for example, a vested remainder).

With that said, keep the following in mind:

The following interests require that you analyze the rule to see if the rule has been violated:

Contingent Remainders
Executory interests
Powers of appointment
Right of first refusal (unless the right is held by a current lessee of land)
Class gifts

The following interests do not require that you analyze the rule, because the rule does not apply:

Present interests in possession
Vested remainders
Possibilities of reverter
Powers of appointment
Charitable trusts
Resulting trusts

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