Contingent Future Interests

The Rule Against Perpetuities The rule states that “no interest other than one in the grantor is good unless it must vest, or fails to vest if it is a remainder, or become possessory or fails to become possessory, if at all, no later than 21 years plus a gestation period after the death of all lives in being.” The basic thrust of the rule is that the effect of every contingent or executory interest must be known with certainty no later than 21 years after the death of all “lives in being.” The rule does not mean that a remainder has to vest or that an executory interest has to become possessory within the measuring period (21 years). They must either fail or succeed within that time, so that their effect will be known with certainty. Interests subject to the rule:
a.
springing and shifting executory interests;

b.
contingent remainders;

c.
vested remainders subject to open-as long as the class of grantees is still open, the rule applies.

2. Interests that are NOT subject to the rule:
a.
reversions;

b.
rights of entry;

c.
possibilities of reverter; and

d.
vested remainders.

3. Effect The rule goes into effect at the time the interest is created. For a will, that means at the death of the grantor; for a deed it is the time of transfer. The rule operates as follows: If it is possible to create a scenario, no matter how improbable, under which one of the future interests subject to the rule will neither succeed nor fail within the measuring period, then that interest is invalid and eliminated from the grant. The analysis is done at the time of the grant.
Infectious invalidity-If cutting out a piece of the grant will defeat the purpose of the entire grant, the court will strike down the entire grant, not just the specific part.