Does the rule against perpetuities apply to executory interests?
Terms: Rule Against Perpetuities: The rule that provides that certain future interests must vest, if at all, within 21 years after the death of a life in being at the time that the interest is created. The rule applies to executory interests and contingent remainders.
Does Michigan have a rule against perpetuities?
Previously, a statute called “the rule against perpetuities” limited the period of time a trust could last. Each state has its own version of the rule. In Michigan, prior to this law change, the maximum duration of a private trust was approximately 90 years.
What interests are subject to the rule against perpetuities?
The rule against perpetuities does not apply to future interests held by a grantor. Those interests—reversions, possibilities of reverters and rights of entry/powers of termination—are inherently vested.
Which states have abolished the rule against perpetuities?
These states are Alaska (repealed the rule for vesting of property interests), Delaware (repealed entirely for personal property interest held in trust; 110 year rule for real property held directly in trust), Idaho, Kentucky (repealing the rule interests in real or personal property), New Jersey, Pennsylvania, Rhode …
What is a springing executory interest?
springing executory interest (plural springing executory interests) (law) An interest in an estate in land created by the conditions of a grant wherein the grantor cuts short the grantor’s own interest in the property in favor of the grantee, contingent upon the occurrence of a specific condition.
Are executory interests subject to rap?
Rather, there is a certain kind of interest to which the RAP applies: future interests. The most notable of these are “contingent remainders” and “executory interests” (the lesser used of these interests include “interests subject to open,” “rights of first refusal,” “options to purchase,” and “powers of appointment”).
What is the uniform statutory rule against perpetuities?
The Uniform Statutory Rule Against Perpetuities (USRAP) invalidates interests in property that are intended to belong to somebody at a future time, but for which the actual determination of ownership cannot or will not be accomplished within a specific period of time.
What is rule against perpetuities examples?
If, for example, the last of A’s children dies before the youngest of A’s grandchildren reaches the age of one, the interest would not vest until after the “life plus 21 years” limitation. Despite the remoteness of this possibility, the interest of A’s grandchildren violates the RAP.
Does the rule against perpetuities still exist?
A number of states, including California, have amended the rule of perpetuities. This is still the case under the California rule, but it also declares the gift valid if it is completed within 90 years of the trust’s creation.
What is the difference between springing and shifting executory interest?
Shifting executory interests go from one grantee to another upon the occurrence of some condition. Springing executory interests go from the grantor to a grantee upon the occurrence of some condition.
What is a shifting executory interest?
An executory interest is a type of future interest in property, held by a third-party transferee which extinguishes another’s interest, or commences after the natural termination of a preceding estate. Shifting executory interests transfer ownership from the grantee to a third party. …
What happens if a trust violates the rule against perpetuities?
If either alternative is not achieved, the trust is void immediately. Whether an interest granted by a trust violates the Rule against Perpetuities can be difficult to determine. But note it is still quite possible to create a trust that will last a remarkably long period of time.