What is the ”Rule Against Perpetuity”

Rule Against Perpetuity: The rule against perpetuity, simply, means that all devices shall be void which tend to create a perpetuity or place property, forever, out of the reach of the exercise of the power of alienation. So long as the transferees are living persons, any number of successive estates can be created.

A transfer can be made to ”A” for life, to ”B” for life, and then to ”C” for life, and so on, provided ”A”, ”B” and ”C” are all living at the date of the transfer. But, if the ultimate beneficiary is someone not in existence at the date of the transfer, Section 13 requires that the whole residue of the estate should be transferred to him. If he is not born before the termination of the last prior estate, the transfer to him fails according to Section 14. If he is born before the termination of the last prior estate, he takes the vested interest at birth and possession, immediately on the termination of the last prior estate. However, the rule against perpetuities does not require that the vesting shall take place at the birth of the ultimate beneficiary. What it does require is that the vesting cannot be delayed, in any case, beyond his reaching the age of 18 years.

The result of the rule against perpetuity is that the minority of the ultimate beneficiary is the latest period at which an estate can be made to vest

Illustration:

1) A fund is bequeathed to ”A” for his life and after his death to ”B” for his life; and after B’s death to such of the sons of ”B” as shall attain the age of 25. ”A” and ”B” survive the testator. Here the son of B who shall first attain the age of 25 may be a son born after the death of the testator; such may not attain 25 until more than 18 years have elapsed from the death of the longer liver of A and B; and the vesting of the fund may, thus, be delayed beyond the lifetime of A and B and the minority of the sons of B. The bequest after B”s death is void.

Transfer in perpetuity for the benefit of the public:

The restriction in the Section does not apply in the case of a transfer of property for the benefit of the public in the advancement of religion, knowledge, commerce, health, safety or any other object for the benefit of mankind.

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