Rule Against Perpetuities

Question 1

What is the initial threshold for determining whether RAP applies?

Answer 1

You must determine whether there is a future interest holder with a contingent future interest.

For example:

• an executory interest
• a contingent remainder
• a vested remainder subject to open
• the power of appointment
• the right of first option or first refusal (except those granted in leases)

Question 2

What is the test for determining whether RAP applies?

Answer 2

You must determine whether there is a contingent future interest, and if yes, you must determine whether the vesting event will certainly occur within 21 years after the person who created the interest dies.

If it is possible that the interest will vest more than 21 years after the person who created the interest dies, then RAP applies. Under the common law, the future interest is void. Under the modern approach, you wait 90 years and see whether the future interest vests within 21 years of the death of the person who created the interest.