The Next Great Disney Reboot – The Rule Against Perpetuities
Disney recently made headlines for its reference to the Rule Against Perpetuities in a declaration of restrictive covenant. The covenant declares that it will remain in effect in perpetuity or “until twenty one (21) years after the death of the last survivor of the descendants of King Charles III, King of England living as of the date of [the] Declaration.” And just like that, Disney sprinkled a little pixie dust on the Rule Against Perpetuities.
The Rule Against Perpetuities, for most law students, is the proverbial clock striking midnight and Cinderella losing her glass slipper of first year property law class. The rule is critical to the understanding and enforceability of wills and estates in most jurisdictions in the United States but is confusingly written and full of legalese. In a later post, we will discuss the Rule as it applies to covenants. So, what is it?
No interest is good unless it must vest, if at all, not later than twenty-one years after some life in being at the creation of the interest.
Clear as a glass slipper.
The Rule, which is based in common law, seeks to prevent property interests that extend in perpetuity – forever. Essentially, under the law, an individual cannot give someone else an interest in property that includes an Ariel-esque interest, i.e. one with permanent legs.
The Rule discusses interests in property. Specifically, it considers future interests in property. In the context of wills and estates, these interests can arise in various forms including “contingent remainders,” “shifting executory interests,” and “springing executory interests.”
Ex. 1: Evil Stepmother conveys the manor to Anastasia for life, then to Drizella, if Drizella learns how to curtsey appropriately. In this example, the remaining interest to Drizella is contingent on her learning to curtsey.
Ex. 2: Evil Stepmother conveys the manor to Anastasia for life, then to Drizella’s heirs. In this example, the heirs’ remaining interest is contingent because they are unspecified persons and the interest is dependent on Drizella actually having heirs.
Shifting Executory Interest
Beast conveys the castle to Cogsworth, but if Mrs. Potts obtains a degree in hospitality, then to Mrs. Potts. In this example, Mrs. Potts has a shifting executory interest in the castle, which would cut off Cogsworth’s interest upon some event, in this case obtaining a degree for hospitality.
Springing Executory Interest
Beast conveys the castle to Mrs. Potts, if Mrs. Potts obtains a degree in hospitality. This example is similar to the example above, but in this example, Mrs. Potts has an interest in the castle that springs from obtaining a degree rather than an interest that shifts from Cogsworth if she obtains a degree.
Unfortunately, this has nothing to do with Aladdin’s iconic style. An interest in property “vests” if an interested individual meets the qualifications for the property.
Ex: Ursula conveys legs to Ariel, if Ariel can obtain Eric’s love within three days. Assuming legs are property for this purpose, Ariel’s interest in legs “vests” if within three days, Eric falls in love with her. You might also notice that Ariel’s interest in legs would be a “springing interest.”
21 Years After Some Life in Being
The Rule Against Perpetuities sets the time limit that an interest must vest as life plus 21 years. If there is a possibility that the interest will not vest within life plus 21 years, the transfer would violate the Rule Against Perpetuities.
Ex: The Sultan conveys the palace to Princess Jasmine as long as the palace is never moved to a mountain with genie magic. If the palace ever moves, then to Jafar and his heirs.
Jafar’s interest violates the Rule Against Perpetuities. While it is probable that the palace will never move to a mountain with the help of genie magic, the Rule does not consider possibilities, it considers whether an interest must vest within 21 years after a life in being. Because there is no certainty about whether or when the palace might be moved to a mountain, there is no certainty that the interest will vest.
Back to Reality
While it is fun to imagine the future property interests of Disney characters, it is far less enjoyable to have a future interest voided in the real world because the interest violated an often-misunderstood rule. Our Asheville attorneys have extensive experience in will and estate disputes and can help you navigate the law around the inheritance of property.
Be sure to check back for our sequel about restrictive covenants and the Rule Against Perpetuities.
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If you have questions about a will provision, the Rule Against Perpetuities, or this blog post, please contact us at (828)252-5555.