The common law rule against perpetuities prohibits using a legal instrument (often a deed or a will) to regulate private property ownership for an indefinite period in the future. A "life in being plus twenty-one years" One cannot create interests in property that are to vest more than 21 years after the creator's or beneficiaries' lifetimes, according to this rule. The law, frequently referred to as control by the "dead hand" or "mortmain," essentially forbids a person from including qualifications and conditions in a deed or will that would continue to affect property ownership long after the individual's death.

There are a few reasons for avoiding perpetuities. To begin, the English judicial system has long understood that allowing owners to attach permanent contingencies to their property hinders the ability of future generations to freely buy and sell the property, because few buyers would risk purchasing a home with legal questions about the current owner still outstanding.

Second, judges were wary of allowing the dead to restrict the living's right to use and own property. The rule allows testators to set ownership conditions, but only if no interest established vests later than twenty-one years after the death of some designated individual alive when the interest was created. Finally, the rule against perpetuities was occasionally employed to ensure that vast, potentially aristocratic estates would not remain in the hands of the same family for more than one or two generations.

Background of the Rule Against Perpetuities

The Rule Against Perpetuities originated in the 17th century in England. The courts in England wanted to ensure that heirs and descendants might buy and sell land without being swayed by the wishes of long-dead relatives who attempted to legally fix those wishes in stone for decades or centuries to come.

This principle can be traced back to the very beginnings of American law. However, the regulation needs to be more consistently interpreted and applied. For instance, the Kansas Supreme Court decided not to apply the rule in the case Jason Oil Co. v. Littler because doing so could result in some families owning land indefinitely.

As a result, many in the legal community view the rule as draconian, illogical, and outdated, and some states have enacted amendments or new legislation to address these concerns. The "wait-and-see" approach was adopted in 31 states in 1986; this means that a property interest must vest within 90 years following the execution of a will or life estate.

Applications

After the death of Michigan lumber mogul Wellington R. Burt in 1919, his will stipulated that his inheritance would not be dispersed in full until 21 years after the death of his last surviving grandson. After his granddaughter Marion Landsill passed away in November 1989, this requirement was finally fulfilled in 2010. After 92 years, in May 2011, his heirs finally settled their differences and dispersed his fortune, valued at between $100 and $110 million.

Henry G Freeman, a real estate entrepreneur, set up the Henry G Freeman Junior Pin Money Fund to give the First Lady of the United States an annual annuity of $12,000. While Freeman passed away in 1917, his heirs received money from the trust when they were all dead by 1989. The payments were to "continue in force as long as this glorious government lasts," as stated in Freeman's will; however, the trustees of the fund determined that continuing the trust for more than 21 years after 1989 would violate the rule against perpetuities, and so they terminated the trust by agreement with then-First Lady Michelle Obama in 2010 to give the fund to charity. As a result, the fund has only ever made distributions to four First Ladies.

Before a state takeover of the district's board in 2023, the Walt Disney Company and the Reedy Creek Improvement District entered into a development agreement that included restrictive covenants limiting the district's authority over Disney properties in Florida, including Walt Disney World. Suppose a perpetual term is found to be unenforceable. In that case, the agreement states that It is against the rule to create interests (often contingent remainders and executory interests) in property that would vest more than 21 years after the lives of persons living at the time of the creation of the interest.

The Wait-and-See Law: What Is It?

The wait-and-see law in the United States helps mitigate the rule's adverse effects. Since this law has been enacted in 31 states, property interests do not expire after twenty-one years. Instead, interests have ninety years to vest once a legal document, such as a will or trust, is created before the document is null and void.

The additional period allows for a more fluid transfer of assets to subsequent generations. If Anne's family had resided in a "wait and see" state, the law against perpetuities would not have prevented her grandchildren from acquiring a vested interest in the vineyard.