This document provides an example to explain the perpetuity rule and how it is applied. It analyzes gifts in a settlement to determine if they are vested or contingent, and if contingent, whether they could vest within the perpetuity period. The gifts to the widow and first child to reach age 25 are contingent, as the takers are not yet ascertainable. To determine if these gifts violate the perpetuity rule, the document explains that one must consider the worst case scenario and whether there is any possibility, however unlikely, that the gifts could vest outside the perpetuity period.
This document provides an example to explain the perpetuity rule and how it is applied. It analyzes gifts in a settlement to determine if they are vested or contingent, and if contingent, whether they could vest within the perpetuity period. The gifts to the widow and first child to reach age 25 are contingent, as the takers are not yet ascertainable. To determine if these gifts violate the perpetuity rule, the document explains that one must consider the worst case scenario and whether there is any possibility, however unlikely, that the gifts could vest outside the perpetuity period.
This document provides an example to explain the perpetuity rule and how it is applied. It analyzes gifts in a settlement to determine if they are vested or contingent, and if contingent, whether they could vest within the perpetuity period. The gifts to the widow and first child to reach age 25 are contingent, as the takers are not yet ascertainable. To determine if these gifts violate the perpetuity rule, the document explains that one must consider the worst case scenario and whether there is any possibility, however unlikely, that the gifts could vest outside the perpetuity period.
The nature and operation of the perpetuity rule is best explained by
working through an example. Assume the following settlement was made before 1997: •to Adam (a bachelor) for life; •r emainder to his widow for life; •r emainder in tail to his first child to attain the age of 25; •r emainder to Beth in fee simple. A perpetuity problem is approached by asking three questions in the following order. (a) Is the gift vested or contingent? The rule against perpetuities attacks contingent gifts only. If the gift has already vested, whether it is vested in possession or vested in interest, the rule has no application. The meaning of ‘vested’ was noted in the last chapter. Generally, a gift is vested if it satisfies two tests: •the taker is ascertained; and •the gift takes effect in possession, or else is ready to take effect in possession subject only to the dropping of life or lives. For the purposes of the perpetuity rule, however, a gift does not count as a vested gift unless it also satisfies a third test: •the size of the share is known. This third test is relevant where there is a class gift of some sort. For nonperpetuity purposes, a class gift vests when the first member of the class is ready to take, subject to incremental divesting as further members of the class qualify. For example, suppose there is a gift to the children of a childless couple. On the birth of their first child, the whole gift vests in him provisionally. On the birth of their second child, the first is divested as to half. On the birth of a third child, the other two are each divested as to one sixth, and so on progressively. 110 For perpetuity purposes, however, it is the final division, not the provisional vesting which is important, and the destination of a class gift is not finally settled until the last member qualifies. (But remember that there are special class closing rules which may artificially restrict, and so save, an over-large class.) Applying that first question, ‘vested or contingent?’, to the four gifts set out above: •the gift to Adam for life is clearly vested in possession, and there is no perpetuity issue; •the second gift, to his widow, is contingent because the taker is not yet ascertainable, and will not be ascertainable until Adam’s death; •the third gift, to Adam’fsi rst child, is also contingent, assuming he has not fathered an illegitimate child; (These days, in a disposition of property, unless a contrary intention appears, no distinction is to be made between legitimate and illegitimate children save in relation to titles of honour and land devolving therewith. So, for the sake of completeness, perhaps it should be said that if Adam already has a 25 year old child, the gift has vested; otherwise the gift is contingent.) •the fourth gift, to Beth, is vested. She is not entitled to possession of the land until all prior interests are exhausted, but she is nevertheless vested in interest. Her gift satisfies all three tests. Even if the prior entail lasts for generations and generations, it is still true to say that Beth is ready to take effect in possession subject only to the dropping of lives. She has a vested fee simple which will devolve under her will or on her intestacy, and Beth or her successors can take possession when all the prior lives have dropped. No further perpetuity issue arises in relation to Beth. In relation to the gifts to the widow and the child, it is necessary to proceed to the second question. (b) Is the gift valid or void at common law? The question is: Assuming the gift does vest, must it vest within the perpetuity period, or is there a possibility, no matter how far-fetched, that it might vest outside the perpetuity period? If there is such a possibility, the gift is void at common law. UNDERSTANDING LAND LAW 111 (i) General approach Note two features in particular. First, the question is not, will the gift vest? but, if the gift vests, when will that be? In relation to the widow’s gift, for example, it is irrelevant, for perpetuity purposes, that Adam might never marry, or that he might outlive his (last) wife. It is irrelevant that he might never leave a widow. The question is, if the gift to the widow ever vests, when will that be? Similarly, in relation to the gift to Adam’s child, it is irrelevant, for present purposes, that Adam may never have a child, or that, if he does, the child may die young. The question is, if he has a child, and if that child attains 25, will it be within, or could it be without, the perpetuity period? The second feature to note is that the common law rule deals with possibilities, not probabilities. It is not permissible to wait to see what in fact happens. The validity must be judged at the date of the gift. It is necessary at every turn to assume that the worst will happen, whilst still leaving open the possibility that the gift will eventually vest. You have to see if it is possible to invent a sequence of events – no matter how unlikely – which would force the gift to vest outside the perpetuity period. To put it luridly, it is necessary to assume that disaster lurks round every corner, that women are likely to die in childbirth, that fathers