Article on the ALI and the Rule Against Perpetuities
Encouraged primarily by a fluke in federal estate and gift tax law, more than half of the states have either effectively or entirely abolished their rules against perpetuities in the past two decades. The American Law Institute, deeply troubled by this development, has adopted for its Third Restatement a proposed rule against perpetuities that would essentially prohibit conditional gifts to continue for the benefit of parties born more than two generations after the transferor.
The ALI’s efforts are misguided. The rule against perpetuities was the product of a legal, political and social age very different than our own. It was designed in large part to address concerns, such as inalienability conditions, that do not effectively exist in modern law, either because the evolution of property structures has dealt with these problems by other means, or because changes in political and social structure have drained the problematicity from the concerns. While some of the old concerns do remain, in modified form, the RAP provides a poor response to them. It offers a medieval barber’s amputation saw where the job demands a modern surgeon’s scalpel. Though both may save the patient from the illness, the scalpel will do a more exact and reliable job, with far less collateral damage.
This article demonstrates where the ALI went wrong, and fashions the scalpel required to deal with modern iterations of dead-hand control and related problems.