Article on A Uniform Perpetuities Reform Act
For centuries the Rule Against Perpetuities providedprotection against a pair of dangers: that important stocks of property wouldbecome, effectively, permanently inalienable as a result of perpetualconditional gifts; and that the dead would be permitted to control thedestinies of the living by placing permanent conditions on the fixed stock ofavailable wealth (i.e., land wealth). In recent decades, though, the stateshave increasingly abandoned the Rule and its protections. As of 2011 all stateshave migrated, at least in part, beyond the traditional“21-years-plus-life-in-being” Rule, and more than half have actually oreffectively abolished their Rules, at least insofar as applied to grants madein trust form.
This migration is, in the main, quite sensible. Thetraditional Rule was complicated, hard to apply, inefficient, and unsupple.Even the ninety-year wait-and-see variation, which has come mostly to supplantthe traditional Rule, cannot differentiate between wise and beneficent giftsthat should survive beyond the ninety-year threshold and problematic gifts thatshould not. The danger of inalienability can be dealt with by transmuting legalinterests into equitable interests at some date certain, and by grantingtrustees of those equitable interests the power of alienation as a matter oflaw as of the same date. The dangers of dead-hand control have already largelydissipated because wealth is not primarily, today, held in the form of a limitedand social-and-political-power-soaked stock such as land, but rather in avariety of highly mutable forms, none of which carry with them overarchingpolitical or social overtones. Remaining concerns about the small category ofproblematic dead-hand incentives can be resolved by targeted adjustments towell-established aspects of property and trust law that carry none of thedisadvantages of the Rule Against Perpetuities in any of its forms.
In short, then, the states have no good reason to revive theirRules Against Perpetuities, and it should not be imagined that they will.Abolition of those Rules does, however, raise some few legitimate concernsabout alienability and dead-hand incentives, concerns best and most efficientlyresolved by a few careful amendments to state trust and property law. Thisarticle proposes and explains a Uniform Perpetuities Reform Act with whichRule-abolishing states can make these targeted changes.