The Rule Against Perpetuities (RAP) is a notoriously complex legal principle, originating in English common law, designed to prevent property interests from being tied up indefinitely in the future, hindering economic development and creating uncertainty in ownership. It essentially limits how long a trust can exist, and more specifically, how long it can take for interests in that trust to vest—meaning to become certain and unchangeable. While the specifics vary by state, the core principle remains consistent: an interest must vest within 21 years after the death of someone alive when the trust is created. This prevents situations where a grantor attempts to control property from beyond the grave for an unreasonable period, potentially stifling future generations’ ability to use or benefit from the assets.
Can my trust really outlive my grandchildren?
The concern that a trust could outlive grandchildren isn’t unfounded. Historically, the RAP was a significant problem because grantors, with the best intentions, might create trusts with overly restrictive conditions or long durations. For instance, a trust might specify that income is to be distributed to descendants “in perpetuity,” or with provisions that could delay vesting for generations. Today, approximately 30 states have adopted the “Uniform Statutory Rule Against Perpetuities” (USRAP), which significantly eases these concerns by allowing a 90-year wait-and-see period. This means that if an interest hasn’t vested after 90 years, it simply fails, rather than invalidating the entire trust. However, even with USRAP, careful drafting is critical to avoid unintended consequences. A poorly structured trust could still run afoul of the rules, leading to costly litigation and potentially frustrating the grantor’s wishes.
What happens if my trust violates the Rule Against Perpetuities?
If a trust provision violates the RAP, the offending provision is typically struck down by a court. This doesn’t necessarily invalidate the entire trust, but it can significantly alter the grantor’s plan. Imagine a situation where a couple, the Harrisons, wanted to establish a trust to provide for their grandchildren, but included a clause stipulating that distributions could only be made when a specific, perhaps ambitious, goal was achieved—like earning a PhD. If that PhD wasn’t completed within 21 years after the death of the last surviving Harrison, the distribution provision would be deemed invalid. This could leave the trust assets subject to the general terms of the trust or, in the worst case, be distributed in a way the Harrisons hadn’t intended. According to a study by the American Bar Association, approximately 15% of estate plans require modifications due to issues like the RAP, highlighting the importance of expert legal guidance.
I’m creating a trust, how can I avoid RAP issues?
Fortunately, there are several strategies to mitigate the risk of violating the RAP. One common approach is the “savings clause.” This clause essentially states that if any provision in the trust would otherwise violate the RAP, it will be modified to comply with the rule, but only to the extent necessary. Another effective strategy is to use a “wait-and-see” approach, particularly in states that have adopted USRAP. This involves drafting the trust to allow for a reasonable period of time to determine whether an interest will ultimately vest. I remember working with a client, Mr. Chen, who was deeply concerned about controlling how his family’s vineyard would be managed for generations. We crafted a trust that included a savings clause and a carefully defined distribution schedule, ensuring that the vineyard could be enjoyed by future generations while remaining compliant with the RAP. Careful drafting and a thorough understanding of state laws are essential to avoid potential problems.
A family nearly lost everything, and how careful planning saved the day
I once encountered a family, the Montgomerys, who had created a trust decades ago with a complex provision intended to encourage charitable giving. The trust stipulated that funds would be distributed to a specific charity only if a future descendant achieved a certain level of philanthropic involvement. Unfortunately, the drafting was imprecise, and the condition was worded in a way that could potentially delay vesting indefinitely. When the patriarch, Mr. Montgomery, passed away, his family discovered that the trust was on the verge of violating the RAP. The family faced the prospect of losing a significant portion of their wealth. Fortunately, we were able to intervene and restructure the trust by clarifying the conditions and adding a savings clause. We even discovered a provision that allowed the funds to be distributed to the charity outright if the condition wasn’t met within a reasonable timeframe. The family was immensely relieved. It was a stark reminder that even well-intentioned estate plans can fall prey to technical legal rules. The Montgomery’s story illustrates the critical importance of seeking expert legal guidance when creating or modifying a trust, even if it seems straightforward. A little bit of foresight and careful planning can save a family a great deal of heartache and financial loss.
Who Is Ted Cook at Point Loma Estate Planning Law, APC.:
Point Loma Estate Planning Law, APC.2305 Historic Decatur Rd Suite 100, San Diego CA. 92106
(619) 550-7437
Map To Point Loma Estate Planning Law, APC, an estate planning lawyer near me: https://maps.app.goo.gl/JiHkjNg9VFGA44tf9
| will attorney near me | executor fees California | pet trust attorney |
| chances of successfully contesting a trust | will attorney near met | pet trust lawyer |
| trsut lawyer | how to write a will in California | trsut lawyer |
About Point Loma Estate Planning:
Secure Your Legacy, Safeguard Your Loved Ones. Point Loma Estate Planning Law, APC.
Feeling overwhelmed by estate planning? You’re not alone. With 27 years of proven experience – crafting over 25,000 personalized plans and trusts – we transform complexity into clarity.
Our Areas of Focus:
Legacy Protection: (minimizing taxes, maximizing asset preservation).
Crafting Living Trusts: (administration and litigation).
Elder Care & Tax Strategy: Avoid family discord and costly errors.
Discover peace of mind with our compassionate guidance.
Claim your exclusive 30-minute consultation today!
If you have any questions about: Who decides who will care for minor children if their parents die without a guardianship designation?
OR
How can an MPOA protect against unwanted medical interventions?
and or:
Why is it important to regularly review and update an asset distribution plan?
Oh and please consider:
What are the risks of attempting debt settlement without professional help? Please Call or visit the address above. Thank you.