Sean Silverman is an attorney and teacher who has prepared numerous students for the MBE, both in person in New York, as well as over Skype for those located outside of New York. For an indication as to his teaching style, visit his website at http://www.mbetutorial.blogspot.com. And while there, feel free to submit a question. If interested in receiving tutoring, feel free to contact him at ssilver0210@hotmail.com.
The following is my advice regarding how to systematically approach a question on the MBE that requires you to apply the rule against perpetuities.
The first thing you’ll want to do is memorize the rule: No interest is valid unless it must vest within 21 years of some life in being at the creation of the interest. What this means is that certain future interests are void if there is any possibility that the interest may vest more than 21 years after the death of a relevant life. If a future interest violates the rule, generally the life estate that was created at the same time remains valid but the future interest is voided. The interest that would have passed to the future interest holder instead is usually received as a future interest of the grantor in the form of a reversion (reversions are not subject to the rule against perpetuities).
On the MBE, your mindset should be as follows:
Determine the type of future interest that is being created. This is essential because the rule against perpetuities only applies to some interests. The rule applies to contingent remainders, executory interests, and certain vested remainders subject to open. Along with reversions, the rule does not apply to vested remainders other than those subject to open.
Once you’ve determined that you’re dealing with an interest that is subject to the rule, find the measuring lives. The measuring lives are those who are alive at the time of conveyance whose life or death is relevant to the conditions occurring.
Finally, see if there is any possibility that the conditions will only be satisfied more than 21 years after the death of all the measuring lives. Remember, all that is necessary is a possibility.
As an example, assume a grant to A for life, then to the first child of A to reach 25 years old. Assume that at the time of the grant, A has a child who is 23 years old. A has a life estate, and the first child of A to reach 25 has a vested remainder. Vested remainders are subject to the rule, so you’ll need to consider it. Is it possible that the first child of A to reach 25 might reach that age more than 21 years after the measuring lives?
The measuring lives here are A, and A’s 23 year old child. What if the day after this grant, A’s child dies. A has another child, and then A dies the day after that child is born. That child (let’s call him B) will reach the age of 25 more than 21 years after any of the measuring lives (because B will reach age 25 more than 21 years of after the death of A, and A’s child). Because it’s possible for this to occur, the grant to A’s child is voided by the rule against perpetuities, and instead A is given a life estate, and the grantor is given a future interest in the form of a reversion.
If you have any follow-up questions, as always, feel free to ask them in the comments.
Copyright 2011 Sean Silverman and http://www.mbetutorial.blogspot.com. Reprinted by permission.
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Decedent, the donee of a testamentary power if appointment that was created by an inter vivos trust in 1957 dies a resident of New York in 2011. The inter vivos trust was created by decedent’s mother who was also a lifelong resident of New York. The trust specified that it was to be construed pursuant to the laws of Massachusetts. The trust was administered in Massachusetts by an institutional trustee that maintained offices in New York and other states as well.
The decedent’s will improperly exercised the testamentary power by providing that the appointive property (i.e. The trust res) be held in further trust and as such would not vest within a life and being plus twenty one years.
Questions: Even thought the 1957 document that created the inter vivos trust specified the choice of law as Massachusetts regarding said trust, does New York conflicts of law require that New York’s rule against perpertuties govern the exercise of the testamentary power of appointment?
Thanks! Very helpful.
What if the grantor is not able to receive the reversion?
If the grantor has died in the interim, for example, then the interest can pass through intestacy to his heirs. In addition, a reversion can be devised in a will.
They are freely alienable.