A Short & Happy Guide to the Rule: The Little Book on Perpetuities
Author:
Gjerdingen, Donald H.
Edition:
1st
Copyright Date:
2017
24 chapters
have results for short and happy guide trusts
Copyright Page 2 results
- a short & happy guide
- The publisher is not engaged in rendering legal or other professional advice, and this publication is not a substitute for the advice of an attorney. If you require legal or other expert advice, you should seek the services of a competent attorney or other professional.
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Title Page 1 result
Chapter 13. Congress, Taxes, and Abolition of the Rule— The Humpty-Dumpty World of Modern Perpetuities 33 results (showing 5 best matches)
- On the one side are large trust companies and banks, and sophisticated estate planners. They wrote and got enacted statutes to abolish or limit the Rule. Their clear goal: use the loophole left by Congress to help moneyed clients avoid taxes. The states gaining trust business and fees are happy, too.
- The message is clear: bring your trusts and your money here. Why? Because we abolished the Rule against Perpetuities. Come here and your taxes on GST-exempt trusts will
- Did it work? For some states, remarkably well. A leading study estimated about $100 billion in trust assets flowed to states allowing dynastic trusts. And, basic math also suggests, about $1 billion every year in fees.
- Advertise a basic point of modern trust law—choice of law. For trusts of personal property—which means almost all modern wealth—the settlor can pick the situs or location of the trust.
- On the other side are many academics and the American Law Institute. The was the first significant perpetuities reform after the rise of dynastic trusts. The ALI urged a fix by Congress and offered an elegant and updated full two-generation version of the Rule.
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Table of Contents 42 results (showing 5 best matches)
Introduction 23 results (showing 5 best matches)
- The Short & Happy Plan for This Book
- Second, and most important, the Rule matters for practicing lawyers, especially those who draft wills and trusts. In the everyday practice of law, the Rule matters most for two big questions about wills and trusts:
- Chapter 2—Why the Rule Matters—The Donative Gene and Future Generations.
- A few advanced topics for perpetuities. Charities, powers of appointment, class gifts, and saving clauses are covered. So are two related rules, the Rule against Accumulation of Trust Income, and the Rule against Suspension of the Power of Alienation.
- Chapter 13—Congress, Taxes, and Abolition of the Rule—The Humpty-Dumpty World of Modern Perpetuities
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Chapter 7. Some Common Cases & Some Classic Traps 38 results (showing 5 best matches)
- An irrevocable trust adds a generation. In turn, what a donor can do moves back a generation as well. In short, what works for in an irrevocable trust.
- With an irrevocable trust, the settlor is still alive. Thus, after-born generation. Again, relative to wills and revocable trusts, everything is pushed back a generation.
- Irrevocable Trusts vs. Revocable Trusts or Wills.
- Irrevocable Trust vs. Revocable Trust or Will [Three Generations]
- Different legal documents may have different effective dates. Using an irrevocable trust rather than a will or revocable trust changes the effective date. In effect, it adds a generation, since the settlor is still alive. Thus, rules move up a generation.
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Chapter 14. A Few Big Ideas—The Policies Behind the Rule 84 results (showing 5 best matches)
- Put blunt, the political rub is this: should hereditary wealth get protection wages and daily earnings don’t? In short, do such dynastic trusts raise what could be called matters of equal protection writ large?
- Basic trust law assumes the Rule, in place and working. The two go together. The Rule limits the length of trusts. In turn, basic trust law assumes two generations, at most, as the norm. Thus, basic trust law is not designed for perpetual trusts. Neither is the basic trust form.
- But the same reboot also applies to trusts. And, here, it matters more. Since the Rule also limits the length of trusts, a parallel reboot applies. After two generations, a new trust must be made. Assets must be gathered, beneficiaries named, and provisions drafted. Thus, the Rule forces regular legal update.
- When it comes to alienability, therefore, dynastic trusts have two very different sides. On the trustee’s side, the legal interest is . Today, most trusts are personal property and the trustee has the power of sale. The property of the trust can be bought and sold.
- Today, virtually all future interests are in trust and most trustees have power of sale. Most important, almost all property in trust today is personal property. Rather than the immovable landed estates of old, it’s now the liquid wealth of bonds, stocks, and cash. Thus, in practice, the application of the Rule to real property here is limited.
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Chapter 2. Why the Rule Matters—The Donative Gene & Future Generations 22 results (showing 5 best matches)
- Thanks to wills and trusts, in short, the dead now can compete with the living for how property is used.
- It wasn’t always that way, of course. Before wills and trusts, people didn’t have much say about property after they died. But wills and trusts changed all that. Empowered by wills, people now can speak at death and must be listened to. Empowered even more by trusts, people now can speak after death for a long time.
- Filled with such thoughts, people will come to you and ask for an estate plan. Some may need wills or revocable trusts. Others may need irrevocable trusts, class gifts, or powers of appointment. Some may need them all.
- The Voice of Wills and Trusts
- For clients and lawyers, therefore, the Rule gives this advice: don’t worry about contingencies too far in the future. You may want great-grandchildren yet unborn as beneficiaries of a trust, but the law may not allow it. The law, you must accept, sets some things off as too remote. Here, the law doesn’t allow you a legal worry.
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Chapter 12. The Age of Statutory Reform 37 results (showing 5 best matches)
- Here, the wait-and-see period is two full generations. At the death of the last measuring life, the trust ends. If it fails to end before, a court can modify the trust. This ends the trust and requires final distribution of assets.
- Today, the law of Wills and Trusts is increasingly statutory. The Uniform Probate Code (UPC) has been adopted in almost 20 states. And the Uniform Trust Code has been adopted in over 30 states. Much other uniform legislation—from the Uniform Prudent Investor Act to the Uniform Principal and Income Act—has been adopted as well.
- For the typical donor, this means two full generations—all children and all grandchildren. This gives a perpetuities period better tailored to typical trust and family circumstances.
- Two reasons are behind the change. First, the special measure of lives in being is best suited to family and generational gifts. Second, shorter periods may better serve commercial settings. Some states use special statutes for commercial transactions, often limiting the period to several decades.
- Later, courts tacked on 21 more years. This added a second generation. But—and here is the key—it wasn’t a full second generation. Instead, it stopped in between. In short, the common-law Rule
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Chapter 5. Gray’s Common-Law Rule—The Nutshell 21 results (showing 5 best matches)
- This simple point plays into some famous traps set by the Rule. For example, while a will becomes effective when the testator dies, an identical interest in an irrevocable inter vivos trust becomes effective a generation earlier—when the settlor is still alive. By using an irrevocable trust rather than a will, therefore, the effective date shifts forward a generation. This is no small point, and must be carefully watched.
- Wills & Revocable Trusts.
- Irrevocable Trusts & Deeds
- However reasonable it would be in other legal contexts, don’t pick up a will or trust and expect to see a measuring life designated in the instrument. A person named in an instrument need not be a measuring life, and a measuring life need not be named in the instrument.
- No modern reform can be understood without first understanding the common-law Rule. In short, you can’t just start with modern reforms. Instead, you must start with the classic Rule and move forward.
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Chapter 9. A Perpetuities Miscellany—Some Advanced Topics 35 results (showing 5 best matches)
- and thereupon that the property held in trust shall be distributed free of all trust to the persons then entitled to receive the income or principal therefrom, in the proportion in which they are then entitled to receive such income.
- Thus, the common-law Rule against Perpetuities does not apply to charitable trusts. Instead, charitable trusts can continue forever.
- Plus, unlike private trusts, charities cannot be terminated by beneficiaries. They remain inalienable and indestructible interests.
- In short, we can’t do the math until the class
- (also known called the “Thellusson Act”). This limited accumulations to various periods short of the Rule.
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Chapter 10. An Interlude—Personalities—Barton Leach 11 results (showing 5 best matches)
- When Leach died in 1971, few states had adopted either reform. Through Leach’s efforts, though, reformation and wait-and-see became set points in law school casebooks. Every law student knew them. In Property and in Wills & Trusts, so did every professor. Leach had made his point.
- And Leach acted on it. A nimble and engaging writer, Leach was a consummate raconteur. He brought his story-telling skills to bear on reforming the Rule. He used vivid and gripping titles, decrying the Rule’s “slaughter of the innocents,” and its “reign of terror.”
- In his quest for reform, Leach wrote article after article in bar journals and law reviews. He drafted legislation and applauded reforms. He also co-wrote a book on the Rule and its reforms.
- The modern era of statutory reform of the Rule begins in 1986 with the Uniform Statutory Rule Against Perpetuities (USRAP). It’s also been the most successful. As we’ll see, USRAP starts with Gray’s Rule and then adds both wait-and-see and reformation. Walter Barton Leach would have been pleased.
- By the 1950s, though, Leach had a change of heart. His views about Gray and the Rule had changed. “[G]reat men and their great books create problems,” argued Leach, “They tend to freeze things in antique patterns.”
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Chapter 15. What Would Nottingham Say? 14 results (showing 5 best matches)
- Today, the argument is a big one: some states have brought back an equitable fee tail in the form of dynastic trusts. Once again, the issue is surrounded by strong personalities, strong politics, and the swirl of wealth. And, once again, it’s raising big questions about families, property, and control of wealth in perpetuity.
- The price for this control was limiting gifts and trusts to two generations. Past that, the Rule required clear title and repurposing of property. The reason: to avoid family dynasties sanctioned by law.
- gives the Rule a change of heart. Unlike Gray’s Rule, it’s not about the remoteness of vesting. Instead, it’s about donative transfers within the family and limiting dead-hand control. By using wait-and-see and reformation, it limits the length of trusts to two full generations. Most important, it offers a simple and elegant version of the Rule. It’s a version more attuned to the natural interests of families. And one, too, far easier to learn, apply, and defend.
- Over the last 350 years, none of this has changed. While wealth has moved from real estate to liquid funds, families and society still have the same needs and interests. And markets still function as markets.
- Whatever happens to the federal tax loophole, more debate about the Rule seems certain. And then it happens, some larger questions are likely. One is the choice between the Uniform Statutory Rule Against Perpetuities (USRAP) and the new, full two-generation model of the
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Chapter 1. The Rule Against Perpetuities and Legal Common Sense 18 results (showing 5 best matches)
- Soon, we’ll look at the Rule itself. But first you need to know why the Rule matters to lawyers. In short, why do lawyers need to know the Rule? And, most important, why does this 350-year-old rule still matter for clients?
- In the Land of Perpetuities, in short, what’s wrong is common sense itself. Here, the Rule
- Law cares about what’s probable or likely. Contracts are drafted that way. So are deeds, wills, and plea agreements. In Torts, negligence looks to probabilities (so says Learned Hand) and to foreseeable injuries and plaintiffs. The same idea moves throughout the law, from contracts and crimes to antitrust and tax.
- of a fertile octogenarian—something everyone agrees does not exist—is enough to make property die. Here, the very air, on a snap, can turn a good and careful lawyer into a slothful executor incapable of the simplest legal act. And here—and only here—do lawyers worry about widows yet unborn and the workings of magic gravel pits.
- Here, everything is opposite: real facts and what happens in the real world are ignored, while hypotheticals and what’s remote or even impossible are made central. Here, what was good is now bad, and what was bad is now good.
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Chapter 8. A Checklist, Some Problems, & Some Answers 38 results (showing 5 best matches)
- Each problem below first lists whether the instrument is a will, revocable trust, or irrevocable trust. It then lists a provision. Assume all named persons are alive, unless otherwise stated. For each, work the proofs.
- Note: compare this with Problem 1 above. Same language, but different instruments. Because of different effective dates, there’s a different result. Problem 1 is only two generations, while this Problem is three generations. It’s all because of the shift from a revocable trust to an irrevocable inter vivos trust.
- generation is added because of the irrevocable trust. Now there are three generations (settlor, children, then more than 21). Assume an after-born child. Then, kill off settlor and all children alive on effective date. If so, whether after-born child reaches age of 30 will not be resolved within 21 years.
- Look at the type of instrument involved (e.g., will, revocable trust, etc.). Based on this, determine the
- Irrevocable Inter Vivos Trust. To my first grandchild to reach the age of 21.
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Chapter 3. The Family That Started It All—The 38 results (showing 5 best matches)
- For help, the Earl went to one of the best conveyancers in England, Sir Orlando Bridgman. In response, Bridgman drew up a trust and conveyance in essentially the following form:
- Under the terms of the trust—and now some 25 years later—the barony of Grostock should shift from Henry to Charles.
- “I’ll know it when I see it,” Nottingham seems to say. Beyond that most general guide, however, he was done.
- But there also was a rub. For any after-born grandchildren, any contingency needed resolution within 21 years. They didn’t get a full lifetime, like the children or grandchildren born before. In short, not all grandchildren were treated the same. This would bring problems later.
- In 1647, Henry Frederick Howard, the 22nd Earl of Arundel, was a wealthy man. Born to an important family, with roots back before the Norman Conquest, he had nine sons and three daughters. A careful and caring parent, he wanted to help his children after his death. The Earl didn’t have the stocks and bonds of today. But he did have the one asset best suited for preserving wealth and providing income in 17th century England—land and estates.
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Chapter 11. Reforms Generally—Reformation, & Wait- and-See 38 results (showing 5 best matches)
- In short, if your sums were wrong, it didn’t matter if you meant for them to be right. Thus, for Gray, the Rule was “intended to defeat intention.”
- Gray was nothing short of apoplectic. He added a special 14-page appendix to his treatise to voice his disapproval.
- wait-and-see
- Passage of the Uniform Statutory Rule Against Perpetuities (USRAP) in 1986 finally brought wait-and-see into widespread use. Wait-and-see also plays prominently in the most recent perpetuity reform offered by the . Thus, wait-and-see remains the centerpiece of perpetuities reform today.
- Both reformation and wait-and-see offer cures for violations of Gray’s Rule. Both, too, are key parts of perpetuities law today.
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Chapter 6. The Cold Heart of Gray’s Rule—Two Options & Rules of Thumb 17 results (showing 5 best matches)
- And that one story is told again and again. Know that one story and you will know them all.
- Again, the heart of the logic—and thus the Rule—is this: in every Rule against Perpetuities case, one of two things must happen:
- Again, these two choices are mutually exclusive. In every case, you have one or the other. Sounds easy enough and it is.
- you have. And because of the special logic of the Rule, there is a special consequence: if you jump the
- Thus, the key is which side to try first. You have to jump to one side of the fence or the other. If you jump the right way, you’re done. But if you jump the wrong way and don’t know it, you’ll never get an answer. Instead, you’ll wander, forever, in a legal thicket.
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Acknowledgments 2 results
- I’m grateful to my colleague, Jeff Stake, for his comments and his enthusiasm for the subject. And to Ms. Mary Beth Boyer for her careful work on the manuscript.
- My thanks to Elizabeth Eisenhart, an editor who, when asked, “What about the Rule against Perpetuities?” did what so many generations of law students and lawyers have done—she laughed.
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Floating Part 1 result
- The Rule against Perpetuities stands as an exotic Gordian-like weed in the common-law garden. Its roots lost in the dark and loamy politics of medieval England, its branches gnarled and deeply knotted, it lived for centuries of lawyers as a hardy nuisance, ever-by. Sharp and tendril-footed, it could draw blood from even the most careful of legal hands. And, in bloom, its touch could be fatal. Unlike anything else the soil of the common law has ever produced, it stands alone, a rule seemingly parched of human touch. All in all, it is a legal plant largely unloved.
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Chapter 4. An Interlude—Personalities—John Chipman Gray 13 results (showing 5 best matches)
- See John Chipman Gray, 5 Select Cases and other Authorities on the Law of Property 425–717 (2d ed. 1909). And his students didn’t have the book you’re reading now.
- , was the work of lifetime. Over 30 years, Gray wrote three editions. The first was published in 1886, two years before his casebook. The second came twenty years later, in 1906, and the third in 1915, two years before his death. Each was carefully revised and expanded. In those three decades, Gray added over 200 pages to the text.
- Why John Chipman Gray and His Rule Still Matter
- the common-law rule. Courts cited him instead of cases. For lawyers and judges, the Rule against Perpetuities was whatever John Chipman Gray said it was. He was “the high priest of the Rule Against Perpetuities.”
- John Chipman Gray and His Book
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- Publication Date: September 8th, 2017
- ISBN: 9781640201361
- Subject: Trusts and Estates
- Series: Short & Happy Guides
- Type: Overviews
- Description: Most students view the Rule against Perpetuities as the most difficult rule in law school. Moreover, the Rule is still covered on MBE for Property and MEE for Wills and Trusts and yet few student-centered resources exist. The Little Book on Perpetuities fills this gap. An ideal subject for self-study, this guide covers all key parts of the Rule, including problems for self-testing. It presents the Rule in its historical context but in a fun, engaging, and accessible way that is simple and clear for students to use. It can be used for Property classes, as well as Wills & Trusts and can supplement a casebook or be used as a separate, self-continued unit. Coverage includes: the common-law Rule and all the famous classics traps; modern statutory reforms, including the new generations-based rule by the Restatement Third of Property; recent efforts by some states to abolish the Rule; and the history and policies of the Rule.