High School

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Which of the following gifts in a trust does not violate the rule against perpetuities?

a) I hereby transfer my stocks in trust to Ted. At my death, the income shall go annually to Al for life, then the income to Al's children for life, then to my great-grandchildren for their lives.

b) I hereby transfer my stocks in trust to Ted. At my death, the income shall go annually to Al for life, then the income to Al's children for life, then to Bob's grandchildren for their lives.

c) I hereby transfer my stocks in trust to Ted. At my death, the income shall go annually to Al for life, then the income to Al's children for life, then to Bob for his life.

d) I hereby transfer my stocks in trust to Ted. At my death, the income shall go annually to Al for life, then the income to Al's children for life, then to Al's grandchildren for their lives.

Answer :

Option (c) "I hereby transfer my stocks in trust to Ted. At my death, the income shall go annually to Al for life, then the income to Al's children for life, then to Bob for his life" does not violate the rule against perpetuities because all interests vest within the required perpetuity period.

The question relates to the rule against perpetuities, which is a legal rule in property law that prevents people from using legal instruments (like trusts or wills) to exert control over the ownership of property for an excessively long period beyond their death. The rule generally states that certain interests in property must vest, if at all, no later than 21 years after the death of a life in being at the creation of the interest.

In the context of the provided choices, the gift that does not violate the rule against perpetuities is option (c) "I hereby transfer my stocks in trust to Ted. At my death, the income shall go annually to Al for life, then the income to Al's children for life, then to Bob for his life."

This is because there are identifiable lives in being (Al and his children) and the gift to Bob vests immediately upon the death of the last life in being, which is within the perpetuity period. There is no need to wait for the birth of any further descendants.

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