equity - power of appointment and rule against perpetuities

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h974483
Posts: 7
Joined: Mon Nov 26, 2012 5:01 pm

equity - power of appointment and rule against perpetuities

Postby h974483 » Sat Feb 15, 2014 9:19 am

Can someone try to explain this phrase:

"with respect to any interests created by the exercise of a valid general testamentary power of special power, the interests created are analysed as if they were created by the instrument creating the power.

also why is the rule against perpetuities another example of the common law's preference for vested interests?

Thanks

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fourtyacslaw
Posts: 47
Joined: Mon Feb 18, 2013 12:53 pm

Re: equity - power of appointment and rule against perpetuities

Postby fourtyacslaw » Mon Feb 17, 2014 2:39 pm

h974483 wrote:Can someone try to explain this phrase:

"with respect to any interests created by the exercise of a valid general testamentary power of special power, the interests created are analysed as if they were created by the instrument creating the power.

also why is the rule against perpetuities another example of the common law's preference for vested interests?

Thanks


To the first part, I'm not entirely sure without more context, but I believe it's talking about the nature of analyzing the interests described in a testamentary trust (i.e. will trust) as if they are being conveyed by the will itself, as opposed to the testator. That is, while interests conveyed by a grantee intervivos are said to have been created by the grantee, interests in a will are analyzed as if the interests were being granted by the will (rather than the now dead testator). This is important for the RAP, because it tells you to analyze the conveyance and therefore the lives in being/measuring lives at the time the will is executed (i.e. upon death of testator), rather than during some time during the testator's life. This can have an important effect for purposes of the RAP, especially when there are classes related to the testator (e.g. widow, children, etc).

2nd question - the RAP is another example of the common law's preference for vested interests because the RAP is specifically designed to scrutinize and invalidate conveyances that hinge too heavily upon contingent interests. The RAP was designed so that interests can't be floating around for decades at a time waiting for contingent remainders to vest or fail. The RAP makes sure that any contingent remainders can be certain to vest or fail within 21 years, otherwise they are invalid. Indefeasibly vested interests aren't subject to the RAP for that reason, and are always valid. We want to be able to determine what happens to interest within a reasonable amount of time, and the RAP is an embodiment of that preference. Uncertainty is undesirable, and the RAP resolves a good amount of it.




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