Rule Against Perpetuities
A centuries-old rule that limits how long a trust can last. Traditionally, a trust must vest (become fully owned) within 21 years after the death of a person alive when the trust was created. Many states have abolished or modified this rule.
Legal Definition
A common law rule providing that no interest in property is valid unless it must vest, if at all, not later than 21 years after some life in being at the creation of the interest, as modified or abolished by various state statutes.
Practical Example
Historically, you could not create a trust that lasts forever. Under the traditional rule, a trust created in 2024 for your newborn grandchild must vest within 21 years of someone alive in 2024. However, many states now allow dynasty trusts that can last for centuries or indefinitely.