Charities and the Rule Against Perpetuities

Summary

Charitable status is a legally privileged status. The law in numerous ways, ranging from the trivial to the noteworthy, confers legal advantages upon charities. These are often misunderstood. For example, it is often said that the rule against perpetuities does not apply to charities. As a technical matter, this is incorrect. A contingent interest in property held by a charity will, as a general rule, fail if it does not vest within the perpetuity period. There are, however, special exceptions for charities. The result is that, although charities are generally subject to the rule against perpetuities, they enjoy a privileged position in relation to it. This article explores these matters with a view to understanding the rule against perpetuities, how it applies to charities, and the justifications behind the special treatment for charities in relation to the rule. Part I provides a primer on the historical, technical, and policy dimensions to the rule. Part II deals with how the rule applies to charities with a particular emphasis on contingent gifts over from charity to charity and the unlimited duration of charitable purpose trusts The article concludes by relating the arguments developed throughout to some broader themes in charity law.