rule against perpetuities

The Texas Legislatures recently passed a bill that takes effect on September 1, 2021 that extends the rule against perpetuities to 300 years for trusts. The Legislature forwarded the bill (HB 654) to the governor on May 20, 2021, but he has not yet signed the bill into law. But unless he vetoes the bill, it will become law after ten days.

The Texas Constitution prohibits perpetuities: “Perpetuities and monopolies are contrary to the genius of a free government, and shall never be allowed . . . .” Tex. Const. art. I, § 26. A perpetuity is a restriction on the power of alienation that lasts longer than a prescribed period. ConocoPhillips Co. v. Koopmann, 547 S.W.3d 858, 866-67 (Tex. 2018). The rule against perpetuities “should be a check on vain, capricious action by wealthy empire builders. But it should not be a constantly present threat to reasonable dispositions which slightly overstep a technical line.” Rekdahl v. Long, Tex., 417 S.W.2d 387 (1967) (Steakley, J., dissenting) (citing W. B. Leach & O. Tudor, The Rule Against Perpetuities § 24.11 at 43 (1957)).
Continue Reading Texas Legislature Extends The Rule Against Perpetuities To 300 Years For Trusts

In Yowell v. Granite Operating Co., the Texas Supreme Court reviewed the validity of an interest in a mineral lease regarding the rule against perpetuities (“Rule”). No. 18-0841, 2020 Tex. LEXIS 425 (Tex. May 15, 2020).  The court of appeals held the reserved overriding royalty interest (“ORRI”) in new leases violated the Rule and

In Bradley v. Shaffer, family members placed mineral interests they inherited into the trust. No. 11-15-00247-CV, 2017 Tex. App. LEXIS 11154 (Tex. App.—Eastland November 30, 2017, no pet.). The trust instrument contained a spendthrift provision precluding the beneficiaries of the trust from assigning their interests in the trust. A beneficiary of the trust executed