Contract law is boring. But it is boredom built upon a strong
foundation of people trying to mediate their relationships
with each other via law rather than force. This makes some
aspects of contract law, if not exciting, at least somewhat
interesting. One such aspect is the Royal Lives Clause (or RLC
for short). But before we even get to discuss this we need to
understand something about Common Law.
foundation of people trying to mediate their relationships
with each other via law rather than force. This makes some
aspects of contract law, if not exciting, at least somewhat
interesting. One such aspect is the Royal Lives Clause (or RLC
for short). But before we even get to discuss this we need to
understand something about Common Law.
The Dead Can't Dictate The Far Future
In the 1600s a certain Henry, Duke of Norfolk set up a rather
complicated succession plan for his estates which involved
them transferring down through his sons and even later
descendants in very specific ways. Henry dies, everyone gets
their estates, and everything seemed to be going smoothly.
That is until the eldest son died. As per Henry's oh-so-clever
plan the estates of his other two sons would both shift
ownership. The second son refused to relinquish his estates.
The fourth son sued and it all ended up in the House of Lords
to sort out. They saw just how stupid this could become and
nixed the idea that such shifting estates could go on forever.
They didn't specify how long it could go on and wouldn't
revisit that question until 150 years later. The 'Rule Against
Perpetuities' sets out that certain aspects of contracts can't
last for longer than the life of a person plus 21 years after their
death. If you have ever been involved with a legal trust you
may be aware that taxes on the trust must be paid every 21
years. This is an application of this rule.
complicated succession plan for his estates which involved
them transferring down through his sons and even later
descendants in very specific ways. Henry dies, everyone gets
their estates, and everything seemed to be going smoothly.
That is until the eldest son died. As per Henry's oh-so-clever
plan the estates of his other two sons would both shift
ownership. The second son refused to relinquish his estates.
The fourth son sued and it all ended up in the House of Lords
to sort out. They saw just how stupid this could become and
nixed the idea that such shifting estates could go on forever.
They didn't specify how long it could go on and wouldn't
revisit that question until 150 years later. The 'Rule Against
Perpetuities' sets out that certain aspects of contracts can't
last for longer than the life of a person plus 21 years after their
death. If you have ever been involved with a legal trust you
may be aware that taxes on the trust must be paid every 21
years. This is an application of this rule.
Why Is This A Thing?
English judges long realized (even before the clever plans of
the above mentioned Duke of Norfolk) that putting certain
limitations and conditions on property made it harder to buy
and sell and that certain aspects of the law could allow the
avoidance of taxation. The Rule Against Perpetuities was a
means of limiting the potential for misuse of these sorts of
contracts. This is why that summer home your family placed in a trust is still taxed every 21 years (even if the option to dissolve the trust is never taken) rather than being a tax free
estate until the end of time. A trust also automatically
dissolves 21 years after its last primary recipient dies.
the above mentioned Duke of Norfolk) that putting certain
limitations and conditions on property made it harder to buy
and sell and that certain aspects of the law could allow the
avoidance of taxation. The Rule Against Perpetuities was a
means of limiting the potential for misuse of these sorts of
contracts. This is why that summer home your family placed in a trust is still taxed every 21 years (even if the option to dissolve the trust is never taken) rather than being a tax free
estate until the end of time. A trust also automatically
dissolves 21 years after its last primary recipient dies.
But I Wanna Mess With My Descendants
Ok, Henry, there is a rule for that. The very rule this article
set out to discuss; Royal Lives Clause. Royal families tend to
be well-documented which makes them useful for tracking
the whole '21 years after death' thing as this is an event people
will note. Its also harder for a member of a royal family to just
disappear. So from the standpoint of a lawyer the lives of
royals are a much better marker than your Aunt Ellis who
disappears for years at a time and has been using a fake ID
for most of her life. An example clause would look like this:
"The option must be exercised before the end of the period
ending 21 years after the death of the last survivor of the
descendants of King Charles III, king of England"
I used this example specifically because Disney recently
invoked this clause in its turf war with the Government of
Florida. Importantly, this clause still sets an end date (but
picking a family with members who routinely make it into
their 90s was a smart move) it is not perpetual and thus a
legal contract.
set out to discuss; Royal Lives Clause. Royal families tend to
be well-documented which makes them useful for tracking
the whole '21 years after death' thing as this is an event people
will note. Its also harder for a member of a royal family to just
disappear. So from the standpoint of a lawyer the lives of
royals are a much better marker than your Aunt Ellis who
disappears for years at a time and has been using a fake ID
for most of her life. An example clause would look like this:
"The option must be exercised before the end of the period
ending 21 years after the death of the last survivor of the
descendants of King Charles III, king of England"
I used this example specifically because Disney recently
invoked this clause in its turf war with the Government of
Florida. Importantly, this clause still sets an end date (but
picking a family with members who routinely make it into
their 90s was a smart move) it is not perpetual and thus a
legal contract.
Who Uses This Clause
Putting aside the House of Mouse, the Royal Lives Clause is a
common legal tool in Britain and the the Commonwealth. It is
often used in Alberta for oil and gas contracts for example.
Similar rules have been used in the US with the Kennedy and
Rockefeller families.
The clause has become a bit rarer in Britain as a new set
period of 125 years was introduced as an alternative. In most
cases the two are roughly equivalent but the new rule is
somewhat more predictable. For this reason other areas, such
as British Columbia, have adopted the 125 rule as well. That
said, it doesn't negate using the Royal Lives Clause if you so
wish.
Loyally Yours,
A Kisaragi Colour
common legal tool in Britain and the the Commonwealth. It is
often used in Alberta for oil and gas contracts for example.
Similar rules have been used in the US with the Kennedy and
Rockefeller families.
The clause has become a bit rarer in Britain as a new set
period of 125 years was introduced as an alternative. In most
cases the two are roughly equivalent but the new rule is
somewhat more predictable. For this reason other areas, such
as British Columbia, have adopted the 125 rule as well. That
said, it doesn't negate using the Royal Lives Clause if you so
wish.
Loyally Yours,
A Kisaragi Colour
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