Under INTER VIVOS TRUST, which rule is stated as not applying?

Under INTER VIVOS TRUST, which rule is stated as not applying?

• A. No RAP
• B. Parol evidence rule
• C. Statute of Frauds
• D. Restraints on alienation

Answer: (A)

The key idea is that Rule Against Perpetuities typically does not apply to inter vivos trusts, which are created and funded during the grantor’s lifetime. Because the trust is established while someone is alive and the settlor can control or modify the arrangement, the kind of vesting problems RAP guards against—where a future interest might vest far in the future—doesn’t arise in the same way. In an inter vivos trust, interests can vest within the grantor’s lifetime or within a period measured by a life in being plus a short period, so the potential for an invalid, perpetually uncertain future interest is avoided. That’s why the statement that RAP does not apply is the correct choice. The other rules can still come into play in various trust contexts: the parol evidence rule governs how extrinsic evidence can be used to interpret the trust’s terms; the Statute of Frauds generally requires the trust instrument to be in writing when real property is involved; and restraints on alienation can be permitted or restricted by law depending on the situation. But for inter vivos trusts, the RAP issue is not applicable, making that option the best answer.

The key idea is that Rule Against Perpetuities typically does not apply to inter vivos trusts, which are created and funded during the grantor’s lifetime. Because the trust is established while someone is alive and the settlor can control or modify the arrangement, the kind of vesting problems RAP guards against—where a future interest might vest far in the future—doesn’t arise in the same way. In an inter vivos trust, interests can vest within the grantor’s lifetime or within a period measured by a life in being plus a short period, so the potential for an invalid, perpetually uncertain future interest is avoided. That’s why the statement that RAP does not apply is the correct choice.

The other rules can still come into play in various trust contexts: the parol evidence rule governs how extrinsic evidence can be used to interpret the trust’s terms; the Statute of Frauds generally requires the trust instrument to be in writing when real property is involved; and restraints on alienation can be permitted or restricted by law depending on the situation. But for inter vivos trusts, the RAP issue is not applicable, making that option the best answer.