When the holder of an estate grants or devises it to another, he may wish to control the recipient's use of it. For example, if A owns a mansion, he may wish to leave it to his nephew when he dies, but ensure that his wife can live there until she dies. A, the grantor, can accomplish this by giving in his will a life estate to his wife and the remainder to his nephew. By making such a will, he is able to accomplish his goals, even though he's dead at the time.

The Rule against Perpetuities requires that all such provisions in a will or other grant occur within the time span defined by a life in being at the time of the grant, plus twenty-one years (plus, if one wishes to be excruciatingly correct, an appropriate human gestation period). Any provision that cannot be proven to occur or fail within the time span is invalid and will be stricken from the grant.

In the previous example, it is clear that the nephew (or his heirs) will get the mansion after A's wife dies, so her life can be used as the "measuring life." The mansion will reach its final owner immediately after the wife dies, which is well within the time span determined by her life plus twenty one years.

On the other hand, if A was to will the mansion to his wife for life, then to the first of his nephew's children to turn 25, the second part of the grant fails -- the best measuring life is the nephew, and it's possible that he'd die while all of his children were younger than 3, so even if any of them reach 25, it wouldn't happen within 21 years of the nephew's death. (Of course, if the nephew had any children at the time of the grant, A could fix his will by naming the child, but it's possible that the named child would die before reaching the age of 25.

The key to determining whether a grant satisfies the Rule against Perpetuities is picking an appropriate measuring life. Once the correct life is selected, it's usually trivial to see whether the grant is good.

I hesitate to discuss the history behind this, because I'm just a law student and my goal is to pass the bar, not to write a treatise on property law, but wharfinger asked, so...

The rule originated in the Duke of Norfolk's Case in 1681. At the time, landowners (perhaps only recently landed themselves) were trying to protect their estates and ensure that their heirs couldn't bungle their way back into poverty. However, the various interests in land that are created when somebody tries to control ownership for decades or centuries tend to cruft up the system. After all, who remembers, 50 or 100 years after you die, that you wanted Cousin Bob's third grandchild to have Blackacre if he married the Earl of Fauntleroy's second cousin once removed, unless she was insufficiently pneumatic, in which case Bob's sister Emma's second child Roderick was to inherit? But these people would show up in court with a title to the land and give the judges migraines (not to mention, kicking out whoever happened to be living on the estate at the time.)

So the Rule against Perpetuities is designed to limit the appearance of these litigants and enhance the alienability of the land -- a buyer need not worry so much about Roderick showing up with a good title.

Amazing what one learns in law school...