perpetuity Flashcards
what does the rule in Saunders v vautier provide?
mechanism to bring the trust to an end, allowing beneficiaries to take full control of the property
what does the law for perpetuity on trusts mean?
that trusts cannot go on indefinitely, instead there are limits to the duration of trusts.
what are the two different sets of perpetuity rules that apply?
- rule against remoteness of vesting
- rule against inalienability
when does the rule against remoteness of vesting apply?
to trusts with people or charities as their objects. (administering a trust that doesnt immediately give rise to vested interests in the trust property) (eg, discretionary trusts and trusts which contain contingencies)
when does the rule against inalienability apply?
it is a more limited rule - consider when advising on the establishment or operation of non-charitable purpose trusts.
what is the period of time for the ‘perpetuity period’?
maximum 125 years (can make it shorter) - person must obtain a vested interest in the trust property within a recognised ‘pepetuity period’
what happens if a trust is created but it doesnt vest within the statutory perpetuity period?
the trust is void
(this doesnt need to be clear from the outset of the trust)
what is the ‘wait and see’ rule?
means the trust can subsist until it becomes apparent that the interest cannot vest within the perpetuity period
(anything done before this will remain valid)
what is ‘class closing’ rules?
a trust can be saved by excluding objects which might otherwise cause the trust to fail because their interest would vest outside the perpetuity period.
what is the rule against inalienability?
assets cannot be tied up on trust for longer than the common law perpetuity period of a specific life in being plus 21 years
(21 year perpetuity period)
