Trust 7 Perpetuity Flashcards
Can trusts be permanent arrangements?
only charitable purpose trusts
What are the two rules to prevent perpetuity?
- remoteness of vesting (people or charities)
- rule against inalienability (non-charitable purpose trusts)
What is the Statutory rule against remoteness of vesting?
a person must obtain a vested interest within 125 years
What happens if the Statutory rule against remoteness of vesting is breached?
the trust will become void at the time of breach
What happens to the trust before the Statutory rule against remoteness of vesting is breached?
trust still valid - can wait and see
Does the Statutory rule against remoteness of vesting apply to non-charitable purpose trusts?
No
What is the Common Law rule against inalienability?
non-charitable purpose trust cannot exceed a life + 21 years
From what time does the Common Law rule against inalienability apply?
From creation of the trust. It must be certain from the creation of the trust that it will come to an end before the perpetuity period of a life + 21 years.
What happens if the Common Law rule against inalienability is breached?
The trust is void - the ‘wait and see’ rule does not apply.
What trusts does the Common Law rule against inalienability apply to?
Non-charitable purpose trusts
What happens if a non-charitable purpose trust has a perpetuity period that might exceed the lifetime +21 year limit?
It will fail. Unlike the 125 year rule, the 21 year limit is not a “wait and see”, it fails immediately.