Overview

The Perpetuities and Accumulations Act 2009 reformed UK law concerning the rules against perpetuities and the accumulation of income in trusts. It simplified these rules, making them clearer and easier to understand, while also modernizing them to better suit current circumstances.

Description

The Act establishes a single perpetuity period of 125 years, replacing more complex systems. This applies to various interests in property, including successive estates, those subject to conditions, and powers of appointment. Exceptions exist for charities and relevant pension schemes. The Act also introduces a "wait and see" rule, allowing the validity of an interest to be determined after a period of time, and provides mechanisms for the exclusion of class members to prevent the invalidity of an interest on remoteness grounds. Existing exceptions to the rule against perpetuities under previous legislation were abolished. The Act also removes restrictions on accumulating income for charitable trusts, subject to a 21-year limit, with exceptions for certain settlors’ death conditions. Finally, the Act applies to instruments taking effect on or after its commencement, with specific provisions for pre-existing wills and instruments.

Government Spending

The Act itself does not directly involve any government spending. Its impact on government spending is indirect and difficult to quantify, as it primarily affects private trusts and wills. The simplification of the rules could reduce legal costs associated with interpreting and applying the old rules, but this is hard to measure in terms of pounds sterling.

Groups Affected

• Trusts and Trustees: The Act significantly alters how trusts are managed and their validity determined. Simplification and the 'wait and see' element may reduce administrative burdens in some cases, while others may need legal advice to adjust existing arrangements.
• Beneficiaries: The Act could alter the timing of inheritance or access to trust funds for beneficiaries, although the overall impact will vary widely depending on individual circumstances.
• Solicitors and Lawyers: The Act necessitates adjustments in legal practice and advice related to wills, trusts, and property law. New expertise and legal interpretation may be required.
• Charities: Changes to accumulation restrictions may affect income streams for charitable organizations.
• Pension Schemes: Specific exceptions are made for relevant pension schemes, implying a degree of impact on their legal frameworks.

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