Overview

The Perpetuities and Accumulations Act 2009 reformed UK law concerning property ownership and inheritance, primarily by simplifying and clarifying rules about how long property can be tied up in trusts and how long income can be accumulated.

Description

The Act overhauled the "rule against perpetuities," which prevented property from being tied up in trusts for excessively long periods. Key changes include:

• Simplified Rule: The Act sets a single, fixed "perpetuity period" of 125 years, replacing the previous, more complex system. Any provision attempting to extend beyond this timeframe is now void.
• Exceptions: The Act maintains some exceptions to the rule, such as those benefiting charities. The Lord Chancellor is also granted power to create further exceptions through order.
• "Wait-and-See" Approach: A "wait-and-see" approach is introduced. If a trust's vesting is uncertain, it will be treated as valid until it's proven to vest beyond the 125-year limit.
• Accumulations: Restrictions on accumulating income in trusts were removed for most trusts, though a 21-year limit applies to charitable trusts, unless the instrument specifies a shorter period linked to the settlor's death.
• Retroactive Application: The act clarified how it applies to existing trusts. For instruments created before the commencement day, a specific provision allows a 100 year limit to be applied by trustee's deed if calculating the existing perpetuity period is deemed too difficult.

Government Spending

The Act doesn't directly involve government spending. Its impact is primarily on the administration of trusts and estates, potentially reducing legal disputes and costs associated with complex perpetuity calculations. There are no directly associated figures available within the text.

Groups Affected

• Trusts and Estate Lawyers: Will require adaptation to the new framework and shortened perpetuity period.
• Trust Beneficiaries: May see changes in how and when they receive trust assets, depending on existing trust structures and the Act's application.
• Charities: The Act provides some clarity regarding the applicability of perpetuity rules on charitable trusts.
• Trustees: Will need to understand and comply with the new rules when managing trusts. They will need to make decisions on application of the act to instruments made before the commencement day, particularly in the event of difficulty calculating the existing perpetuity period.

Powered by nyModel