KembaraXtra - Legal Terms - Rule Against Perpetual Trusts

The rule against perpetual trusts prohibits non-charitable trusts from lasting indefinitely. Its purpose is to prevent property from being tied up forever under trust arrangements. The law requires such trusts to come to an end within a prescribed perpetuity period. This ensures that property remains transferable and economically useful. The rule reflects an important principle of public policy in trust law.

At common law, the perpetuity period was generally measured as a life in being plus twenty-one years. Where there was no relevant life in being, such as with many non-charitable purpose trusts, the period was simply twenty-one years. The validity of the trust depended on compliance with this time limit. Any trust exceeding the permitted duration was void. This rule restricted long-term private control over property.

The Perpetuities and Accumulations Act 2009 significantly reformed the law. For trusts created on or after 6 April 2010, the general perpetuity period became a fixed period of 125 years. This replaced the complicated common-law calculation in most cases. However, section 18 of the Act preserves a twenty-one-year limit for non-charitable purpose trusts. Different categories of trusts are therefore subject to different statutory rules.

The rule does not apply to charitable trusts in the same way. Charitable trusts may continue indefinitely because they serve public rather than private purposes. This reflects the law’s favourable treatment of charitable activities. The distinction between charitable and non-charitable trusts is therefore significant. Proper classification determines whether the rule applies.

The rule against perpetual trusts continues to play an important role in trust law. It balances an individual’s freedom to create trusts with society’s interest in keeping property available for future generations. Modern legislation has simplified the law while preserving its underlying policy. Lawyers must still consider perpetuity limits when drafting trust instruments. Compliance ensures that the trust remains legally valid