The Ministry of Justice has issued a press release reminding everyone that the rules on leaving property in trust for future generations are set to change.
The Perpetuities and Accumulations Act 2009 seeks to modernise and simplify trust law and will come into effect on 6 April 2010.
The Act covers two areas of trust law: (1) perpetuities; and (2) accumulations.
The centuries-old rule against perpetuities will be replaced under the Act by a standard perpetuity period of 125 years. The perpetuity period limits the length of time that the future ownership of property can be dictated by a person setting up a trust, by will or otherwise.
The new time limit aims to strike the balance between respecting the intentions of people who give away property, against the needs of future generations to use estates for other purposes that might be more appropriate in future years.
The Act will also remove the current limits on the time that the terms of a trust can require the trustees to accumulate investment income rather than distributing it.
The previous law derived from legislation in the early 19th century that was designed originally to prevent individuals accumulating enough money to threaten the national economy – which is no longer a risk in the global 21st century financial market.
However, charities will still be subject to an accumulation limit of 21 years or, if specified, the remainder of the life of the settlor, unless the court or the Charity Commission allows longer.
“The laws around perpetuities and accumulations were confusing, complicated and outdated. Now they are clearer, simpler and better fitted for the 21st century,” said Justice Minister Bridget Prentice.
** Additional Information & Advice **
Depending on your circumstances, however, you may want to speak with a solicitor who specialises in trust law. You can be matched with a solicitor in your area for free via solicitor matching services, which can also help you to understand the best course of action for your situation and whether you are ready to hire a solicitor.
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