Last Tuesday, I blogged about The Descendants and powers of attorney/advance directives. Today, I thought I would talk about one of the central plot points: the Rule Against Perpetuities.
The Rule Against Perpetuities is a very old common law rule that states, essentially, that trusts cannot go on forever (or in perpetuity). Basically, there has to be an end in sight for it to be valid. The length of time varies from jurisdiction to jurisdiction. I recently learned that in Florida it is 360 years, but in Ontario it is “lives in being plus 21”; in other words, 21 years after the death of the last person living who was contemplated by the trust. You cannot set up a trust that will continue forever, but you can set up a trust that will continue for 21 years after the death of your current youngest great-grandchild.
The Rule Against Perpetuities can get very complex; in fact, in 1961 there was a case in California that found that a lawyer had not committed malpractice by failing to understand it, since it is a very inscrutable law. Many jurisdictions have abolished it entirely, or, as in Florida, simply streamlined and simplified it. In areas where it still exists, however, it can create problems with long-term trusts. If you are thinking about setting up a trust that could go on for a long time, you would be well advised to speak to someone who can help you through it.