UK to bring Perpetuities & Accumulations Act into force
UK Justice Minister Bridget Prentice announced, on 7 January 2010, a Commencement Order to bring the Perpetuities and Accumulations Act 2009 fully into force on 6 April 2010. The Act, which received Royal Assent on 12 December 2009, is designed to modernise and simplify trust law on leaving property in trust for future generations.
Under the Act, a standard perpetuity period of 125 years will apply to property put in trust, by will or otherwise. The perpetuity period limits the length of time that the future ownership of property can be dictated by a person setting up a trust. 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 to prevent individuals accumulating sufficient money to threaten the national economy - which is no longer considered to be a threat. Charities will 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 Act implements, with some modifications, the recommendations in the Law Commission's 1998 Report, The Rules Against Perpetuities and Excessive Accumulations (LC251) and is the first piece of primary legislation to enter Parliament under a trial of a proposed House of Lords procedure for legislation implementing Law Commission recommendations.
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