Do We Need a Rule Against Perpetuities?
| Date | 01 July 1994 |
| Author | Carl Emery |
| DOI | http://doi.org/10.1111/j.1468-2230.1994.tb01961.x |
| Published date | 01 July 1994 |
The
Modern
Law
Review
[Vol.
57
Do
We Need
a
Rule Against Perpetuities?
Carl
Emery*
England, like almost all other common law jurisdictions, has until now retained a
so-called ‘rule against perpetuities’’ limiting the period of time for which the
identity of persons unconditionally entitled to property
in
trust funds is permitted
by law to remain unascertainable. In a recent Consultation Paper,* the Law
Commission has expressed the provisional view that the rule should be either
abolished or ref~rmed.~ The Commission has rejected the options of either
leaving the rule unamended or replacing it with a new rule; but it has not yet
reached a preference between abolition and ref~rm.~ This article will consider
the options.
A
The Rule and its Rationale
The rule applies to transfers of property under the terms of which a person’s claim
to an interest in such property is made to depend on the fulfilment of some
condition or contingency. The condition may be that,
in
order to benefit, one must
fulfil certain criteria
-
eg in the case of a pension fund trust.5 Or the condition
may be
-
eg
in
the case of a discretionary trust
-
that the individual is selected by
the trustees of a fund to receive some benefit. Or again, a gift may be to persons
some or all of whom at the date
of
the gift are or may be minors or unborn (eg a
testator’s children or grandchildren); here the condition of entitlement may
perhaps be attaining majority, or simply being born.
Essentially, the rule against perpetuities as it applies to property transfers today
provides that if at the end of a certain period measured from the date
of
a
contingent disposition it is still possible, according to the terms of the disposition,6
that further persons may
fulfil
a prescribed condition and
so
become
entitled to some benefit from the fund, those persons may not take any benefit
under the disposition. Instead, the unappointed property goes (depending on the
nature and terms of the disposition) either to the persons who have already
qualified for benefit or to whoever would have been entitled to it apart from the
terms of the disposition.
Thus, the rule ensures that within the permitted ‘perpetuity’ period, the identity
of all persons with any claim to the property will become ascertainable. And once
all those persons have attained their majority, they together will have an unfettered
right to deal with the property as they choose.’ The effect of the rule is thus to
*Durham University.
My thanks to Professor David Hayton and
to
Mr
A.J. Oakley
for
their valuable comments
on
this piece in
draft form.
1
More precisely, a rule against ‘remoteness
of
vesting.’
2
Law Commission Consultation Paper
No
133, October 1993 (LCCP).
3 LCCP 5.91.
4
Manitoba abolished the rule in 1983; abolition has been recommended in South Australia and in
Saskatchewan
(5.34).
The rule was abolished in Turks and Caicos by the Trust Ordinance
1990.
But
the general trend in the common law world has been towards reform rather than abolition.
In fact, express statutory provision exempts many types
of
pension scheme from the rule
-
see n
15
below.
For
statutory modification of the terms of perpetuitous contingent dispositions, see text
to
n 39 below.
Under the rule in
Saunders
v
Vuutier
(1841) Cr
&
Ph
240.
5
6
7
602
0
The
Modern
Law Review
Limited
1994
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