Perpetuities and Accumulations Bill [HL]

House of Commons

Session 2008 - 09
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Other Bills before Parliament

Perpetuities and Accumulations Bill [HL]

Perpetuities and Accumulations Bill [HL]
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A
Bill
To
Amend the law relating to the avoidance of future interests on grounds of
remoteness and the law relating to accumulations of income.
Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and
consent of the Lords Spiritual and Temporal, and Commons, in this present
Parliament assembled, and by the authority of the same, as follows:—
Application of rule against perpetuities
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Application of the rule
(1)
The rule against perpetuities applies (and applies only) as provided by this
section.
(2)
If an instrument limits property in trust so as to create successive estates or
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interests the rule applies to each of the estates or interests.
(3)
If an instrument limits property in trust so as to create an estate or interest
which is subject to a condition precedent and which is not one of successive
estates or interests, the rule applies to the estate or interest.
(4)
If an instrument limits property in trust so as to create an estate or interest
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subject to a condition subsequent the rule applies to—
(a)
any right of re-entry exercisable if the condition is broken, or
(b)
any equivalent right exercisable in the case of property other than land
if the condition is broken.
(5)
If an instrument which is a will limits personal property so as to create
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successive interests under the doctrine of executory bequests, the rule applies
to each of the interests.
(6)
If an instrument creates a power of appointment the rule applies to the power.
(7)
For the purposes of subsection (2) an estate or interest includes an estate or
interest—
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(a)
which arises under a right of reverter on the determination of a
determinable fee simple, or

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Perpetuities and Accumulations Bill [HL]
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(b)
which arises under a resulting trust on the determination of a
determinable interest.
(8)
This section has effect subject to the exceptions made by section 2 and to any
exceptions made under section 3.
(9)
In section 4(3) of the Law of Property Act 1925 (c. 20) (rights of entry affecting
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a legal estate) omit the words from “but” to the end.
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Exceptions to rule’s application
(1)
This section contains exceptions to the application of the rule against
perpetuities.
(2)
The rule does not apply to an estate or interest created so as to vest in a charity
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on the occurrence of an event if immediately before the occurrence an estate or
interest in the property concerned is vested in another charity.
(3)
The rule does not apply to a right exercisable by a charity on the occurrence of
an event if immediately before the occurrence an estate or interest in the
property concerned is vested in another charity.
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(4)
The rule does not apply to an interest or right arising under a relevant pension
scheme.
(5)
The exception in subsection (4) does not apply if the interest or right arises
under—
(a)
an instrument nominating benefits under the scheme, or
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(b)
an instrument made in the exercise of a power of advancement arising
under the scheme.
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Power to specify exceptions
(1)
The Lord Chancellor may by order provide that the rule against perpetuities is
not to apply—
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(a)
in cases of a specified description, or
(b)
if specified conditions are fulfilled.
(2)
Different descriptions and conditions may be specified for different purposes.
(3)
Any order under this section may include such supplementary, incidental,
consequential or transitional provisions as appear to the Lord Chancellor to be
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necessary or expedient.
(4)
In this section “specified” means specified in the order.
(5)
The power to make an order under this section is exercisable by statutory
instrument.
(6)
A statutory instrument containing an order under this section may not be
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made unless a draft of the instrument has been laid before and approved by a
resolution of each House of Parliament.
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Abolition of existing exceptions
These provisions cease to have effect—

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(a)
section 121(6) of the Law of Property Act 1925 (c. 20) (rule against
perpetuities not to apply to certain powers and remedies);
(b)
section 162 of that Act (declaration that rule does not apply in certain
cases);
(c)
section 163 of the Pension Schemes Act 1993 (c. 48) (rule not to apply to
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trusts and dispositions concerning certain pension schemes).
Perpetuity period
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Perpetuity period
(1)
The perpetuity period is 125 years (and no other period).
(2)
Subsection (1) applies whether or not the instrument referred to in section 1(2)
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to (6) specifies a perpetuity period; and a specification of a perpetuity period in
that instrument is ineffective.
Perpetuities: miscellaneous
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Start of perpetuity period
(1)
The perpetuity period starts when the instrument referred to in section 1(2) to
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(6) takes effect; but this is subject to subsections (2) and (3).
(2)
If section 1(2), (3) or (4) applies and the instrument is made in the exercise of a
special power of appointment the perpetuity period starts when the
instrument creating the power takes effect; but this is subject to subsection (3).
(3)
If section 1(2), (3) or (4) applies and—
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(a)
the instrument nominates benefits under a relevant pension scheme, or
(b)
the instrument is made in the exercise of a power of advancement
arising under a relevant pension scheme,

the perpetuity period starts when the member concerned became a member of
the scheme.
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(4)
The member concerned is the member in respect of whose interest in the
scheme the instrument is made.
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Wait and see rule
(1)
Subsection (2) applies if (apart from this section and section 8) an estate or
interest would be void on the ground that it might not become vested until too
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remote a time.
(2)
In such a case—
(a)
until such time (if any) as it becomes established that the vesting must
occur (if at all) after the end of the perpetuity period the estate or
interest must be treated as if it were not subject to the rule against
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perpetuities, and
(b)
if it becomes so established, that does not affect the validity of anything
previously done (whether by way of advancement, application of
intermediate income or otherwise) in relation to the estate or interest.

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(3)
Subsection (4) applies if (apart from this section) any of the following would be
void on the ground that it might be exercised at too remote a time—
(a)
a right of re-entry exercisable if a condition subsequent is broken;
(b)
an equivalent right exercisable in the case of property other than land
if a condition subsequent is broken;
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(c)
a special power of appointment.
(4)
In such a case—
(a)
the right or power must be treated as regards any exercise of it within
the perpetuity period as if it were not subject to the rule against
perpetuities, and
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(b)
the right or power must be treated as void for remoteness only if and so
far as it is not fully exercised within the perpetuity period.
(5)
Subsection (6) applies if (apart from this section) a general power of
appointment would be void on the ground that it might not become exercisable
until too remote a time.
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(6)
Until such time (if any) as it becomes established that the power will not be
exercisable within the perpetuity period, it must be treated as if it were not
subject to the rule against perpetuities.
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Exclusion of class members to avoid remoteness
(1)
This section applies if—
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(a)
it is apparent at the time an instrument takes effect or becomes
apparent at a later time that (apart from this section) the inclusion of
certain persons as members of a class would cause an estate or interest
to be treated as void for remoteness, and
(b)
those persons are potential members of the class or unborn persons
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who at birth would become members or potential members of the class.
(2)
From the time it is or becomes so apparent those persons must be treated for
all the purposes of the instrument as excluded from the class unless their
exclusion would exhaust the class.
(3)
If this section applies in relation to an estate or interest to which section 7
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applies, this section does not affect the validity of anything previously done
(whether by way of advancement, application of intermediate income or
otherwise) in relation to the estate or interest.
(4)
For the purposes of this section—
(a)
a person is a member of a class if in that person’s case all the conditions
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identifying a member of the class are satisfied, and
(b)
a person is a potential member of a class if in that person’s case some
only of those conditions are satisfied but there is a possibility that the
remainder will in time be satisfied.
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Saving and acceleration of expectant interests
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(1)
An estate or interest is not void for remoteness by reason only that it is ulterior
to and dependent on an estate or interest which is so void.
(2)
The vesting of an estate or interest is not prevented from being accelerated on
the failure of a prior estate or interest by reason only that the failure arises
because of remoteness.
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