Perpetuities And Accumulations Bill [HL] - continued          House of Commons

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Perpetuity period: The time period within which an interest in property must vest, or be capable of vesting, in order to avoid being void for remoteness.

Power: In the context of the Bill, an authority to act in relation to another’s property. A power may be administrative or dispositive. An administrative power is a power, the exercise of which does not affect the beneficial interest arising under a trust, such as a power to sell or lease property. A dispositive power is a power, the exercise of which does affect the beneficial interests arising under a trust, for instance, a power of advancement or a power of appointment.

Power of advancement: A power given to trustees to apply capital for the benefit of a beneficiary under the trust who is not yet entitled to the capital. For instance, where capital is held on trust for A on reaching the age of 30, part of that capital might be paid to A at the age of 21 in order to pay for university fees.

Power of appointment: A power to create or transfer an interest in property. The extent of the power will depend on the terms of the instrument granting it. Under the Bill general and special powers of appointment are defined in clauses 11 and 20.

Resulting trust: A trust where the settlor of the trust property is also the beneficiary, which may arise automatically (i.e. by operation of law) in some circumstances. For example, A grants property to trustees to be held on trust for B subject to a condition subsequent. If the condition is broken, the trustees will hold the property on trust for A.

Right of re-entry: A right entitling a person to reclaim possession of land granted to another. For example, if X gave a house to Y on the condition that Y never marry, X has a right of re-entry which will become exercisable if Y marries.

Right of reverter: The possibility of the original owner of an estate in land becoming entitled to possession of the land if a determinable interest in the same land comes to an end. For example, if A grants land to B until B re-marries, A has a right of reverter. If B re-marries, the land reverts to A.

Settlor: A person who creates a trust.

Trust: An arrangement for holding property which imposes equitable obligations on a trustee to deal with property for the benefit of another. In the case of charitable trusts and non-charitable purpose trusts, trustees are obliged use the property for the benefit of certain purposes. A trust can be created by deed, by will, by statute, by declaration or by operation of law.

Vest: An interest designated for a person (for example, in a gift or will) vests at the point when it becomes that person’s property. An interest can be vested in possession, in which case the interest is capable of being presently enjoyed. An interest can also be vested in interest, in which case the interest is not vested in possession and therefore cannot be presently enjoyed, but will come to be so on the eventual termination of the prior interest or interests in the same property. For example, when property is given to X for life, remainder to Y, X has an interest vested in possession until he dies. Y’s interest in the property is vested in interest. When X eventually dies, Y then has an interest vested in possession.

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Prepared: 21 July 2009