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The rules relating to perpetuities and accumulations stem from the common law and the provisions in the Perpetuities and Accumulations Act 1964 (PAA 1964). These increasingly archaic rules were becoming troublesome and in 1989 the Law Commission started consultations on altering them. This culminated in a paper in 1993 identifying defects in the system and a final Report in 1998 with a draft bill. This resulted in the Perpetuities and Accumulations Act 2009 (PAA 2009).
PAA 2009 came into force on 6 April 2010. It seeks to modify and simplify the law by making changes both to the rule against perpetuities (also known as the rule against remoteness of vesting) and the rule against excessive accumulations. Practitioners will still have regard to the old rules that continue to apply in certain cases.
The rule against perpetuities exists to prevent property from being tied up indefinitely. There are three elements:
the rule against remoteness of vesting, which dictates that a future trust interest in property must be certain of vesting in the beneficiary within the perpetuity period
the rule against inalienability, which dictates that private (ie non-charitable) purpose trusts cannot last indefinitely
the rule against excessive accumulations, which dictates that trustees cannot accumulate income beyond the accumulation period
Under the common law, the perpetuity period is defined as the lifetime of any relevant life (or lives) in being plus 21 years—life in being simply means any
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