Perpetuity and Accumulations Bill introduced

On 1 April 2009 the Perpetuity and Accumulations Bill was introduced in the House of Lords.

The Bill will extend the maximum perpetuity period to 125 years which will apply to all trust interests (subject to two exemptions in respect of charities and pension schemes) created after the day the Bill comes into force. Trustees of old trusts that refer to the lifetime of a certain individual plus 21 years may opt to adopt a fixed perpetuity period of 100 years. Interests created by exercising special powers of appointment under existing trusts will remain subject to the perpetuity period stated in the trust document.

The Bill will also amend the law relating to the ability of trustees to accumulate income within a trust. There will be no limit on the accumulation of income for all non-charitable trusts during the maximum perpetuity period of 125 years (or 100 years, as applicable). The Bill will not override provisions in trust documents created after the Bill has come into force, which restrict accumulation to a specific period. Charitable trusts will be subject to a permitted accumulation period of 21 years. Interests created by exercising special powers of appointment under existing trusts will be able to provide for longer accumulation if the trust document allows this.

For more information contact Hauke Harrack or call him on 01604 233233.