Summary of recommendations
Chapter 17 – Perpetuities and the maximum duration of trusts
R49 The new Trusts Act should:
(1) Repeal the Perpetuities Act 1964 and provide that the common law rule against perpetuities is of no application in New Zealand from the date of the repeal forward.
(2) Provide a default duration of 150 years for all trusts (a shorter period may be specified in the terms of the trust).
(3) Provide that at the expiry of 150 years from the date of the establishment of a trust, all trust property is to be vested in accordance with the provisions contained in the terms of the trust, or if the trust deed is silent about who is to receive the property, it is to be vested in all surviving beneficiaries in equal shares.
(4) Provide that trusts which include a mechanism to calculate the vesting date rather than specifying a duration shall continue until the earlier of the date resulting from the calculation, or 150 years from the establishment of the trust.
(5) Provide that, notwithstanding these reforms, distributions which were valid under the Perpetuities Act 1964 at the date they occurred remain valid.
(6) Repeal section 59(2) of the Property Law Act 2007 to reflect the abolition of the rule against perpetuities.
(7) Update the rule against accumulations to reflect the abolition of the rule against perpetuities, and clarify that trustees may accumulate income, provided the terms of the trust do not prevent this, and provided the accumulated income is distributed upon or before the termination of the trust.
(8) Carry over the existing exemptions allowing the trusts referred to in section 19 of the Perpetuities Act 1964 to continue indefinitely and apply these exemptions to the rule limiting the duration of trusts (trusts for retirement schemes under the Financial Markets Conduct legislation, currently referred to as superannuation schemes, and certain trusts of a share purchase scheme under section YA1 Income Tax Act 2007), as well as trusts currently exempted in their own legislation.
(9) Provide that these reforms will apply to all trusts, not only express trusts within the new Act.