After abolishing the Rule Against Perpetuities
, one of the crucial pieces of modern trust law that South Dakota codified was the directed trust.
Each trust created under this Agreement shall terminate, unless sooner terminated under the terms of this Agreement, thirty (30) days before the end of the period provided under the applicable Rule Against Perpetuities
. The foregoing provision also shall apply to a trust created by the exercise of a power of appointment conferred by this Agreement unless the exercise expressly begins a new Rule Against Perpetuities
or similar rule that limits the time that property may remain in trust.
Many states limit the duration of trusts to a period of time, generally around 100 years, through their rule against perpetuities
. Delaware law, however, permits mists to last forever.
(79) South Dakota, for example, had recently eliminated the rule against perpetuities
in an effort to enter the trusts market and had previously repealed its law regarding maximum interest rate charges, which opened the door for national credit card companies to set up processing centers in South Dakota.
(11.) The rule against perpetuities
does not apply under Illinois law if the trust so states, and the power of the trustee to sell property is not limited by the trust instrument.
Although beneficiaries do not have to be identified by name, or even all be in existence at the date the trust is created, they must be an identifiable and definite class or group and must be in existence within the period measured by the appropriate state's rule against perpetuities
. This makes it possible for a trust to be created for the "children of the grantor" even though all the members of that class of beneficiaries (the grantor's children) may not be in existence at the moment the trust is created, since the grantor is presumed capable of having more children.
is attractive for international planners when their clients seek unique trust law advantages (i.e., no rule against perpetuities
in certain states, protection from forced heirship and private trust company trusteeship) that the U.S.
Interests of a beneficiary in a trust must generally vest within the period allowed for in the rule against perpetuities
. For example, all members of a class must generally be ascertainable immediately or within the period allowed for in the rule against perpetuities
abolishing the centuries-old Rule Against Perpetuities
(1) as applied to
1881) (noting that the English common law, including the "great" rule against perpetuities
, was adopted by the California Legislature in 1850, thus becoming a part of that state's common law).
There also was the "rule against perpetuities
" that required a trust be settled no later than 21 years after an owner's death.
As has been observed, "the trust has endured because it has changed function."(75) In particular, changes have occurred recently in such diverse areas as principal and income, the rule against perpetuities
, self-settled spendthrift trusts, reformation of the trust to achieve the settlor's tax goals, and revocation of an inter vivos trust by will.(76) These follow upon earlier radical changes in terms of increasingly broad trustee investment flexibility and a statutory default rule extending the trustee's authority over the administration of the trust, without the requirement of prior judicial authorization of the exercise of powers.