Trusts Act 2019: Duration of a trust

The Trusts Act will repeal the Perpetuities Act 1964 and abolish the common law rule known as the ‘rule against perpetuities’. As a result, the maximum duration of a trust will extend from 80 to 125 years.

The terms of an existing trust may limit the duration of the trust to 80 years (or some other period of time) – if that is the case, a variation to the terms of the trust will be required to take advantage of the longer permitted duration. Before extending a trust’s duration, the trustees will need to consider whether the terms of the trust are able to be varied in that way and whether that extension is in the best interests of the beneficiaries.

Where the assets of a trust are resettled from one trust to another, the 125 year period is calculated from the commencement of the original trust.

The maximum duration does not apply to charitable trusts and some trusts associated with superannuation schemes and employee share schemes.

We have published A trustee’s guide to the Trusts Act 2019 (Guide) – the above is an extract from the Guide. If you would like a full copy of the Guide, please get in contact with us.

Disclaimer: This publication should not be construed or acted on as legal advice. It is brief and general in nature. Specific advice should be sought.