It is in public interest that property – both real and personal – should be able to be alienated freely. There is a rule that property may not remain in trust perpetually; or for too long a period
This is known as the rule against perpetuities or, perhaps more accurately, the rule against remoteness of vesting.
- Since medieval times, English law has been subjected to the tensions between two conflicting influences
- Owners of land and of other types of property have generally wished to tie up their property indefinitely, usually for the benefit of their family or for some institution or cause, while the courts and the legislature have always felt that it is in the interest of the nation as a whole that property should not be made inalienable and that money should circulate freely and be spent
- The rule against perpetuities is a rule that derives from public policy i.e. it is public policy and good economic sense that property, both real and personal, can be alienated (i.e. sold or given to someone else) freely
- Property should not remain in trust perpetually or for too long a period otherwise all property would end up in trust
An early reference to rule against perpetuities was seen in the case of Stanley v Leigh (1732)
- Sir Joseph Jekyll MR said that it is contrary to public economic policy that property be held in trust, unable to be bought or sold, for too long a period
All private trusts must have a provision for their ending within a certain period (this is usually done by vesting any property left over absolutely into the children, grandchildren, etc. of the settlor). If there is no such provision, the trust may be void. The trust property will then return to the settlor on a resulting trust: Air Jamaica v Charlton 
Before April 2010, the trust property had to vest (i.e. the legal and beneficial titles had to be held by the same person or persons) within a life in being plus 21 years; or within 80 years (i.e. say in 80 years the property will vest).
A life in being was usually the life of the first beneficiary, but could be someone else’s life, such as a member of the royal family (as seen in the case of Re Horley Town FC: the perpetuity period in this case was 21 years after the death of the youngest descendant of George VI living in 1948)
This rule allowed the settlor to leave property to his or her children and then to his or her grandchildren, with the property vesting in the grandchildren when they reached the age of 21. Any attempt to control the disposition of property beyond that point (i.e beyond the perpetuity period) was held to be void (and would invalidate the trust)
The life in being test allowed a life interest to be held by a person, and the remainder to pass to their children on reaching 21. There was a possible gestation period allowed, so that property could pass to a child en ventre sa mere at the time of the life tenant’s death (i.e. a possible 9 months extra if the child is in the womb at time of life tenant’s death)
THE ‘WAIT AND SEE’ RULE
Under the old rule (under the common law before 1964), the mere possibility that property might not have vested before the end of the permitted period was enough to invalidate the trust ab initio (i.e. from the beginning). This was the basis of the judgment in Air Jamaica v Charlton , a Privy Council case from Jamaica, in which the old rule against perpetuities still applied (i.e. the rule England and Wales applied before 1964)
- In other words, the law in Jamaica applied the old common law in that if there was just a POSSIBILITY the trust would continue for longer than the life in being plus 21 years then it would be automatically void
- See the case facts, here
The Privy Council held in the case that each employee’s pension fund was a separate trust, established at the time that the employee joined the scheme. The power to provide benefits to widows offended against the rule against perpetuities, as it was possible for a person to marry, after the constitution of the trust, a person who had not been alive at the date of constitution.
- As a result, Lord Millett said that every single pension fund under the scheme was invalid because under the old rule pre-1964 the mere possibility was sufficient to invalidate a trust
- Just before the change in the law the following case happened: Pilkington v Inland Revenue Commissioners 
In Pilkington v Inland Revenue Commissioners  the establishment of a second trust for a man’s daughter, who was not alive when the original trust was established, took the perpetuity period from the original trust
- I.e. as property was taken out of one trust to set up a new trust the HoL held the perpetuity period should date from the formation of the original trust and not the new trust → So you cannot create a new trust out of the old trust to get around the perpetuity rules
- So, and it could have been a specific response to this case, in 1964 parliament passed the Perpetuities and Accumulations Act 1964 → it was in this the wait and see rule was introduced
PERPETUITIES AND ACCUMULATIONS ACTS
The Perpetuities and Accumulations Act 1964 introduced the ‘wait and see’ rule: the trust did not become void until it became established that the trust property would not vest until after the end of the perpetuity period.
- So for any trust established after 1964 there is a wait and see rule → this rule means the trust does not become void until the perpetuity rule is exceeded e.g. the case of Pilkington would now not fail until the daughter ACTUALLY outlived her father by 21 years
- In comparison, under the old rule, just the mere possibility that the daughter could outlive her father by 21 years would have been enough to make the trust void → but, under the 1964 Statute, the wait and see rule dictates the trust will not become invalid until the even actually happens e.g. until the daughter actually outlives her father by 21 years
- Another example would be in the Air Jamaica case: only those pensions where the employer married someone who was not alive when he joined the pension scheme, and died, and his widow had survived him for more than 21 years → only at that point would the pension scheme fail → clearly this would not happen that often so the new rule made a big difference
- So this rule reduces the problems with perpetuities quite a lot, but note, having said that, there may be trusts existing before 1964 that are still going (and therefore the old common law applies)
- And there are still many trusts, and there will be for many years, that exist prior to 2009 i.e. before the latest amendment to the perpetuities and accumulations act 2009
The Perpetuities and Accumulations Act 2009 provides that, for any trust established after 6 April 2010, the perpetuity period is 125 years. The trust instrument must provide that the property vests within that period, subject to the ‘wait and see’ rule.
- So under the latest amendment, which applies since 6 April 2010, there is no more lives in being → trusts can now have only one perpetuity period. Trust property must therefore vest within 125 years subject to the wait and see rule
- So pre 2010 the 1964 act applies, post 6 April 2010 the new act applies
It should be noted that trusts may exist for a considerable period: there are trusts set up on the majority of the life beneficiary which could have been in existence since well before the 1964 Act: a person aged 21 in 1964 would now be 71.
- So in all probability there are many pre 1964 trusts still going e.g. the trust established in 1948 in Re Horley Town Football Club  had a perpetuity period of the life time of the last descendant of George VI alive in 1948, plus 21 years. This trust – had it not been determined sooner – would have lasted until 21 years after the death of the present Queen.
An accumulation is where the income from the capital property, whether land or investments, is added to the capital, rather than distributed to the beneficiaries; or where there are provisions to delay the beneficial enjoyment of the property.
- You can set up a trust just to accumulate money
- Usually income/profit made on the property either because of the nature of the property (e.g. it is an investment) or through its sale (e.g. land) will be distributed to the beneficiaries → However, with an accumulation trust, there is an arrangement whereby the trustees are directed to gather, rather than distribute, this income/profit on the property making up the trust until the time specified in the document that created the trust
Again, it is because it is contrary to public policy to have property ‘tied up’ for long periods, that there has been a prohibition against indefinite or long-lasting accumulations → But in 2010 the rule against accumulations was abolished
For trusts created before 6 April 2010, the income cannot be accumulated for longer than one of the allowed periods, of 21 years or the minority of a person in being
- So in trusts created before 2010 trusts cannot be accumulated for more than 21 years or for the minority of a person in being
- So this would have allowed, for instance, money to accumulate over time on the trust and on the beneficiary’s 18th birthday give them the whole lot
The rule has been abolished for trusts created after 6 April 2010, by the Perpetuities and Accumulations Act 2009
- So the rule against accumulations is now abolished → so there is no maximum period of time over which accumulations can occur