Can You Have A Trust Last 1000 Years? YES: Understanding the Florida Uniform Statutory Rule Against Perpetuities (c) Cynthia C. Rignanese, Esquire (2023)
Introduction
In my 30 years handling estate planning, I have addressed the intricate web of legal statutes and regulations that can often appear daunting to non-lawyers. Among these, the Florida Uniform Statutory Rule Against Perpetuities (The “Rule”), as encapsulated in the leather-bound law books of Florida Statutes 689.225, stands as a significant pillar. Designed to regulate the duration of non-charitable trusts, the “Rule” aims to prevent the indefinite tying up of assets and the subsequent stagnation of wealth distribution. In this article, I delve into the nuances of the “Rule”, its implications, and its relevance in contemporary estate planning. I will address if you can have your trust last 1000 years? Spoiler alert — you can have one for 1000 years, but not 1001!
Understanding the Rule Against Perpetuities
The “RULE AGAINST PERPETUITIES” origins can be traced back to the 17th century in England. The rule was created to prevent property from being held inalienable for an indefinite period, as this could lead to economic inefficiency and hinder the free circulation of property. The concept was to strike a balance between allowing individuals to control the disposition of their property and preventing property from being tied up in a way that would stifle its productive use and circulation in society.
In essence, the “Rule” establishes a limit on the duration of non-charitable trusts. It stipulates that a trust must vest at a certain time. The original “Rule” was 21 years after the death of a life in being at the time that the interest was created. Then the “wait and see” option was added; it said that the timing was either the original 21 years after a living person OR a flat 90 years. Three years ago, 360 years was substituted for 90 years. And now, it is 1000 YEARS after its creation. This "wait and see" approach allows for a certain level of flexibility, as the validity of a trust is assessed only when it comes into question, rather than being immediately determined at its inception.
Example in Florida of A Family-Owned Blueberry Farm
David owns and runs a blueberry farm and citrus vineyard in Florida. His son Matthew and his wife Mary live on the edge of the farm and help David with operations. David wants the land to stay in the family. So, he writes a trust; it leaves the farm to Matthew, plus a contingency that allows any future children of Matthew and Mary to take ownership of the property upon turning twenty-six. Since Matthew is the beneficiary, he is known as the ‘measuring life’ or ‘life in being’ when David drafted the interest in the property.
David passes away, then Matthew and Mary have a child a year later. Two years after that, Matthew and Mary perish in a plane crash. Although they owned the farm, their child will not turn twenty-six for another twenty-four years, violating the rule against perpetuities, which prevents the transfer of property from occurring more than twenty-one years after the death of the measuring life or “life in being”. Under the original Rule, the gift is invalid.
The extended time frame of a fixed number of years gives more flexibility for property to pass down to heirs. From the example above, if David’s family lived in a wait-and-see state of 90 years, his grandchildren’s interest in the farm would have been vested without the rule against perpetuities getting in the way.
Implications for Estate Planning
For individuals engaged in estate planning, particularly those with substantial assets, the “Rule” holds significant implications. By imposing a temporal constraint on the validity of trusts, the law prompts lawyers to consider the long-term objectives of their clients while avoiding the potential pitfalls of perpetual trusts.
Balancing Long-Term Objectives: While individuals may desire to ensure their family's financial security for generations to come, overly lengthy trust durations might lead to unintended consequences. The “Rule” encourages lawyers to strike a balance between safeguarding wealth and facilitating its effective utilization across generations.
Flexibility and Adaptive Planning: Estate planning requires a forward-looking approach. By allowing trusts to be assessed for validity at a later point, the “Rule” enables planners to adjust strategies based on changing family dynamics, economic conditions, and legal landscapes.
Wealth Distribution and Charitable Endeavors: The rule against perpetuities has its roots in preventing "dead hand control," wherein a person signing a will or trust wishes restrict the flexibility of future generations. The “Rule” encourages wealth distribution over time, potentially fostering charitable initiatives and societal contributions that can have a lasting impact.
Professional Expertise: Given the intricacies of the “Rule”, estate planners, attorneys, and financial advisors play a pivotal role in guiding clients through the nuances of trust duration, ensuring compliance with the law, and aligning strategies with their clients' objectives.
Contemporary Relevance and Future Considerations
The relevance of the “Rule” in today's ever-evolving legal landscape remains unquestionable. As society, economics, and family structures continue to change, this law serves as a safeguard against the concentration of wealth and the potential pitfalls of locking assets away for excessive periods. However, the efficacy of the “Rule” in achieving its intended outcomes and its adaptability to new financial instruments and planning techniques warrant ongoing evaluation.
Interstate and International Considerations
In an increasingly globalized world, assets and families often span multiple jurisdictions. Lawyers must navigate potential conflicts of laws to determine which jurisdiction's perpetuities rule applies, further emphasizing the need for specialized legal expertise.
Conclusion
The Florida Uniform Statutory Rule Against Perpetuities (“Rule”) stands as a cornerstone that aims to balance testamentary freedom with societal interests. Ensuring that assets are not indefinitely tied up, the “Rule” encourages prudent wealth distribution and adaptive planning strategies. As the legal landscape evolves and financial instruments diversify, professionals and individuals alike must remain vigilant in understanding and applying the nuances of the “Rule” to ensure the responsible and effective management of wealth across generations. I personally have never written a trust that was to last longer than a living family member. So while it may be legally possible to write a trust lasting 1000 years, it is not a matter to be done for sensationalism; it is a serious series of decisions to make with a lawyer with expertise in estate planning. If I can lend my three decades of legal experience to your questions about the “Rule” or your Florida estate planning, please do not hesitate to contact me, as follows:
Please reach out to us at Rignanese & Associates Law, 141 5th Street NW, Suite 300, Winter Haven, Florida 33881 at 863.294.1114.