Law Reform Commission of Nova Scotia Final Report on Rule Against Perpetuities

The Law Reform Commission of Nova Scotia has published its final report on The Rule Against Perpetuities:

"The rule against perpetuities limits the duration of certain restrictions on the use and transfer of property. The Rule is to the effect that no legal interest in property is valid unless it is certain, at the time when the disposition (e.g., a trust) takes effect, that the interest must vest within a life or lives in being plus twenty-one years."

"In other words, property may not be tied up in trust, subject to restricted use, or otherwise held subject to any contingency, for longer than twenty-one years after the death of a person who is alive at the time of the disposition and whose life is relevant to the validity of the disposition. The Rule applies to all sorts of property interests - e.g., options to purchase, conditional easements, remainder estates, etc. - but today arises most commonly in connection with trusts. The Rule is generally understood to serve the purpose of balancing the rights of property owners to impose conditions on the use and exchange of their property against the importance of having property under the control of living persons, so that it may be put to its best contemporary use."

"The common complaint is that the Rule is simply too complex and abstract in its application, resulting in a substantial risk that beneficiaries or grantees will be deprived of their interests through inadvertent errors in drafting. In the estate planning context, a great number of vesting conditions may offend the Rule, most often unintentionally, and often only hypothetically in any event. The consequence of a breach is very real, however; the intended gift or transfer will generally be entirely invalid (...)"

"Given these difficulties, the Rule has been subject to significant reform in most jurisdictions other than Nova Scotia. The most common sort of reform - referred to generally as ‘wait and see’ - maintains the substance of the Rule, but allows the disposition to run its course for the perpetuity period, rather than declaring it to be invalid at the outset (...)"

"A more radical reform, adopted in Manitoba, South Australia, Saskatchewan, Ireland, a number of US states and certain Caribbean nations, is to simply abolish the Rule, relying on other laws to serve the purposes the Rule was designed to fulfill (...) We recommend abolition."