Summary and Background The rule against perpetuities Perpetuities and Accumulations Act 1964
9.The Perpetuities and Accumulations Act 1964 (“the 1964 Act”), which came into force on 16 July 1964, modified the operation of the common law rule. The 1964 Act, which was based on the 1956 report of the Law Reform Committee (Fourth Report, The rule against perpetuities (1956) Cmnd 18), contained three key reforms to the common law rule. These reforms apply in relation to dispositions made on or after 16 July 1964.
10.First, it allowed settlors to specify a fixed perpetuity period of up to 80 years instead of having to rely on the common law period of a life in being plus 21 years.
11.Second, it introduced the principle of “wait and see”. This means that, where an interest in property could possibly vest outside the perpetuity period and so would be void at common law, it is permissible to “wait and see” whether the property will in fact vest within the perpetuity period. Only when it becomes clear that the gift cannot so vest will the gift be void. So in the example above (at paragraph 7), the gift would be void only if no child became a doctor within 21 years of A’s death.
12.Third, the 1964 Act introduced a number of other “gift-saving” devices. Class closing rules are one such device which allow a gift to be saved by the exclusion of a beneficiary whose inclusion would invalidate a gift. Another ensures that a gift will not be invalid automatically just because it follows a previous interest which violates the rule.