Commentary on Sections Part 1 – Trusts Chapter 5 – Duration of trust
72.Section 45 of the Act repeals or disapplies the statutory and common law restrictions on (i) the period during which trustees may accumulate income and (ii) the creation of future interests. The restrictions in each case date back to the 19th century.
73.Under this section, it is possible to create a trust of any duration which the truster chooses (subsection (1), in partial implementation of recommendation 93(1)) (unless the trust is a non-charitable public trust (see subsection (5)(a)). Subsections (2) and (3) further implement recommendation 93(1). Subsection (2) repeals various provisions which set out a number of upper limits on the period during which income may be accumulated before it has to be paid out. Subsection (3) repeals a number of provisions which restrict the creation of future interests.
74.Subsection (4) disapplies two long-standing rules of common law, both of which deal with conveyances of land to a person who has not yet come into existence or who is unascertainable. By way of example, in Frog’s case(13) (from 1735) property was conveyed to a 9 year old boy in liferent with the fee to his lawful heirs. The court decided that, as the fee would be left hanging until any heirs were born, the boy was to take the property in fee rather than in liferent. This subsection implements recommendation 96, which is also implemented by the repeal of section 8 of the 1921 Act (in schedule 2 of the Act), which sets out a statutory version of the late 18th century rule in Newlands(14).
75.The effect of the disapplication of the common law by subsection (4) is described in recommendation 97 in the Report on Trust Law: where Charles conveys property to his wife Margaret in liferent and to his great-grandchildren in fee but his great-grandchildren are non-existent or unidentifiable at the time of the conveyance, then Margaret would take a liferent interest (but no more) and the conveyance to the great-grandchildren would fail. Charles would therefore remain the owner of the property. By subsection (5)(a), which partially implements recommendation 98(1)(15), the repeals in this section do not apply to trusts which are already in existence, unless the trust deed expressly provides for accumulation beyond the maximum period allowed by law at the time of drafting in anticipation of a law change, as there is a risk that otherwise there may be an adverse effect on acquired rights in property.
76.Despite recommendation 93(2), the repeals will apply to charitable trusts to enable such trusts to accumulate income. Other statutory controls (primarily as a matter of charity law) will apply to such accumulations.