PERPETUITIES AND ACCUMULATIONS ACT 2009 – EXERCISE OF POWER CHANGING GOVERNING LAW TO BERMUDA LAW UNDER TRUST INSTRUMENTS CREATED PRIOR TO ENACTMENT OF 2009 ACT – WHETHER PERPETUITY RULE APPLIES TO EXERCISE OF POWER
On December 4, 2017 the Chief Justice granted an application by the Trustees of the X, Y and Z Trusts for declarations that the perpetuity period did not apply to those Trusts. He was persuaded that it was appropriate to grant the application on the following alternative bases. Either:
- by virtue of Section 3 of the Perpetuities and Accumulations Act 2009 (“the Act”), the rule against perpetuities did not apply; or
- if he was wrong, he in any event possessed the jurisdiction to dis-apply the rule against perpetuities under Section 4 of the Act.
The X, Y and Z Trusts were established to preserve family wealth for many generations.
- They were established prior to August 2009 under Cayman Islands Trust law’s Special Trusts Alternative Regime (“STAR”).
- The Trust Period was defined as a period of years in excess of 100 years.
- They were not “pure” purpose trusts as they had beneficiaries. This is pertinent as the law is already clear that the rule against perpetuities does not apply to purpose trusts.
- The Trusts’ governing law was changed to Bermuda law after 1 August, 2009.
- The Trustees understood that prior to this change the perpetuities rule did not apply to them as Cayman Islands STAR trusts, but that afterwards it did, or might, apply under Bermuda law.
- The Trusts neither hold nor are intended to hold Bermuda land.