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Long Live Bermuda Trusts – Dis-applying the Rule Against Perpetuities

Bermuda’s Chief Justice (Kawaley CJ) has provided additional guidance under the Bermuda Perpetuities and Accumulations Amendment Act, 2015 (the “2015 Act”) which amended the Bermuda Perpetuities and Accumulations Act, 2009 (the “2009 Act”) to empower the Court to dis-apply the rule against perpetuities (the “Rule”) for Bermuda law trusts established before 1 August 2009.

The 2009 Act had dis-applied the Rule for all trusts established after 1 August 2009, except trusts owning real property in Bermuda. The 2015 Act amended the 2009 Act to grant the Court power to amend or extend trust periods or dis-apply the Rule to trusts established before 1 August 2009.

In a recent case, In the Matter Of The G Trusts [2017] SC (Bda) 98 Civ (15 November 2017) (“G Trusts”) Kawaley CJ for the Supreme Court of Bermuda notably interpreted Section 4 of the 2009 Act (as amended under the 2015 Act) as empowering the Court “to declare that the rule against perpetuities shall not apply, most broadly, in relation to: instruments taking effect before August 1, 2009 which are governed by Bermuda law; and instruments taking effect under a foreign governing law either before or after the commencement of the 2009 Act . . .” Kawaley CJ also highlighted that “a generous ambit of discretion is granted to [the] Court” in these provisions.

In G Trusts, Kawaley CJ re-affirmed the following three guiding principles previously set out In The Matter Of The C Trust [2016] SC (Bda) 53 Civ (16 May 2016) (in which Ben Adamson of Conyers appeared for the Applicant):

  • “(1) the Court should not act as a ‘rubber stamp’;
  • (2) the Court should have regard to the best interests of all interested parties, broadly defined and looked at as a whole; and
  • (3) the fact that extending the duration of a trust will dilute the economic interests of existing beneficiaries will ordinarily be an irrelevant consideration.”

 

To continue reading full articles in PDF format:
Long Live Bermuda Trusts – Dis-applying the Rule Against Perpetuities

 


Scott Pearman
Director

Bermuda   +1 441 294 5925



Alec R. Anderson
Director, Global Head of Private Client & Trust

Bermuda   +1 441 299 4945


Paul Smith
Partner, Head of Cayman Islands Litigation & Restructuring Practice

Cayman Islands   +1 345 814 7777


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