Are you a person who reads every word of an instruction booklet or, more relevant to estate planning, a trust document? If so, you may see a reference to Joseph P. Kennedy and his descendants and wonder why he is listed in your trust. Since many people have experienced identity theft or know someone who has, you may have even wondered if this was a scam of some sort. Well, let’s start with a brief history, and it will make more sense. No, it is not a scam.
The Rule Against Perpetuities
Centuries ago, according to English trust law, land-owning nobility were not permitted to lock up their family wealth in trusts that could exist forever. The rule against perpetuities (RAP) was a common trust provision that is often referred to as a “savings clause,” and states that “no interest in land is good unless it must vest, if at all, not later than twenty-one years after some life in being at the creation of the interest.” A perpetuity, by definition, has no end date. The law has grown out of case law and has become part of statutory law in most states.
Though the rule may seem simple in principle, applying it is quite complicated, and therefore it has generated more than its share of controversy. One major issue with the RAP was that, traditionally, courts could invalidate any trust that violated the rule. This would leave state laws or intestacy statutes to determine how the property held in the trust would be passed to the owner’s heirs. As a result, many states have modified the rule so it can no longer invalidate an entire trust. However, it can still prevent certain beneficiaries from ultimately receiving their interest in the trust, even if the trustmaker wanted them to have it. As you can see, this is quite a significant problem, and therefore, it has become critical to draft trust documents carefully to avoid violating the RAP.
Getting Around the Rule Against Perpetuities
Trusts are a common legal tool, and estate planning attorneys have access to certain standard legal language that they commonly use to circumvent the pitfalls associated with RAP. They needed to identify “some life in being.” The best way to do this was to name an easily identifiable family with numerous descendants. It doesn’t matter that the family is not related to the trustmaker.
Joseph P. Kennedy’s family fit the bill. They are a large family with a well-known tendency to have many children. No matter when a trust was created, there was a very good chance of identifying someone from that family who was very young and would therefore maximize the amount of time that an interest in the trust could vest in the trust’s named beneficiaries.
Some attorneys prefer other options, easily identifiable families with numerous descendants, such as Queen Victoria of England, the Rockefeller family of New York, and Brigham Young of Vermont. All serve the same purpose in a trust document.
States Have Made Modifications that Make the RAP Less Problematic
Many states have made modifications to the law, making it much less cumbersome for estate attorneys. For example, Alaska has abolished the law altogether. Colorado and Utah have extended the period from twenty-one years to 1,000 years. Eventually, if this trend continues, there will not be a need to add Joseph P. Kennedy and his descendants to trust documents. In the meantime, trust documents continue to include the RAP savings language because there is no consistency across states. The language in the trust must ensure that the trust or an interest in the trust does not become invalid just because a trustmaker or a beneficiary moves from one state to another.
The End Result
Just like there are important details buried in an instruction booklet that may be the difference between an appliance working or not, it is important to understand why your trust documents contain the language they do. You, like most Americans, may not spend your whole life living in one state. Having this carefully crafted language in your trust document could have a real impact on your ability to craft a trust document that meets your estate planning goals and ensures your money and property go to the beneficiaries you intended.
These arcane rules may seem confusing and unwarranted. However, in most cases, they have a very specific purpose and real-life consequences if they are not given the attention they deserve.
You now know why Joseph P. Kennedy and his descendants may be in your trust documents. However, you may have other questions about your trust language and purposes. If so, call on us to help you reach your estate planning goals.
You are welcome to schedule a call with us or reach us directly at 855.434.2062 to learn more about how best to plan today to protect those most important to you.