Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Wednesday, June 2, 2021

Texas Legislature Extends The Rule Against Perpetuities To 300 Years For Trusts

TrustThe Texas Legislature has just passed a bill that extends the rule against perpetuities to 300 years for trusts. The Bill will take affect on September 1, 2021. 

The Bill (HB 654) was sent to the governor from the Legislature on May 20, 2021, but he has not yet signed the bill into law. Unless the governor vetoes the bill, it will become law after 10 days. 

Under the Texas Constitution: "Perpetuities and monopolies are contrary to the genius if a free government, and shall never be allowed. . . ." According to ConocoPhillips Co. v. Koopmann "[a] perpetuity is a restriction on the power of alienation that lasts longer than a prescribed period." 

The rule against perpetuities is not so simple to understand. The rule against perpetuities considers invalid any will or trust that "attempts to create any estate or future interest which by any possibility may not become vested within a life or lives in being at the time of the testator's death and twenty-one years thereafter, and when necessary the period of gestation.

This rule applies to wills and non-charitable trusts. 

Due to the recent amendment to Texas Trust Code Section 112.036, the interest in a trust must vest, if at all "not later than 300 years after the effective date of the trust, if the effective date of the trust is on or after September 1, 2021. 

See David Fowler Johnson, Texas Legislature Extends The Rule Against Perpetuities To 300 Years For Trusts, Winstead: Texas Fiduciary Litigator, May 27, 2021. 

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

https://lawprofessors.typepad.com/trusts_estates_prof/2021/06/texas-legislature-extends-the-rule-against-perpetuities-to-300-years-for-trusts.html

Estate Administration, Estate Planning - Generally, New Legislation, Trusts | Permalink

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