Perpetuities Act

PERPETUITIES ACT Chapter P‑5 Table of Contents 1 Definitions 2 Rule against perpetuities 3 Possibility of vesting beyond period 4 Presumption of validity - “ Wait and See ” 5 Determination of perpetuity period 6 Reduction of age 7 Exclusion of class members to avoid remoteness 8 General cy‑pres provision 9 Presumption and evidence as to future parenthood 10 Application to court to determine validity 11 Application of remedial provisions 12 Interim income 13 Saving provision and acceleration of expectant interests 14 Powers of appointment 15 Administrative powers of trustees 16 Avoidance of contractual rights in cases of remoteness 17 Options to acquire reversionary interest 18 Commercial transactions 19 Possibilities of reverter and conditions subsequent 20 Specific non‑charitable trusts 21 Rule in Whitby vs. Mitchell abolished 22 Rules not applicable to employee benefit trusts 22.1 Rule against perpetuities not applicable to qualifying environmental trusts 23 Application to Crown 24 Accumulations of income 25 Application of Act HER MAJESTY, by and with the advice and consent of the Legislative Assembly of Alberta, enacts as follows: Definitions 1 In this Act, (a) “court” means the Court of King’s Bench; (b) “disposition” includes the conferring of a power of appointment and any provision whereby an interest in property or a right, power or authority over property is disposed of, created or conferred and also includes a possibility of reverter or resulting trust, and a right of re‑entry on breach of a condition subsequent; (c) “in being” means living or conceived but unborn; (d) “perpetuity period” means the period within which at common law as modified by this Act an interest must vest; (e) “power of appointment” includes any discretionary power to transfer a beneficial interest in property without the furnishing of valuable consideration. RSA 2000 cP‑5 s1;AR 217/2022 Rule against perpetuities 2 Except as provided by this Act, the rule of law known as the rule against perpetuities continues to have full effect. RSA 1980 cP‑4 s2 Possibility of vesting beyond period 3 No disposition creating a contingent interest in real or personal property shall be treated as or declared to be void as violating the rule against perpetuities by reason only of the fact that there is a possibility of the interest vesting beyond the perpetuity period. RSA 1980 cP‑4 s3 Presumption of validity ‑ “ Wait and See ” 4 (1) Every contingent interest in real or personal property that is capable of vesting within or beyond the perpetuity period is presumptively valid until actual events establish (a) that the interest is incapable of vesting within the perpetuity period, in which case the interest, unless validated by the application of section 6, 7 or 8, shall be treated as void or declared to be void, or (b) that the interest is incapable of vesting beyond the perpetuity period, in which case the interest shall be treated as valid or declared to be valid. (2) A disposition conferring a general power of appointment, which but for this section would have been void on the ground that it might become exercisable beyond the perpetuity period, is presumptively valid until the time, if any, it becomes established by actual events that the power cannot be exercised within the perpetuity period. (3) A disposition conferring a power other than a general power of appointment, which but for this section would have been void on the ground that it might be exercised beyond the perpetuity period, is presumptively valid and shall be declared or treated as void for remoteness only if, and so far as, the power is not fully exercised within the perpetuity period. RSA 1980 cP‑4 s4 Determination of perpetuity period 5 (1) When section 4 applies to a disposition, the perpetuity period shall be determined as follows: (a) if any persons falling within subsection (2) of this section are persons in being and ascertainable at the beginning of the perpetuity period, the duration of the period shall be determined by reference to their lives and no others, but so that the lives of any description of persons falling within subsection (2)(b) or (c) shall be disregarded if the number of persons of that description is such as to render it impractical to ascertain the date of death of the survivor; (b) if there are no lives under clause (a), the perpetuity period is 21 years. (2) The persons referred to in subsection (1) are as follows: (a) the person by whom the disposition is made; (b) a person to whom or in whose favour the disposition was made, that is to say, (i) in the case of a disposition to a class of persons, any member or potential member of the class; (ii) in the case of an individual disposition to a person taking only on certain conditions being satisfied, any person as to whom some of the conditions are satisfied and the remainder may in time be satisfied; (iii) in the case of a special power of appointment exercisable in favour of members of a class, any member or potential member of the class; (iv) if, in the case of a special power of appointment exercisable in favour of one person only, the object of the power is not ascertained at the beginning of the perpetuity period, any person as to whom some of the conditions are satisfied and the remainder may in time be satisfied; (v) in the case of a power of appointment, the person on whom the power is conferred; (c) a person having a child or grandchild within clause (b)(i) to (iv), or such a person any of whose children or grandchildren, if subsequently born, would by virtue of his or her descent, fall within those subclauses; (d) any person who takes any prior interest in the property disposed of and any person on whose death a gift over takes effect; (e) when a disposition is made in favour of a spouse or adult interdependent partner of a person who is in being and ascertainable at the commencement of the perpetuity period, or when an interest is created by reference to the death of the spouse or adult interdependent partner of such a person, or by reference to the death of the survivor, the same spouse or adult interdependent partner whether or not he or she was in being or ascertainable at the beginning of the period. RSA 2000 cP‑5 s5;2002 cA‑4.5 s62 Reduction of age 6 (1) When a disposition creates an interest in real or personal property by reference to the attainment by any person or persons of a specified age exceeding 21 years and actual events existing at the time the interest was created or at any subsequent time establish (a) that the interest, but for this section, would be void as incapable of vesting within the perpetuity period, but (b) that it would not be void if the specified age had been 21 years, the disposition shall be read as if, instead of referring to the age specified, it had referred to the age nearest the age specified that would, if specified instead, have prevented the interest from being so void. (2) One age reduction to embrace all potential beneficiaries shall be made pursuant to subsection (1). (3) When in the case of any disposition different ages exceeding 21 years are specified in relation to different persons (a) the reference in subsection (1)(b) to the specified age shall be construed as a reference to all the specified ages, and (b) that subsection operates to reduce each such age so far as is necessary to save the disposition from being void for remoteness. RSA 1980 cP‑4 s6 Exclusion of class members to avoid remoteness 7 (1) If the inclusion of any persons, being potential members of a class or unborn persons who at birth would become potential members of the class, prevents section 6 from operating to save a disposition from being void for remoteness, those persons shall be excluded from the class for the purposes of the disposition and that section has effect accordingly. (2) If, in the case of a disposition to which subsection (1) does not apply, it is apparent at the time the disposition is made, or becomes apparent at a subsequent time that, but for this subsection, the inclusion of any persons being potential members of a class or unborn persons who at birth would become members or potential members of the class, would cause the disposition to be treated as void for remoteness, those persons shall for all the purposes of the disposition be excluded from the class. RSA 1980 cP‑4 s7 General cy‑pres provision 8 (1) When (a) it has become apparent that, apart from this section, a disposition would be void solely on the ground that it infringes the rule against perpetuities, and (b) the general intention originally governing the disposition can be ascertained in accordance with the normal principles of interpretation of instruments and the rules of evidence, the disposition shall, if possible and as far as possible, be reformed so as to give effect to the general intention within the limits of the rule against perpetuities. (2) Subsection (1) does not apply if the disposition of the property has been settled by a valid compromise. RSA 1980 cP‑4 s8 Presumptions and evidence as to future parenthood 9 (1) When, in proceedings respecting the rule against perpetuities, a question arises that turns on the ability of a person to have a child at some future time, then (a) it shall be presumed (i) that a male is able to have a child at the age of 14 years or over, but not under that age, and (ii) that a female is able to have a child at the age of 12 years or over, but not under that age or over the age of 55 years, but (b) in the case of a living person, evidence may be given to show that the person will or will not be able to have a child at the time in question. (2) Subject to subsection (3), when a question is decided in relation to a disposition by treating a person as able or unable to have a child at a particular time, then that person shall be so treated for the purpose of any question that may arise concerning the rule against perpetuities in relation to the same disposition, notwithstanding that the evidence on which the finding of ability or inability to have a child at a particular time is proved by subsequent events to have been erroneous. (3) When a question is decided by treating a person as unable to have a child at a particular time and that person subsequently has a child or children at that time, the court may make any order it sees fit to protect the right that the child or children would have had in the property concerned as if that question had not been decided and as if the child or children would, apart from that decision, have been entitled to a right in the property not in itself invalid by the application of the rule against perpetuities as modified by this Act. (4) The possibility that a person may at any time have a child by adoption shall not be considered in deciding any question that turns on the ability of a person to have a child at some particular time, but, if a person does subsequently have a child or children by adoption, then subsection (3) applies to the child or children. RSA 2000 cP‑5 s9;2010 c16 s1(47) Application to court to determine validity 10 (1) An executor or a trustee of any property or a person interested under, or in the validity or invalidity of, an interest in that property may at any time apply to the Court of King’s Bench in accordance with the Surrogate Rules for the opinion, advice or direction of the court as to the validity or invalidity with respect to the rule against perpetuities of an interest in that property and with respect to the application of any provision of this Act. (2) An executor or trustee acting on the opinion, advice or direction of the court given under this section is deemed, so far as regards the executor’s or trustee’s own responsibility, to have discharged any duty as executor or trustee in respect of the subject‑matter of the opinion, advice or direction. (3) Subsection (2) does not extend to indemnify an executor or trustee in respect of any act done in accordance with the opinion, advice or direction of the court given under this section if the executor or trustee has been guilty of fraud or wilful concealment or misrepresentation in obtaining that opinion, advice or direction. RSA 2000 cP‑5 s10;RSA 2000 c16(Supp) s60;2009 c53 s127; AR 217/2022 Application of remedial provisions 11 The remedial provisions of this Act shall be applied in the following order: (a) section 9; (b) section 4; (c) section 6; (d) section 7; (e) section 8. RSA 1980 cP‑4 s11 Interim income 12 Pending the treatment or declaration of a presumptively valid interest within the meaning of section 4 as valid or invalid, the income arising from that interest and not otherwise disposed of shall be treated as income arising from a valid contingent interest, and any uncertainty whether the disposition will ultimately prove to be void for remoteness shall be disregarded. RSA 1980 cP‑4 s12 Saving provision and acceleration of expectant interests 13 (1) A disposition that, if it stood alone, would be valid under the rule against perpetuities is not invalidated by reason only that it is preceded by one or more dispositions that are invalid under the rule against perpetuities, whether or not the disposition expressly or by implication takes effect after, or is subject to, or is ulterior to and dependent on, the invalid disposition. (2) When a prior interest is invalid under the rule against perpetuities, any subsequent interest that, if it stood alone, would be valid shall not be prevented from being accelerated by reason only of the invalidity of the prior interest. RSA 1980 cP‑4 s13 Powers of appointment 14 (1) For the purpose of the rule against perpetuities, a power of appointment shall be treated as a special power unless (a) in the instrument creating the power it is expressed to be exercisable by one person only, and (b) it could, at all times during its currency when that person is of full age and capacity, be exercised by that person so as immediately to transfer to that person the whole of the interest governed by the power without the consent of any other person or compliance with any other condition, not being a formal condition relating only to the mode of exercise of the power. (2) A power that satisfies the conditions of subsection (1)(a) and (b) shall, for the purpose of the rule against perpetuities, be treated as a general power. (3) For the purpose of determining whether an appointment made under a power of appointment exercisable by will only is void for remoteness, the power shall be treated as a general power when it would have been so treated if exercisable by deed. RSA 1980 cP‑4 s14 Administrative powers of trustees 15 (1) The rule against perpetuities does not invalidate a power conferred on trustees or other persons to sell, lease, exchange or otherwise dispose of any property, or to do any other act in the administration, as opposed to the distribution, of any property including, when authorized, payment to trustees or other persons of reasonable remuneration for their services. (2) Subsection (1) applies for the purpose of enabling a power to be exercised at any time on or after July 1, 1973, notwithstanding that the power is conferred by an instrument that took effect before that date. RSA 1980 cP‑4 s15 Avoidance of contractual rights in cases of remoteness 16 When a disposition inter vivos would be treated as void for remoteness if the rights and duties under it were capable of transmission to persons other than the original parties and had been so transmitted, it shall be treated as void as between the person by whom it was made and the person to whom or in whose favour it was made or any successor of that person, and no remedy lies in contract or otherwise for giving effect to it or making restitution for its lack of effect. RSA 1980 cP‑4 s16 Options to acquire reversionary interest 17 (1) The rule against perpetuities does not apply to an option to acquire for valuable consideration an interest reversionary on the term of a lease or renewal of a lease, whether the lease or renewal is of real or personal property, (a) if the option is exercisable only by the lessee or the lessee’s successors in title, and (b) if it ceases to be exercisable at or before the expiration of one year following the determination of the lease or renewal. (2) Subsection (1) applies to an agreement for a lease as it applies to a lease, and “lessee” shall be construed accordingly. (3) Subsection (1) applies to a right of first refusal or pre‑emption as it applies to an option. (4) The rule against perpetuities does not apply to options to renew a lease of real or personal property. RSA 1980 cP‑4 s17 Commercial transactions 18 (1) In the case of a contract whereby for valuable consideration an interest in real or personal property may be acquired at a future time, the perpetuity period is 80 years from the date of the contract, and if the contract provides for the acquisition of such an interest at a time greater than 80 years, then the interest may be acquired up to 80 years and not afterwards. (2) In particular and not so as to restrict the generality of subsection (1), that subsection applies to all contracts relating to a future sale or lease, to options in gross, rights of pre‑emption or first refusal and to future profits a prendre, easements and restrictive covenants. (3) This section does not apply to any provision in a will or inter vivos trust. RSA 1980 cP‑4 s18 Possibilities of reverter and conditions subsequent 19 (0.1) In this section, (a) “minerals” means all naturally occurring minerals and, without restricting the generality of the foregoing, includes gold, silver, uranium, platinum, pitchblende, radium, precious stones, copper, iron, tin, zinc, asbestos, salts, sulphur, petroleum, oil, asphalt, bituminous sands, oil sands, natural gas, coal, anhydrite, barite, bauxite, bentonite, diatomite, dolomite, epsomite, granite, gypsum, limestone, marble, mica, mirabilite, potash, quartz rock, rock phosphate, sandstone, serpentine, shale, slate, talc, thenardite, trona, volcanic ash, sand, gravel, clay and marl; (b) “mineral lease” means a lease of minerals in the nature of a profit a prendre for a term of uncertain duration. (1) In the case of (a) a possibility of reverter on the determination of a determinable fee simple, or (b) a possibility of a resulting trust on the determination of a determinable interest in real or personal property, the rule against perpetuities as modified by this Act applies in relation to the provision causing the interest to be determinable as it would apply if that provision were expressed in the form of a condition subsequent giving rise on its breach to a right of re‑entry or an equivalent right in the case of personal property, and, if the event that determines the determinable interest does not occur within the perpetuity period, the provision shall be treated as void for remoteness and the determinable interest becomes an absolute interest. (2) The perpetuity period for the purpose of a possibility of reverter or a possibility of a resulting trust or of a right of re‑entry on breach of a condition subsequent or equivalent right in personal property is 40 years. (3) Subsection (1) does not apply when the event that determines the prior interest or on which the prior interest could be determined, is the cessation of a charitable purpose but in that case if the cessation of the charitable purpose takes place after the expiration of the perpetuity period, the property shall be treated as if it were the subject of a charitable trust to which the cy‑pres doctrine applies. (4) This section does not apply, nor does the rule against perpetuities apply, to a gift over from one charity to another. (5) For greater certainty, subsection (1) does not apply to a mineral lease, whether the lease was entered into before or after the coming into force of this subsection. RSA 2000 cP‑5 s19;2013 c10 s3 Specific non‑charitable trusts 20 (1) A trust for a specific non‑charitable purpose that creates no enforceable equitable interest in a specific person (a) shall be construed as a power to appoint the income or the capital, as the case may be, and (b) is, unless the trust is created for an illegal purpose or a purpose contrary to public policy, valid so long as and to the extent that it is exercised either by the original trustee or the trustee’s successor within a period of 21 years, notwithstanding that the disposition creating the trust manifested an intention, either expressly or by implication, that the trust should or might continue for a period in excess of that period, but, in the case of such a trust that is expressed to be of perpetual duration, the court may declare the disposition to be void if the court is of the opinion that by so doing the result would more closely approximate the intention of the creator of the trust than the period of validity provided by this section. (2) To the extent that the income or capital of a trust for a specific non‑charitable purpose is not fully expended (a) within a period of 21 years, or (b) within any annual or other recurring period within which the disposition creating the trust provided for the expenditure of all or a specified portion of the income or the capital, each person or that person’s successors, who would have been entitled to the property comprised in the trust if the trust had been invalid from the time of its creation, are entitled to the unexpended income or capital. RSA 1980 cP‑4 s20 Rule in Whitby vs. Mitchell abolished 21 The rule of law prohibiting the disposition, after a life interest to an unborn person, of an interest in land to the unborn child or other issue of an unborn person is hereby abolished, but without affecting any other rule relating to perpetuities. RSA 1980 cP‑4 s21 Rules not applicable to employee benefit trusts 22 The rules of law and statutory enactments relating to perpetuities and to accumulations do not apply and are deemed never to have applied to the trusts of a plan, trust or fund established for the purpose of providing pensions, retirement allowances, annuities or sickness, death or other benefits to employees or persons not being employees engaged in any lawful calling or to their widows, widowers, dependants or other beneficiaries. RSA 1980 cP‑4 s22 Rule against perpetuities not applicable to qualifying environmental trusts 22.1 (1) In this section, “qualifying environmental trust” means a qualifying environmental trust as defined in section 1(1)(p.2) of the Alberta Personal Income Tax Act. (2) The rule against perpetuities does not apply to a qualifying environmental trust created after December 31, 2013. 2014 c13 s9;2015 c21 Sched. 2 s4 Application to Crown 23 This Act and the rule against perpetuities bind the Crown except in respect of dispositions of property made by the Crown. RSA 1980 cP‑4 s23 Accumulations of income 24 (1) The Accumulations Act, 1800 , 39 & 40 Geo. III c98 (U.K.), does not apply in Alberta. (2) When property is settled or disposed of in such manner that the income of the property may or must be accumulated wholly or in part, the power or direction to accumulate that income is valid if the disposition of the accumulated income is or may be valid but not otherwise. (3) Nothing in this section affects the rights of any person to terminate an accumulation that is for the person’s benefit or any jurisdiction or power of the court to direct payments from accumulations pursuant to any statute. (4) This section applies to instruments taking effect before or after July 1, 1973 except when the period of accumulation permitted by the Accumulations Act, 1800 has expired before July 1, 1973 and as a result a beneficiary has acquired a vested right to receive income from property. RSA 1980 cP‑4 s24 Application of Act 25 Except as provided in sections 15(2), 22 and 24(4), this Act applies only to instruments taking effect after July 1, 1973, including an instrument made in the exercise of a general or special power of appointment after July 1, 1973 even though the instrument creating the power took effect before July 1, 1973. RSA 1980 cP‑4 s25