Probate & Trust Law Section Conference Manual ... - Minnesota CLE

*In 1995, Delaware enacted legislation that permits stocks, bonds, and other personal
property to remain in trust forever. 2 Real property is limited to only 110 years in trust. 3
This 110 real property limitation can be avoided by putting the property in a limited
liability company or a family limited partnership because, under Delaware law, interests
in these entities are personal property. 4
Please See: Daniel G. Worthington, Perpetual Trust States – The Latest Rankings,
TRUSTS & ESTATES, Jan. 2007;
2. APPROACH TO REPEALING OR MODIFYING THE RAP
There has been no one dominant approach to repealing or modifying the RAP. Several
approaches have been utilized to create perpetual and long-term trusts. 5
a. RAP Approach #1: Suspension of the Power to Alienate
Several states shift the perpetuities inquiry from remoteness of vesting to suspension of
the power to alienate. Consequently, if the trustee has an explicit or implied power to sell,
the trust jumps outside the rule of suspension of alienation, which limits the duration of a
trust. These states have also generally abrogated their rule against perpetuities, which
addresses the timing issue. Consequently, these states address both the “timing” and
“vesting” issues associated with doing away with their RAP. These states are further
categorized as:
i. Pre-1986 States: Idaho, 6 South Dakota, 7 Wisconsin 8
Please note: These states are sometimes referred to as the “bellwether” states
because they made changes to their applicable law before the generation-skipping
transfer (GST) tax was imposed in 1986, and therefore their statutory purpose
could not have been to circumvent the Internal Revenue Code (IRC). Congress
passed the GST tax in 1986, imposing a tax on property transfers to skip
persons. 9
2 DEL. CODE ANN. tit. 25, § 503.
3 Id.
4 Id.
5 The various methods of repealing or modifying the Rule Against Perpetuities are outlined in the following articles:
Garrett Moritz, Note, Dynasty Trusts and the Rule against Perpetuities, 116 HARV. L. REV. 2588 (2003); Jesse
Dukeminier & James E. Krier, The Rise of the Perpetual Trust, 50 UCLA L. REV. 1303 (2003); Stewart E. Sterk,
Jurisdictional Competition to Abolish the Rule Against Perpetuities: R.I.P. for the R.A.P., 24 CARDOZO L. REV.
2097 (2003); Daniel G. Worthington, The Problems and Promise of Perpetual Trust Laws, TRUSTS & ESTATES, Dec.
2004; Charles D. Fox IV & Michael J. Huft, Asset Protection and Dynasty Trusts, 37 REAL PROP. PROB. & TR. J.
287 (2002); Richard W. Nenno, Relieving Your Situs Headache: Choosing and Rechoosing the Jurisdiction for a
Trust, 2006 Miami Tax Institute; Daniel G. Worthington, Is Florida’s New Rule Against Perpetuities a Generation-
Skipping Transfer Tax Trap for the Unwary?, TRUSTS & ESTATES, Dec. 2000.
6 IDAHO CODE ANN. § 55-111.
7 S.D. CODIFIED LAWS §§ 43-5-1 – 43-5-9, 55-1-20.
8 WIS. STAT. § 700.16.
9 See supra note 5.
© South Dakota Trust Company LLC – All Rights Reserved
Page | 4