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

g. RAP Approach #5: Rhode Island
perpetual trust,” which is exempt from the RAP, 61 simply by designating
in the trust instrument that the RAP does not apply and making sure that
the power of alienation is not suspended beyond the common law
perpetuities period. 62 Thus Illinois effectively emphasizes alienability
instead of remoteness of vesting, but leaves the common law RAP as a
default rule that can be easily waived. Illinois does not address the
alienability concern behind the RAP. 63
Please Note: Maine 64 takes a similar opt-out approach. It has a modified
wait-and-see rule, but so long as the trust instrument’s language opts out
of the RAP and the power to alienate the trust property is not suspended
beyond the perpetuities period, the RAP will not apply. 65 Maryland 66
and Ohio 67 also take this approach.
Rhode Island has a unique approach to its RAP. 68 It had completely abrogated its RAP
without leaving any rule against alienation as a stopgap. This seems to deal with the
“timing” issue but leaves the “vesting” issue unanswered. Many states have handled the
vesting issue statutorily (see Approach #1 in outline section 2.a.).
Pennsylvania abolished its RAP for interests created after December 21, 2006 but did not
leave the leave the rule against alienation as a stopgap. Pennsylvania retains its wait-andsee
approach to RAP for interests created before January 1, 2007. 69
3. CHANGE OF SITUS – CONSTRUCTIVE ADDITION
a. Introduction: Once GST tax exemption has been allocated to a trust, any material
change to the nature of the beneficial interest might trigger a constructive addition,
thereby eroding the GST tax inclusion ratio. 70
b. States: Several of the dynasty jurisdictions have somewhat different perpetuities rules
except for the approach #1 suspension of alienation states:
i. Alaska (with exceptions)
ii. Delaware
iii. Idaho
iv. Kentucky
v. Missouri
vi. New Hampshire
61 Id. 305/4(a)(8).
62 Id. 305/3(a-5).
63 Moritz, supra note 5.
64 ME. REV. STAT. ANN. tit. 33, § 101-A.
65 Id.
66 MD. CODE ANN., EST. & TRUSTS §§ 11-102 – 11.103.
67 OHIO REV. CODE ANN. §§ 2131.08, 2131.09.
68 R.I. GEN. LAWS § 34-11-38, see also Worthington “Problems and Promise,” supra note 5.
69 20 PA. CONS. STAT. §§ 6104, 6107.1.
70 Worthington “Problems and Promise,” supra note 5.
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