76-2002. Statutory rule against perpetuities.
a) A nonvested property interest is invalid unless:
(1) When the interest is created, it is certain to vest or terminate no later than twenty-one years after the death of an individual then alive; or(2) The interest either vests or terminates within ninety years after its creation.
A group of estate planning attorneys posted this statement about RAP and state trust laws:
"This week I’m at the Heckerling Institute on Estate Planning. In the Recent Developments session, we discussed the increasingly lengthy term of trusts. Today, 28 states and the District of Columbia have repealed the Rule Against Perpetuities. (The common law Rule is that an interest must vest, if at all, at the expiration of a life in being plus 21 years.)"
These laws allow "dynasty trusts," trusts that allow the very rich to maintain a financial dynasty. Charles Schwab explains:
"The main feature of a dynasty trust is its ability to avoid estate and generation-skipping taxes each time wealth is transferred from one generation to the next. In turn, assets in the trust are allowed to stay invested with the potential to accumulate additional wealth for each successive generation."
Hopefully, upper level classes in wills, trusts and estate planning will deal with dynasty trusts and how to keep the rich rich forever.
For now, just be aware that some states have abolished the Rule entirely, others have exempted certain trusts from the Rule, and others, such as Nebraska, have adopted a statutory RAP that provides a 90-year wait and see provision.
