NC's Repeal of Rule Against Perpetuities Upheld
I previously blogged about NC's repeal of the Rule Against Perpetuities, which limited the amount of time a trust could stay in existence, and some questions that existed regarding the repeal's validity.
In February 2009, an order was entered by Judge Albert Diaz in the Mecklenburg County Superior Court found that:
- Section 41-23 of the North Carolina General Statutes, denominated as Perpetuities and Suspension of Power of Alienation for Trusts (the "Act"), is a valid exercise of the General Assembly's legislative power to repeal both the common law Rule Against Perpetuities and the Uniform Statutory Rule Against Perpetuities, as they apply to trusts in North Carolina;
- The prohibition against "perpetuities and monopolies" found at Article I, Section 34 of the North Carolina Constitution applies only to unreasonable restraints on the alienation of property and not to the vesting of remote interests.
The Court declared that the Act is constitutional and supersedes the common law Rule Against Perpetuities and the Uniform Statutory Rule Against Perpetuities.
Brown Brothers Harriman Trust Co., N.A., as Trustee of the Benson Trust v. Anne P. Benson, et al; Mecklenburg County File No. 08 CVS 13456
As a Superior Court ruling (rather than Court of Appeals or Supreme Court), this holding is not binding on other North Carolina Courts, but it does serve to help answer the questions posed in the my earlier post. I would feel fairly comfortable preparing a North Carolina dynasty trust at this point.
We encourage anyone interested in this matter to take a look at "Allowing Perpetuities in North Carolina," an article that was recently published in the Campbell Law Review. The author is John V. Orth, a professor at the UNC School of Law.
It can be accessed at http://law.campbell.edu/lawreview/articles/31-3-399.pdf.
-Campbell Law Review