The Alberta Law Reform Institute Recommends Abolishing Perpetuities Law
April 3, 2017
BY British Columbia Law Institute
On March 21, 2017, the Alberta Law Reform Institute (ALRI) published its report Abolition of Perpetuities Law. In the report, the ALRI recommends that Alberta follow Manitoba, Nova Scotia, and Saskatchewan in abolishing the rule against perpetuities. The Uniform Law Conference of Canada (ULCC) also recommended abolishing perpetuities law in its 2012 Uniform Trustee Act.
The ALRI first reviewed perpetuities law in 1971. At the time, it recommended reforms to the modern rule against perpetuities, including the adoption of the wait and see principle, but rejected abolition. Those changes were implemented in Alberta by the Perpetuities Act, which was recently amended to exclude mineral leases and certain environmental trusts from the scope of the perpetuity rule.
The ALRI began considering abolition of the perpetuities rule as part of a project on the implementation of the 2012 ULCC Uniform Trustee Act, which culminated with the report A New Trustee Act for Alberta. In 2014, the provincial Ministry of Justice and Solicitor General, concerned about the economic effects of perpetuities law, requested the ALRI to conduct this latest review as a separate project.
Addressing remoteness of vesting
The ALRI points out that the 21-year deemed disposition rule under the Income Tax Act and modern variation of trusts legislation greatly diminish the need for perpetuities law by discouraging the creation of long-term trusts with contingent interests. ALRI’s consultation feedback from trusts and estate practitioners and the judiciary indicated majority support for abolition of the rule against perpetuities. In addition, the ALRI places reliance on modern trust variation legislation in preference to the inflexible common law perpetuity rule to deal with problems associated with remoteness of vesting.
Rather than extend trust variation legislation to non-trust equitable and common law interests that are otherwise subject to perpetuities law, such as conditional easements and rights of re-entry, the ALRI recommends that Alberta enact a new statute providing for court variation of instruments creating these interests. The new statute would be based on Nova Scotia’s Real Property Act.
The report A New Trustee Act for Alberta, released earlier this year, refers to the 2004 BCLI report A Modern Trustee Act for British Columbia and the 2003 BCLI report Creditor Access to the Assets of a Purpose Trust.