NEW JERSEY DOES AWAY WITH RULE AGAINST PERPETUITIES

On July 8, 1999, the New Jersey legislature has done away with the rule against perpetuities which has confounded law students for many years. Under the old common law which we inherited from England, it was thought that property interests should come to rest (or vest in someone) after a certain number of years. That number of years could be as long as lives in being (you pick the people who are then living) plus 21 years. In other words, control over property must cease at some time.

New Jersey has now gone the way that more and more states are going. Why does property need to vest at any particular time? Vesting will only create problems but it will give some people a greater sense of security. Here's what I mean. Why leave assets to children or grandchildren when 50% are getting divorced and the property is often mixed with the couple's other assets so as to make the inherited assets marital property. The assets could be used but protected. Say you have a child with a shaky marriage. Leave the assets in trust for the benefit of that child and grandchildren and use it only to satisfy their necessaries and then it may be used for the next generation. It will be never be subject to the claims of creditors (malpractice lawsuits, lead paint, automobile accidents, divorcing spouses etc.). It's the greatest asset protection device alive and you don/t need a limited partnership or offshore trust to accomplish your goals. Moreover its simple and part of an estate plan and can be incorporated in a Will or Revocable Living Trust.

New York still retains the old rule. But even with the old rule, you can get protection for almost a hundred years. Just pick out young people as your lives in being and add 21 years to the mix. Now you have a workable domestic trust without fear and without much cost. Speak to your estate planning lawyer about this device.