The commencement of the Perpetuities and Accumulations Act 2009 in relation to Wills

 In Wills

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COMMENCEMENT OF THE PERPETUITIES AND ACCUMULATIONS ACT 2009

Perpetuities and Accumulations Act 2009 (PAA 2009) came into effect on 6 April 2010 (Perpetuities and Accumulations Act 2009 (Commencement) Order 2010, SI 2010/37). Where it applies, the perpetuity period is 125 years (s 5), and there is no limit apart from the perpetuity period on the period for which income can be accumulated (s 13) unless it is a charitable trust (s 14).

Timing

PAA 2009 applies to any lifetime settlement made and any Will made on or after 6 April 2010 (PAA 2009 s 15(1)). However, whereas Perpetuities and Accumulations Act 1964 (PAA 1964) applied to the Will of anyone who died after the commencement date of that Act, even though the Will was made before it (PAA 1964 s 15(2), (5)), PAA 2009 does not apply to a Will made before 6 April 2010, even where the testator dies on or after it (PAA 2009 s 15(1)(a)). PAA 1964 will continue to apply to a Will made before 6 April 2010 of a person dying on or after that date and even if the Will was made before PAA 1964 came into force (PAA 1964 s 15(5A) inserted by PAA 2009 s 16).

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However, there are two ways in which PAA 2009 can come to apply to a pre-6 April 2010 Will, where the testator dies on or after that date:

  1. by virtue of a codicil made on or after 6 April 2010
  2. by exercise of a special power of appoint¬ment created by the Will.

Codicils

A codicil usually has the effect of ‘republishing’ the Will to which it is a codicil, and the effect of this is (subject to an express or implied contrary intention) to make the Will speak from the date of the codicil for many purposes. PAA 2009 makes no express provision for the effect of a codicil made on or after 6 April 2010 to a Will made before that date. It does provide that references in PAA 2009 to a Will include a codicil (s 20(7)). Therefore it seems likely as a matter of principle, but it is not absolutely certain, that a codicil to a pre 6 April 2010, where the codicil is made on or after that date, causes PAA 2009 to apply to the Will. The practical position is that it will be an unusual case where there is any serious problem about this. If the codicil makes no changes to the Will to take advantage of PAA 2009 it is unlikely to matter whether the Will is subject to PAA 2009 or not, because the beneficial interests will remain ones tailored to the requirements of the pre-PAA 2009 law. If the codicil does make changes to the Will to take advantage of PAA 2009, it will be obvious that PAA 2009 is intended to apply to the provisions in the Will.

Special Powers of Appointment

As regards exercises of special powers of appointment, PAA 2009 apparently has the interesting effect that PAA 2009 can apply to an exercise of a special power created by a Will which was made before 6 April 2010, if the testator dies on or after that date. PAA 2009 s 15(1) provides that the main provisions of that Act apply to an instrument ‘taking effect’ on or after 6 April 2010, and s 15(1)(b) excludes from this an instrument made in exercise of a special power of appointment if the instrument creating the power ‘took effect’ before that day. PAA 2009 s 20(6) provides that an instrument which is a Will ‘takes effect’ at the testator’s death. While there is in PAA 2009 s 15(1)(a) an express exclusion from PAA 2009 of Wills made before 6 April 2010 of persons dying on or after that date, there is no such exclusion from PAA 2009 of exercises of powers created by Wills made before that date of persons dying on or after it.

Summary

In general PAA 2009 only applies to Wills and Settlements made on or after 6 April 2010, and does not apply to exercises of special powers of appointment made on or after that date where the instrument creating the power took effect before that date. There are two possible ways for PAA 2009 to apply to the trusts of a Will made before 6 April 2010 of a testator who dies on or after that date: (i) where the testator made a codicil on or after that date which had the effect of republishing the Will, and (ii) by the exercise of a special power of appointment created by the Will.

 

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