Think of a long-dead ancestor your parents might have told you about. 50 years, 100 years. The further back, the better. Now, imagine the dead relative controlling your family land from beyond the grave.
If this seems too far-fetched, we have news. The situation used to be completely legal!
You see, there existed a legal arrangement which one could have used to exert continuous control (or control in perpetuity) over property using a Will or a Deed. How did this work?
Imagine if a Mr. A had set up a Living or Testamentary Trust, clearly stating that:
“My 100 acres of land, situate* at Plot 110 to Plot 210, Sangotedo, Lagos State should be given to my only son B and upon the death of B, should be given to my grandson C and upon the death of C, should be given to any of C’s children (my great grandchildren) and upon the death of that great grandchild, should be given to the heir of that child and for as long as the property is in existence, it shall be bequeathed to the heir of each successive beneficiary”.
As you can see, the straightforward clause implies that Mr. A could possibly control how the property is used forever. This is exactly what an ancestor could have done to you a few centuries ago.
What changed to make such a situation illegal, you ask? Story time!
THE ORIGIN OF TRUST DURATIONS
Nigeria inherited its legal system from England where for many years, owners tied up property indefinitely. Things changed after the judicial intervention in the Duke of Norfolk’s Case of 1682. In that case, the Earl of Arundel made a Will so that his property could pass to his eldest son Thomas (who was mentally deficient),
And upon Thomas’s death, the property would pass to his second son Henry,
And upon the death of Henry, the property would then pass to another son Charles,
And so on for many generations later if certain conditions should occur.
Henry (who later became the 6th Duke of Norfolk) received the property upon the death of his elder brother Thomas, but tried to prevent the property from passing to his young brother Charles upon his own death. Charles sued to protect his interest, and the English court ruled that tying up property too long beyond the lives of people living at the time was wrong. However, the judges did not give a time frame for how long a Testator or Settlor could tie up their property.
In the judicial matter of Cadell v. Palmer 150 years later, the court established that property cannot be tied up for more than 21 years after the last life in being. That new rule is today known as the ‘Rule against perpetuity’.
RULE AGAINST PERPETUITY
The Rule against perpetuity is codified under Nigerian law. Section 27 of the Trustees Act of 1889 and a Statute of general application prevents a Settlor from tying up property indefinitely in Nigeria.
The section even empowers the Nigerian court to intervene and vest the property, thereby preventing people from using a Living Trust or a Testamentary Trust to exert control over the ownership of private property indefinitely.
Specifically, the rule forbids a person from creating future interests in property that will go beyond 21 years after the lifetime of those living at the time the interest is created. The principle therefore permits a Settlor to tie up property for up to 21 years after their last living heir dies but no further. This is why the rule is often referred to as the rule of ‘Life in being plus 21 years’.
Let us backtrack a little.
Looking at our first example, Mr. A will be able to direct the use of his 100 acres of land at Sangotedo, Lagos State with respect to Mr. B (his son), Mr. C (his grandson) and Mr. D (his great grandson) only if they are all alive at the time he makes the Trust Deed or Will. If Mr. C (his grandson) is the youngest heir alive at the time he makes the document, then Mr. A will not be able to direct how his great grandson uses the land because that great grandson was not ‘a life in being’ at the time he made the document.
Where Mr. A has only a son but no grandson, then he will only be able to direct how his son uses the property and not his grandson who had not yet been born when he made the Trust or Will. In fact, after the 21 years following the death of the last ‘life in being’, the property must finally vest on the living heirs at that time (who will do with the property as they desire).
Bringing it closer to home, the rule came up in the Nigerian case of Adekunle Adeseye & Ors v. Nathaniel A. Williams & Ors. In that case, a beneficiary of the deceased brought an action against the Trustees appointed by his father to execute his estate. The father had instructed the Trustees not to sell a particular property but to collect rent from the property for 15 years, after which the property should be given to the beneficiary. The court held that the instruction of the deceased appeared to create a valid private trust. It was found that the instruction did not offend the rule against perpetuities because after 15 years of the Will coming into force, the house was to be conveyed to the beneficiaries.
It should however be noted that Charitable Trusts are not subject to the rule against perpetuity. Consequently, a Trust set up for charitable purposes can continue indefinitely to the designated class of beneficiaries so long as the asset subsists.
Finally, the purpose of the rule against perpetuity is to prevent property owners from attaching long lasting contingencies to their property, which will harm the ability of future generations to freely sell or use a property as they desire. This is because few people will be willing to buy property that has unresolved issues regarding its ownership hanging over it.
If your instructions violates the rule against perpetuity, the court will invalidate them.
Do you have plans to secure the future of your loved ones?
Would you like to be able to plan for the long term?
If your answer to the above questions is yes, you will need an estate planning professional to ensure that your projected duration does not offend the rule against perpetuity.
We happen to know just where you can find an estate planning professional!
HB: For more details on making a Will or Trust, click here .
*‘Situate’ is one of the ways in which lawyers say ‘located’.