At common law, in trusts there is something called “the rule against perpetuities”, which means that a trust must either fully vest or be distributed within “21 years of a life in being”.

At common law, in trusts there is something called “the rule against perpetuities”, which means that a trust must either fully vest or be distributed within “21 years of a life in being”. In real terms that means a trust cannot last longer than 21 years past any named person dies at the time of the creation of the trust. One of the reasons for this rule was that economically, it created something known as “waste” which is essentially money sitting around idly. People create trusts to control money after they are gone so as to not allow others to throw away what they have earned (e.g. spoiled-brat entitled children). 

In Florida, there is a statute which states that a trust can exist for 360 years after its creation date (roughly 5 generations). During that time it is not taxed and is still governed by the same rules created by the trust.

Does it make economic sense for money to be held (essentially by a deceased) person for nearly four centuries? Does this create economic waste? Does it encourage people to create trusts in Florida? Is this economically sensible?

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