Why Some Interests Are Exempt
The rule against perpetuities stops wealthy families from tying up property forever through dynastic trusts. It was never meant to block ordinary business deals, fiduciary duties, or charitable giving.
This statute draws a clear line between interests that need policing and those that do not.
This article does not apply to: 1. A nonvested property interest or a power of appointment arising out of a nondonative transfer, except for a nonvested property interest or a power of appointment arising out of any of the following: (a) A premarital or postmarital agreement. (b) A separation or divorce settlement.
A.R.S. § 14-2904(1)Business deals are generally excluded. Buyers and sellers negotiate at arm's length and can protect themselves.
However, the statute carves out family-related agreements. Premarital agreements, divorce settlements, and spousal elections still fall under the rule. So do contracts about wills or trusts and transfers tied to a support duty.
Management and Charitable Exclusions
The statute also excludes fiduciary management powers. These include a trustee's authority to sell, lease, or mortgage property. They also include the power to sort out principal and income.
These are management tools, not ownership interests. The perpetuities rule has no reason to limit them.
Charitable interests that follow other charitable interests are exempt too. The rule does not apply when a trust directs property from one charity to another. The same is true when a charity, government, or agency holds the interest after another such entity.
Employee benefit plans also fall outside the rule. This includes pension, profit-sharing, and health plans. These serve ongoing purposes that should not be cut short by time limits.
For most families with a living trust, these exclusions are good news. Standard trustee powers, retirement account designations, and charitable giving all sit outside the perpetuities framework.