Back in 2020, Indiana was still in the minority of states that had not amended their “RAP” or Rule Against Perpetuities. At the time, the Indiana’s perpetuity period was 90 years, which meant trusts could not last past this deadline.) As noted in an Indiana Lawyer article, Rebecca Geyer, as a member of the American College of Trust and Estate Counsel, was one of those in favor of extending the period (the time over which wealthy families could protect their assets for generations while avoiding federal transfer taxes). She felt that extending the protection would put Indiana at an economic advantage.
Now that vision has become a reality. On March 11, 2024, Indiana Gov. Eric Holcomb signed into law House Bill 1209, which amends Indiana law to extend the rule concerning how long trusts may last to 360 years
Geyer Law estate planning attorneys remind readers that persons with Indiana trusts effective before July 1, 2024, particularly revocable trusts, should consider consulting their legal counsel regarding the application of the new rule to their own trusts.
Looking back in history, it’s interesting to note that Old English common law had originally set the limit at 21 years, in effect making the interest in a trust vest within the life of a single beneficiary. In contrast, the new limits now in effect here and in most other states, extend the possible protection to the lives of ten beneficiaries!
Despite the actual change that has now been made effective in Indiana law, opposition to dynasty trusts remains with creditors raising concerns about inability to collect on assets, and others considering 360 years excessive.
But, true to Rebecca Geyer’s prediction years ago, with the new RAP in place, Indiana will no longer be “losing potential revenue coming from state income taxes and fees paid to manage trusts in the Hoosier State”. And, while the dynasty trust is not the type of sophisticated strategy an average person is going to take advantage of, she admits, for those Indiana citizens who might, we now “won’t be sending them elsewhere.”
– by Ronnie of the Rebecca W.. Geyer blog team
