Why Is It Thought to Be a Bad Thing to Allow

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The Answer is Allowing a trust to last forever, also known as a "perpetual trust," is often thought to be a bad thing for several reasons:

1. **Concentration of Wealth**: Perpetual trusts can lead to the concentration of wealth within certain families or groups across generations. This can exacerbate economic inequality and limit the distribution of wealth in society.

2. **Loss of Relevance**: The original intent of the trustor (the person who creates the trust) may lose relevance over time. Social, economic, and family circumstances can change dramatically, making the original terms of the trust obsolete or inappropriate.

3. **Inflexibility**: Trusts that last indefinitely can become inflexible and unable to adapt to new laws, economic conditions, or family situations. This can make the trust less effective in fulfilling its intended purpose.

4. **Diminished Incentives**: Beneficiaries of a perpetual trust may lack financial incentives to work or contribute to society if they can rely on trust income indefinitely. This can lead to a lack of motivation and productivity among beneficiaries.

5. **Legal and Tax Issues**: Perpetual trusts can create complex legal and tax issues. For example, the Rule Against Perpetuities, a legal principle in many jurisdictions, was established to prevent trusts from lasting indefinitely and to ensure that property is not tied up for too long.

6. **Administrative Burden**: Managing a trust over an indefinite period can be burdensome and costly. Trustees may need to be replaced over time, and the administrative costs can erode the trust's assets.

7. **Potential for Mismanagement**: The longer a trust exists, the greater the risk of mismanagement or abuse by trustees. Future trustees may not act in the best interests of the beneficiaries or may not manage the trust's assets effectively.

8. **Interference with Market Dynamics**: Perpetual trusts can interfere with the natural flow of capital and property within the market. By preventing assets from being sold or redistributed, these trusts can reduce market liquidity and efficiency.

9. **Generational Disconnect**: As generations pass, the connection between the beneficiaries and the original trustor diminishes. This can lead to a lack of appreciation for the assets or the purpose of the trust.

10. **Public Policy Considerations**: Many legal systems favor the eventual distribution and transfer of wealth. Perpetual trusts can run counter to this principle, prompting lawmakers to discourage or limit their duration through legislation.

For these reasons, many jurisdictions have laws that limit the duration of trusts, such as the Rule Against Perpetuities, which typically allows trusts to last only for a certain period after the death of the last identifiable beneficiary alive at the time the trust was created.

Why Is It Thought to Be a Bad Thing to Allow

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