If you’re thinking about creating a trust, you might be wondering – how long can it last? How many years can a trust last in Arizona?
This is something that goes way back in time, to the beginning of trusts when they were first invented in English common law. There were some sneaky guys who were like, we’re going to put stuff in a trust forever. It was literally intended to be forever, nobody can touch it. They can put all these strings around it.
Well, that ended up going into court and the court stripped it and said, “Nope, can’t create trusts that last forever.” It’s against the rule of perpetuity. It can’t be in trust, in perpetuity, they said way back when it’s limited to 21 years. So, you can create them for this long: somebody’s lifespan plus 21 years. That was what the rule was way back when they first started creating trust laws.
Well, Arizona has changed a lot of that. Right now, Arizona says you can create a trust for somebody’s lifespan plus 500 years. In reality, it’s kind of forever when you think about that, right? 500 years? The United States has only been around for a couple hundred years? Maybe 250 years? Five hundred years – it’s a long time.
Why would you create a trust for 500 years? There are a couple of reasons. I think of folks who are looking at it from a charitable giving standpoint. You can do some pretty cool things if you say don’t spend this money for 50 years, just invest it. Split it over 50 years, and then we’re going to start implementing some charitable ratios.
Benjamin Franklin did that with his, and he benefited the city of Philadelphia, the state of Pennsylvania. It has to sit in trust for 100 years first, and then it can start being dripped out. Now, obviously, he’s let something sit for 100 years and just earns some basic, simple interest. It’s going to massively grow, and that’s what happens.
You can do things like that, and then that keeps going, that’s where you’re allowed to do it for hundreds of years. Or you could say something like, “I want this to stay in trust for my family, my bloodline, and it’s going to just benefit the generations.”
A lot of times, it’s called a dynasty trust or a generation-skipping trust where it’s literally just going generation by generation. There’s enough money there, and you only allow distribution of a certain percentage so that there’s always a main amount of it where it’s just being distributed a small percentage, maybe three, four, five, six, seven percent. So that it actually never runs out.
It just grows enough to sustain the distributions, or maybe it grows a lot more to sustain those distributions. It will be around for a long time. That’s where you can do something for 500 years and create a little bank for your family bloodline, then always have that private trust for their benefit. That’s the way you might use a trust for multiple hundreds of years.
Summary
In Arizona, the duration of a trust can extend far beyond traditional limits. English common law originally restricted trusts to 21 years after the grantor dies. Today, Arizona allows trusts to last for an individual’s lifetime plus 500 years. This extended duration can serve charitable goals or establish dynasty trusts, ensuring long-lasting benefits for generations while maintaining control over trust assets.
