Rule Against Perpetuities
Trusts in general are subject to the rule against perpetuities which, in practical terms, puts limits on the length of time within which all trust property must be distributed. Because of the strictures of the rule, a number of trusts have been struck down in wildly hypothetical circumstances because of possible infringement of the rule (see, e.g. the fertile octogenarian).
Most offshore jurisdictions which have sophisticated trust laws have modified their laws relating to perpetuity to allow settlor to select lengthy, fixed, perpetuity periods, to avoid the use of "Royal lives" clauses. Many have also adopted "wait and see" laws, which mean that trusts which might potentially infringe the rule against perpetuities are no longer automatically invalid, but instead the trust remains valid unless and until the perpetuity period is breached.
In Jersey the rule against perpetual trusts has actually been abolished entirely. This has also been done in a number of U.S. states.
Read more about this topic: Offshore Trust
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