Apr 2023

Disney, DeSantis, King Charles, and New Jersey Trust Law

Recent news reports on the tussle between Florida governor Ron DeSantis and the Walt Disney Company over control of Disney’s Reedy Creek Improvement District note a rather quirky tactic used by the outgoing board just before the Governor’s incoming appointees took control, one that indirectly drags King Charles III and his descendants into the mess.

The District (now renamed the Central Florida Tourism Oversight District) covers the property that makes up the Walt Disney World Resort (WDW) and was created by the Florida legislature in 1967. The District essentially acts as a county government for WDW, providing services such as firefighters and police. Until recently, Disney appointed the board members that controlled the District; this changed due to a new law promoted by Governor DeSantis that gave him the power to appoint the board.

Before Governor DeSantis’s appointed board members took over in February 2023, however, the outgoing District board adopted a “Declaration of Restrictive Covenants.” Among other things it limits how the WDW property can be used in the future and prohibits the District board from using the Disney name or Disney characters in any way.

It’s the duration of this declaration that has caught the fancy of many commentators, though. It is “effective in perpetuity.” However, if that is found to violate the “Rule Against Perpetuities,” then the declaration shall continue to be in effect “until twenty-one (21) years after the death of the last survivor of the descendants of King Charles III, King of England living as of the date of this Declaration.”

The Rule Against WHAT?

First, let’s discuss the Rule Against Perpetuities. It is a very old rule of law and also a topic that has confounded law students (and lawyers) for hundreds of years. It comes from trust and estate law and has a simple purpose: to restrict the ability of someone to control their property after they die. In its classic form, the Rule Against Perpetuities says that property affected by the rule must “vest” in the person to whom it is to be granted within 21 years after the death of someone alive when the interest in the property was created. This interest in property can be direct ownership, such as when real estate is passed from one person to another through a will, or in the form of a trust created by a will or otherwise.

A simpler way of putting it is that the Rule Against Perpetuities restricts a trust or a restriction on the use of property from continuing forever.

It’s a rule given to us by our English friends when we adopted much of their common law, which is law that is created by court decisions versus being written down in statutes. Since then, however, many states have also enacted statutory versions of some form of the Rule Against Perpetuities. In one version of the rule adopted by many states, for example, the length of time is a simpler-to-measure 90 years from the date the interest was created.

But Why Drag King Charles III Into It?

The Rule Against Perpetuities has confused lawyers and non-lawyers alike for generations. As a result, many documents that try to have some sort of very long-lasting effect on property, such as in the case of the “perpetual” restrictive covenants affecting WDW, will create a backup just in case some court somewhere down the road decides that “perpetual” is too long a time. These backup time periods (called “savings clauses”) are also lengthy, but they tend to be connected with the lifetimes of descendants of famous people with many relatives. It’s not uncommon to see these clauses use the descendants of Joseph P. Kennedy (John F. Kennedy’s father) or John D. Rockefeller as the measure for the time covered by the restriction. In this case, the Reedy Creek board used a “royal lives” version of the clause: if the restrictive covenant is not permitted to continue “in perpetuity,” then it will continue “until twenty-one (21) years after the death of the last survivor of the descendants of King Charles III”,– a period that is likely to be a very long time.

How Does New Jersey Handle the Rule Against Perpetuities?

Well, relatively easy. New Jersey abolished the rule against perpetuities in 2016, and as a result, a New Jersey trust can, in many cases, continue in perpetuity. How and whether to do this as part of your own estate planning strategy is a more complicated matter based on your situation, and is something you should consult an experienced trust and estates attorney about. For help with your estate planning questions, contact Melanie Levan at 856-354-7700 or mlevan@earpcohn.com.

(Oh, and as for Florida – it recently extended its maximum permitted duration for trusts from 360 years to 1000 years for trusts created on or after July 1, 2022.)