Rule Against Perpetuities in Texas: The 300-Year Trust Rule

The rule against perpetuities in Texas now runs on two tracks. A trust with an effective date on or after September 1, 2021 can last up to 300 years before its interests must vest. Every other future interest in property, including those created by deed or by will outside of a trust, must still vest within 21 years after the death of a person alive when the interest was created. Both tracks sit under the same constitutional ceiling: Article I, Section 26 of the Texas Constitution forbids perpetuities outright, so every long-term arrangement must have a definite endpoint.¹

The 300-Year Rule for Trusts

Texas Property Code Section 112.036 sets the outer boundary for a trust at the later of two periods: 300 years after the effective date, or 21 years after a life in being at the effective date plus a period of gestation.² In practice, 300 years is almost always the longer figure, which is why the statute is commonly called the 300-year rule.

The “effective date” is the date the governing instrument becomes irrevocable with respect to the interest in question.² For a revocable living trust, that moment arrives when the settlor gives up the power to revoke. For a trust created through a will, it is the settlor’s date of death. If assets later move from one trust into another trust with a different effective date, the statute uses the earlier of the two dates, so families cannot restart the clock by shuffling assets between vehicles.

The statute requires that each interest in the trust vest, if at all, within the applicable period. The phrase “if at all” matters: an interest that might never vest does not violate the rule as long as it either vests inside the window or fails entirely. An interest vests when the person entitled to it is identified and all conditions on their right to receive it have been satisfied.

The 100-Year Cap on Holding Real Property

A trust can last 300 years, but a settlor cannot direct the trustee to retain specific real property, or prohibit its sale, for more than 100 years.² This separate cap under Section 112.036(f) reflects the constitutional concern about keeping land marketable. A trust can hold financial assets for three centuries; an instruction to hang onto a particular ranch or commercial building expires after 100 years, and the trustee then regains discretion to sell.

Trusts Created Before September 2021

Trusts with an effective date before September 1, 2021 were originally bound by the traditional common law period of 21 years after a life in being plus a gestation period. The current statute includes an opt-in: if the trust instrument states that interests vest under the provisions of Section 112.036 applicable on the date the interest actually vests, the 300-year framework can apply retroactively.² An older trust that lacks this language may still be able to reach the longer period through amendment or decanting, but that is a question for counsel.

Non-Trust Interests Still Follow the Common Law

Deeds, wills outside of a testamentary trust, mineral conveyances, executory interests, and conditional gifts all still answer to the traditional rule. The interest must vest no later than 21 years after the death of a person alive when the instrument took effect. There is no 300-year alternative.

The analysis is unforgiving. You must imagine every possible chain of events under which the interest could vest. If any theoretical scenario would cause it to vest too late, the interest is void from the moment of creation, even if the actual facts would have worked out fine. That is why non-trust long-term planning is so narrow in Texas and why trust-based structures have become the preferred vehicle for multi-generational transfers.

Mineral Interests

The rule has particular bite in Texas oil and gas transactions. Mineral interests are often divided among heirs, and deeds sometimes create future interests tied to events like the cessation of production or the expiration of a lease term. Top leases, options to acquire mineral interests, and conditional reversions all raise the question. If a conveyance or reservation of an overriding royalty is conditioned on an event that might not occur within a life in being plus 21 years, courts can strike it down from the start.

Because mineral rights can carry substantial value, even experienced operators and landmen sometimes miss a perpetuities problem buried in deed language. Having conveyance language reviewed specifically for compliance is worth the cost on any transaction involving multiple generations of mineral owners.

Charitable Trusts Are Exempt

Section 112.036 applies to interests in trusts “other than a charitable trust.”² A charitable trust can, in principle, last indefinitely. The exemption covers the charitable trust itself. A gift that shifts from one charity to another on a condition is generally valid whenever the condition occurs, but a gift that shifts from a charity to a private individual on a remote contingency can still fail. The dividing line is whether the interest stays within the charitable sphere.

What Happens If an Instrument Violates the Rule

Texas provides a safety net. Under Property Code Section 5.043, a court must reform or construe an interest that violates the rule so as to carry out the creator’s general intent within the permissible period. The statute uses mandatory language: a court “shall” reform, not “may,” and it directs courts to “liberally construe” the provision to validate the interest to the fullest extent consistent with that intent.³

This cy pres approach means the court does not throw out the whole document. It enforces the provisions that comply and rewrites only the problematic ones. A gift “to my grandchildren when the youngest turns 30” might be reformed to vest at 21 to bring it inside the period while preserving the gift itself. The power applies to both legal and equitable interests in non-charitable gifts and trusts, conveyed by any instrument that took effect on or after September 1, 1969.³

Getting a reformation order requires filing suit in a Texas district court, presenting the instrument, explaining the creator’s intent, and asking the court to modify the offending terms. Even straightforward cases involve attorney time, filing costs, and the possibility of beneficiary disputes. Reformation is a repair mechanism, not a planning strategy; drafting correctly from the start costs far less.

Federal GST Tax on Long Trusts

The 300-year window creates planning opportunities, and it also pulls federal transfer tax into the picture. A trust spanning multiple generations will involve transfers to grandchildren, great-grandchildren, and beyond. Without planning, each generational skip can trigger the federal generation-skipping transfer tax, assessed at a flat 40% on top of any regular estate or gift tax.

The GST exemption for 2026 matches the basic estate tax exclusion of $15,000,000 per person.⁴ A married couple can allocate up to $30,000,000 combined to shield a dynasty trust from the GST tax at creation. If the structure is correct and the exemption is allocated properly, assets inside the trust can grow and pass to future generations without further transfer tax for the life of the trust.⁵ A misallocation can expose distributions to grandchildren and later generations to the full 40% that proper planning would have avoided. The interplay between the state-law duration and the federal tax is where most of the real complexity in a Texas dynasty trust lives.

1
FindLaw. Texas Constitution Art. 1, Section 26 – Perpetuities and Monopolies; Primogeniture or Entailments
2
State of Texas. Texas Property Code Section 112.036 – Rule Against Perpetuities
3
State of Texas. Texas Property Code Section 5.043 – Reformation of Interests Violating Rule Against Perpetuities
4
Internal Revenue Service. Whats New – Estate and Gift Tax
5
Congress.gov. The Generation-Skipping Transfer Tax (GSTT)