This section is from the book "Real Property, An Introductory Explanation Of The Law Relating To Land", by Alfred F Topham. Also available from Amazon: The New Law Of Property.
The rule against perpetuities determines how long land can be tied up in such a way as to prevent the fee simple itself from being freely alienable.
The rule against accumulation determines how long the income can be directed to accumulate at compound interest, in such a way as to prevent its being received and enjoyed by any one.
Originally there was no separate rule against accumulations, but a direction to accumulate was valid provided it did not infringe the rule against perpetuities. The rule was created in 1799 in consequence of the will of Peter Thellusson.
T/iellusson v. Woodford (1798), 4 Ves. 227.
T gave by will all his property to trustees upon trust to accumulate the income during the lives of his sons A, B, and C, and of all their descendants who might be living at his death, and after the death of the last survivor of them, the whole to be held on trust in equal thirds for the eldest male descendants of A, B, and C.
Held, although the funds might accumulate at the lowest computation to nineteen millions sterling and no person could enjoy it for perhaps 80 years, yet the trusts were valid.
By an Act of 1799 (a), usually called the Thellusson Act because it was passed in consequence of this case, accumulations may not be directed for longer than one of the following periods.
(i.) during the life of the grantor, or
(a) 39 & 40 Geo. III. c. 98.
(ii.) for 21 years after the death of the grantor or testator, or
(iii.) during the minority of any person or persons living at the death of the grantor or testator, or
(iv.) during the minority of any person or persons who would have been entitled to the income if it had not been directed to accumulate.
This last period may include the minority of some person who is not living at the death of the grantor.
Re Gattell,  1 Oh. 567.
A testator gave by will certain property to trustees upon trust for the children of his eldest son, and directed the trustees to accumulate the income of the share of each child of his son until that child should reach 21. The testator died in 1880; his eldest son had a daughter Gladys, born in 1885, who attained 21 in 1906. The income of Glady's share was accumulated from 1885 until 1906, that is during her minority, though she was not born when the testator died.
Held. - This accumulation was valid.
By the Accumulations Act, 1892, (b) when the accumulation is directed for the purpose of the purchase of land only, the fourth period is the only period allowed.
Exceptions to the rules as to accumulations. - The limits mentioned above may be exceeded in cases where income is directed to accumulate, to provide a fund for
(i.) The payments of debts of the settlor or any other person.
Note, that this includes the debts of any person, not merely of the settlor, and thus differs from the exception to^the perpetuity rule.
(b) 55 & 56 Vict. c. 58.
(ii.) Maintaining the property in good repair. Vine v. Raleigh (1891), 2. Ch. 13.
(iii.) Portions for children of the settlor or any person taking an interest under the settlement.
Harrington v. Liddell (1852), 2 De G. M. & G. 480.
The Bishop of Durham by his will gave £15,000 to trustees to accumulate during the life of Lord B. until portions of £40,000 which were charged on certain settled lands had been paid off. Lord B. was tenant for life of the settled land and the portions were sums payable to his younger children. Lord B. lived for more than 21 years after the death of the Bishop.
Held, the accumulation may continue for the rest of the life of Lord B. because (1) it is for portions, and (2) it is for payment of a debt of £40,000 charged on the settled land.
(iv.) Directions touching the produce of timber.
These provisions as to accumulations are set out in full on p. 303.
If the periods allowed by this act are exceeded, the direction to accumulate is not wholly void, but the accumulation may continue for the longest of the periods allowed by the act.
Note, that the effect of infringing this rule is very different from the effect of infringing the rule against perpetuities; for in that case the whole gift is bad.
At the end of the longest period allowed, the accumulations stop and the income goes to the person who would have been entitled to the income if there had been no direction to accumulate (c).
Thus, A by will gives land to trustees upon trust to pay the income to his wife W during her life, and after her death to accumulate the rents and profits until his daughter D should marry, and on the marriage of D the whole to he held in trust forD.
(c) Griffiths v. Vere (1803), 9 Ves. 127.
A died in 1860, leaving one son, S, and one daughter, D. W (the wife) died in 1870. D did not marry until 1890.
Result - From 1860 to 1870 the rents would be paid to W, from 1870 the rents would accumulate until 21 years after the death of A, viz. 1881; from 1881 to 1890 the rents would be paid to S as the heir of A, for the land is not given to D until she marries; therefore there is an intestacy, and the land goes to S as heir until 1890.
In 1890 the land and the rents which accumulated between 1870 and 1881 go to D.
Note. - Suppose the accumulated rents amounted in 1881 to £1000. This sum would bear interest from 1881 to 1890 This interest would not be allowed to accumulate but would also go to S.