66-1-202 - Validity of nonvested property interests and powers of appointment.
66-1-202. Validity of nonvested property interests and powers of appointment.
(a) A nonvested property interest is invalid unless one (1) of the following conditions is satisfied:
(1) When the interest is created, it is certain to vest or terminate no later than twenty-one (21) years after the death of an individual then alive;
(2) The interest either vests or terminates within ninety (90) years after its creation; or
(3) The interest satisfies the conditions set forth in subsection (f).
(b) A general power of appointment not presently exercisable because of a condition precedent is invalid unless one (1) of the following conditions is satisfied:
(1) When the power is created, the condition precedent is certain to be satisfied or becomes impossible to satisfy no later than twenty-one (21) years after the death of an individual then alive;
(2) The condition precedent either is satisfied or becomes impossible to satisfy within ninety (90) years after its creation; or
(3) The condition precedent satisfies the conditions set forth in subsection (f).
(c) A non-general power of appointment or a general testamentary power of appointment is invalid unless one (1) of the following conditions is satisfied:
(1) When the power is created, it is certain to be irrevocably exercised or otherwise to terminate no later than twenty-one (21) years after the death of an individual then alive; or
(2) The power is irrevocably exercised or otherwise terminates within ninety (90) years after its creation.
(d) In determining whether a nonvested property interest or a power of appointment is valid under subdivision (a)(1), (b)(1), or (c)(1), the possibility that a child will be born to an individual after the individual's death is disregarded.
(e) If, in measuring a period from the creation of a trust or other property arrangement, language in a governing instrument seeks to disallow the vesting or termination of any interest or trust beyond, seeks to postpone the vesting or termination of any interest or trust until, or seeks to operate in effect in any similar fashion upon, the later of:
(1) The expiration of a period of time not exceeding twenty-one (21) years after the death of the survivor of specified lives in being at the creation of the trust or other property arrangement; or
(2) The expiration of a period of time that exceeds or might exceed twenty-one (21) years after the death of the survivor of lives in being at the creation of the trust or other property arrangement;
such language is inoperative to the extent it produces a period of time that exceeds twenty-one (21) years after the death of the survivor of the specified lives.
(f) As to any trust created after June 30, 2007, or that becomes irrevocable after June 30, 2007, the terms of the trust shall require that all beneficial interests in the trust vest or terminate or the power of appointment is exercised within three hundred sixty (360) years; provided, however, that this subsection (f) shall only apply to trusts that grant a power of appointment at death to at least one (1) member of each generation of beneficiaries who are beneficiaries of the trust more than ninety (90) years after the creation of the interest. The permissible appointees of each power of appointment shall at least include all descendants of the beneficiary, yet may include other persons.
[Acts 1994, ch. 654, § 2; 2007, ch. 144, §§ 14-16.]