75-2-707 - Definitions -- Survivorship with respect to future interests under terms of trust -- Substitute takers.
75-2-707. Definitions -- Survivorship with respect to future interests under termsof trust -- Substitute takers.
(1) As used in this section:
(a) "Alternative future interest" means an expressly created future interest that can takeeffect in possession or enjoyment instead of another future interest on the happening of one ormore events, including survival of an event or failure to survive an event, whether an event isexpressed in condition-precedent, condition-subsequent, or any other form. A residuary clause ina will does not create an alternative future interest with respect to a future interest created in anonresiduary devise in the will, whether or not the will specifically provides that lapsed or faileddevises are to pass under the residuary clause.
(b) "Beneficiary" means the beneficiary of a future interest and includes a class member ifthe future interest is in the form of a class gift.
(c) "Class member" includes an individual who fails to survive the distribution date butwho would have taken under a future interest in the form of a class gift had he survived thedistribution date.
(d) "Distribution date" with respect to a future interest, means the time when the futureinterest is to take effect in possession or enjoyment. The distribution date need not occur at thebeginning or end of a calendar day, but can occur at a time during the course of a day.
(e) "Future interest" includes an alternative future interest and a future interest in the formof a class gift.
(f) "Future interest under the terms of a trust" means a future interest that was created bya transfer creating a trust or to an existing trust or by an exercise of a power of appointment to anexisting trust, directing the continuance of an existing trust, designating a beneficiary of anexisting trust, or creating a trust.
(g) "Surviving beneficiary" or "surviving descendant" means a beneficiary or adescendant who neither predeceased the distribution date nor is considered to have predeceasedthe distribution date under Section 75-2-702.
(2) A future interest under the terms of a trust is contingent on the beneficiary's survivingthe distribution date. If a beneficiary of a future interest under the terms of a trust fails to survivethe distribution date, the following apply:
(a) Except as provided in Subsection (2)(d), if the future interest is not in the form of aclass gift and the deceased beneficiary leaves surviving descendants, a substitute gift is created inthe beneficiary's surviving descendants. They take per capita at each generation the property towhich the beneficiary would have been entitled had the beneficiary survived the distribution date.
(b) Except as provided in Subsection (2)(d), if the future interest is in the form of a classgift, other than a future interest to "issue," "descendants," "heirs of the body," "heirs,""next-of-kin," "relatives," or "family," or a class described by language of similar import, asubstitute gift is created in the surviving descendants of any deceased beneficiary. The propertyto which the beneficiaries would have been entitled had all of them survived the distribution datepasses to the surviving beneficiaries and the surviving descendants of the deceased beneficiaries. Each surviving beneficiary takes the share to which he would have been entitled had the deceasedbeneficiaries survived the distribution date. Each deceased beneficiary's surviving descendantswho are substituted for the deceased beneficiary take per capita at each generation the share towhich the deceased beneficiary would have been entitled had the deceased beneficiary survivedthe distribution date. For the purposes of this subsection, "deceased beneficiary" means a class
member who failed to survive the distribution date and left one or more surviving descendants.
(c) For the purposes of Section 75-2-701, words of survivorship attached to a futureinterest are, in the absence of clear and convincing evidence, a sufficient indication of an intentcontrary to the application of this section. Words of survivorship include words of survivorshipthat relate to the distribution date or to an earlier or an unspecified time, whether those words ofsurvivorship are expressed in condition-precedent, condition-subsequent, or any other form.
(d) If a governing instrument creates an alternative future interest with respect to a futureinterest for which a substitute gift is created by Subsection (2)(a) or (b), the substitute gift issuperseded by the alternative future interest only if an expressly designated beneficiary of thealternative future interest is entitled to take in possession or enjoyment.
(3) If, after the application of this section, there is no surviving taker, the property passesin the following order:
(a) if the trust was created in a nonresiduary devise in the transferor's will or in a codicilto the transferor's will, the property passes under the residuary clause in the transferor's will; forpurposes of this section, the residuary clause is treated as creating a future interest under theterms of a trust; and
(b) if no taker is produced by the application of Subsection (3)(a), the property passes tothe transferor's heirs under Section 75-2-711.
Enacted by Chapter 39, 1998 General Session