HCS CSSB 162(JUD): "An Act relating to the rule against perpetuities, nonvested property interests, and powers of appointment; and providing for an effective date."
00HOUSE CS FOR CS FOR SENATE BILL NO. 162(JUD) 01 "An Act relating to the rule against perpetuities, nonvested property interests, and 02 powers of appointment; and providing for an effective date." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. AS 13.12.702(d) is amended to read: 05 (d) Survival by 120 hours is not required if 06 (1) the governing instrument contains language dealing explicitly with 07 simultaneous deaths or deaths in a common disaster and that language is operable 08 under the facts of the case; 09 (2) the governing instrument expressly indicates that an individual is 10 not required to survive an event, including the death of another individual, by a 11 specified period or expressly requires the individual to survive the event by a specified 12 period , [;] but survival of the event or the specified period must be established by clear 13 and convincing evidence; 14 (3) the imposition of a 120-hour requirement of survival would cause
01 a nonvested property interest or a power of appointment to fail to qualify for validity 02 under AS 34.27.051 or 34.27.100 [AS 34.27.050(a)(1), (b)(1), OR (c)(1)] or to become 03 invalid under AS 34.27.051 or 34.27.100, [AS 34.27.050(a)(2), (b)(2), OR (c)(2);] but 04 survival must be established by clear and convincing evidence; or 05 (4) the application of a 120-hour requirement of survival to multiple 06 governing instruments would result in an unintended failure or duplication of a 07 disposition , [;] but survival must be established by clear and convincing evidence. 08 * Sec. 2. AS 13.36.157(a) is amended to read: 09 (a) Unless the terms of the instrument expressly provide otherwise, a trustee 10 who has the absolute discretion under the terms of a testamentary instrument or 11 irrevocable inter vivos agreement to invade the principal of a trust for the benefit of 12 the beneficiary who is eligible or entitled to the income of the trust may exercise 13 without prior court approval the trustee's discretion by appointing part or all of the 14 principal of the trust in favor of a trustee of a trust under an instrument other than that 15 under which the power to invade was created if the exercise of this discretion 16 (1) does not reduce any fixed income interest of an income beneficiary 17 of the trust; 18 (2) is in favor of the beneficiary of the trust; and 19 (3) does not violate the limitations on validity under AS 34.27.051 or 20 34.27.100 [AS 34.27.050(a)]. 21 * Sec. 3. AS 34.27 is amended by adding new sections to read: 22 Sec. 34.27.051. Statutory rule against perpetuities. (a) A general or 23 nongeneral power of appointment not presently exercisable because of a condition 24 precedent is invalid unless, within a period of 1,000 years after its creation, either the 25 power is irrevocably exercised or the power terminates. For purposes of this 26 subsection, the period in which the power must be exercised or the power terminated 27 is computed from the time of creation of the original power of appointment under 28 which a subsequent general power of appointment not presently exercisable or a 29 subsequent nongeneral power of appointment not presently exercisable was created. 30 (b) If a nongeneral power of appointment is exercised to create a new general 31 power of appointment, all property interests subject to the exercise of that new general
01 power of appointment are invalid unless, within 1,000 years after the creation of the 02 new general power of appointment, the property interests that are subject to the general 03 power of appointment either vest or terminate. 04 (c) If a nongeneral power of appointment is exercised to create a new or 05 successive nongeneral power of appointment, all property interests subject to the 06 exercise of that new or successive nongeneral power of appointment are invalid unless, 07 within 1,000 years from the time of creation of the original instrument or conveyance 08 creating the original nongeneral power of appointment that is exercised to create a new 09 or successive nongeneral power of appointment, the property interests that are subject 10 to the nongeneral power of appointment either vest or terminate. 11 Sec. 34.27.053. Savings provision. A property interest that, under 12 AS 34.27.051, becomes invalid shall, upon the expiration of the 1,000-year period set 13 out in AS 34.27.051, 14 (1) if income from the property interest is payable 15 (A) to one person, be distributed to the person to whom the 16 income is then payable; 17 (B) to more than one person, be distributed to the persons to 18 whom the income is then payable 19 (i) in the shares to which the persons are entitled to the 20 income; or 21 (ii) equally among all persons who are entitled to the 22 income if shares are not specified; 23 (2) if income from the property interest is payable in the discretion of 24 a trustee and is payable 25 (A) to one person, be distributed to the person then eligible to 26 receive the income; or 27 (B) to more than one person, be distributed to the persons then 28 eligible to receive the income 29 (i) in the shares to which the persons are entitled to the 30 income; or 31 (ii) equally among all persons who are entitled to the
01 income if shares are not specified; or 02 (3) when there is no person then living to whom the property interest 03 may be distributed under (1) or (2) of this section, be payable to one or more 04 organizations described in 26 U.S.C. 2055(a) (Internal Revenue Code), or to one or 05 more organizations described in any successor provision to 26 U.S.C. 2055(a), in the 06 shares or proportions that the trustee or trustees then acting may determine. 07 * Sec. 4. AS 34.27.070 is amended to read: 08 Sec. 34.27.070. Application [PROSPECTIVE APPLICATION]. (a) Except 09 as extended by (b) of this section, the former provisions of AS 34.27.050 - 34.27.090 10 apply to a nonvested property interest or a power of appointment that is created on or 11 after January 1, 1996 , and before April 2, 1997 . For purposes of this subsection 12 [SECTION], a nonvested property interest or a power of appointment created by the 13 exercise of a power of appointment is created when the power is irrevocably exercised 14 or when a revocable exercise becomes irrevocable. 15 (b) If a nonvested property interest or a power of appointment was created 16 before January 1, 1996, and is determined in a judicial proceeding, commenced on or 17 after that date, to violate this state's rule against perpetuities as that rule existed before 18 January 1, 1996, or if a nonvested property interest or a power of appointment 19 was created on or after January 1, 1996, but before April 2, 1997, and is 20 determined in a judicial proceeding, commenced on or after that date, to violate 21 this state's rule against perpetuities as that rule existed, on or after January 1, 22 1996, and before April 2, 1997, a court , upon the petition of an interested person , 23 may reform the disposition in the manner that most closely approximates the 24 transferor's manifested plan of distribution and is within the limits of the rule against 25 perpetuities applicable when the nonvested property interest or power of appointment 26 was created. For purposes of this subsection, a nonvested property interest or a 27 power of appointment created by the exercise of a power of appointment is 28 created when the power is irrevocably exercised or when a revocable exercise 29 becomes irrevocable. 30 * Sec. 5. AS 34.27.070 is amended by adding a new subsection to read: 31 (c) The provisions of AS 34.27.051 apply to a trust instrument or conveyance
01 executed on or after April 2, 1997, if the trust instrument or conveyance creates a 02 contingent power of appointment or nonvested property interest subject to the exercise 03 of a power of appointment that creates a new or successive power of appointment. 04 * Sec. 6. AS 34.27.075 is amended to read: 05 Sec. 34.27.075. Relationship to [SUPERSESSION OF] common law rule. 06 AS 34.27.051 - 34.27.100 [AS 34.27.050 - 34.27.090] supersede the rule of the 07 common law known as the rule against perpetuities. The common law rule against 08 perpetuities does not apply in this state. 09 * Sec. 7. AS 34.27 is amended by adding a new section to read: 10 Sec. 34.27.100. Perpetuities and suspension of the power of alienation. (a) 11 A future interest or trust is void if, as to property subject to the future interest or trust, 12 (1) the future interest or trust suspends the power of alienation of the 13 property, the suspension of the power is for a period of at least 30 years after the death 14 of an individual alive at the time of the creation of the future interest or trust, and the 15 suspension of the power of alienation occurs in the document creating the future 16 interest or trust; 17 (2) the future interest or trust suspends the power of alienation of the 18 property and the suspension of the power is for a period of at least 30 years after 19 termination of a power to revoke the trust; 20 (3) the future interest or trust suspends the power of alienation of the 21 property, the future interest or trust is created by the exercise of a general power of 22 appointment, whether by will or otherwise, and the suspension of the power is for a 23 period of at least 30 years from the time the power of appointment is exercised; or 24 (4) the future interest or trust suspends the power of alienation of the 25 property, the future interest or trust is created by the exercise of a power of 26 appointment that is not a general power of appointment, and the suspension of the 27 power is for a period of at least 30 years from the time of creation of the original 28 instrument or conveyance creating the original power of appointment that was 29 exercised to create a new or successive nongeneral power of appointment. 30 (b) For purposes of (a) of this section, the power of alienation 31 (1) is suspended if there is no person alive who, alone or in
01 combination with others, can, as to property that is part of the future interest or trust, 02 convey 03 (A) title to real property in fee; or 04 (B) complete ownership of personal property. 05 (2) is not suspended by a future interest or trust or by an equitable 06 interest in a trust if 07 (A) the trustee of the trust has power, either express or implied, 08 to sell the property; or 09 (B) at least one person alive at the time the trust was created 10 has an unlimited power to terminate the trust. 11 (c) The provisions of (a) of this section do not apply to a transfer 12 (1) made outright or in trust for a charitable purpose; 13 (2) to a literary or charitable organization; 14 (3) to a veterans' memorial organization; or 15 (4) to a cemetery corporation, society, or association. 16 * Sec. 8. The uncodified law of the State of Alaska is amended by adding a new section 17 to read: 18 RETROACTIVE EFFECT. AS 34.27.070(c), added by sec. 5 of this Act, is retroactive 19 to April 2, 1997, and applies to a trust instrument or conveyance executed on or after that date 20 upon the conditions set out in that subsection. 21 * Sec. 9. AS 34.27.050, 34.27.055, 34.27.060, 34.27.065, and 34.27.090 are repealed. 22 * Sec. 10. This Act takes effect immediately under AS 01.10.070(c).