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91_HB2874
LRB9100019DJcd
1 AN ACT concerning the Rule Against Perpetuities.
2 Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
4 Section 0.01. Short title. This Act may be cited as the
5 Uniform Statutory Rule Against Perpetuities.
6 Section 1. Statutory Rule Against Perpetuities.
7 (a) Validity of nonvested property interest. A
8 nonvested property interest is invalid unless:
9 (1) when the interest is created, it is certain to
10 vest or terminate no later than 21 years after the death
11 of an individual then alive; or
12 (2) the interest either vests or terminates within
13 90 years after its creation.
14 (b) Validity of general power of appointment subject to
15 a condition precedent. A general power of appointment not
16 presently exercisable because of a condition precedent is
17 invalid unless:
18 (1) when the power is created, the condition
19 precedent is certain to be satisfied or becomes
20 impossible to satisfy no later than 21 years after the
21 death of an individual then alive; or
22 (2) the condition precedent either is satisfied or
23 becomes impossible to satisfy within 90 years after its
24 creation.
25 (c) Validity of nongeneral or testamentary power of
26 appointment. A nongeneral power of appointment or a general
27 testamentary power of appointment is invalid unless:
28 (1) when the power is created, it is certain to be
29 irrevocably exercised or otherwise to terminate no later
30 than 21 years after the death of an individual then
31 alive; or
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1 (2) the power is irrevocably exercised or otherwise
2 terminates within 90 years after its creation.
3 (d) Possibility of post-death child disregarded. In
4 determining whether a nonvested property interest or a power
5 of appointment is valid under subsection (a)(1), (b)(1), or
6 (c)(1), the possibility that a child will be born to an
7 individual after the individual's death is disregarded.
8 (e) Effect of certain "later-of" type language. If, in
9 measuring a period from the creation of a trust or other
10 property arrangement, language in a governing instrument (i)
11 seeks to disallow the vesting or termination of any interest
12 or trust beyond, (ii) seeks to postpone the vesting or
13 termination of any interest or trust until, or (iii) seeks to
14 operate in effect in any similar fashion upon, the later of
15 (A) the expiration of a period of time not exceeding 21 years
16 after the death of the survivor of specified lives in being
17 at the creation of the trust or other property arrangement or
18 (B) the expiration of a period of time that exceeds or might
19 exceed 21 years after the death of the survivor of lives in
20 being at the creation of the trust or other property
21 arrangement, that language is inoperative to the extent it
22 produces a period of time that exceeds 21 years after the
23 death of the survivor of the specified lives.
24 Section 2. When nonvested property interest or power of
25 appointment created.
26 (a) Except as provided in subsections (b) and (c) and in
27 Section 5(a), the time of creation of a nonvested property
28 interest or a power of appointment is determined under
29 general principles of property law.
30 (b) For purposes of this Act, if there is a person who
31 alone can exercise a power created by a governing instrument
32 to become the unqualified beneficial owner of (i) a nonvested
33 property interest or (ii) a property interest subject to a
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1 power of appointment described in Section 1(b) or 1(c), the
2 nonvested property interest or power of appointment is
3 created when the power to become the unqualified beneficial
4 owner terminates.
5 (c) For purposes of this Act, a nonvested property
6 interest or a power of appointment arising from a transfer of
7 property to a previously funded trust or other existing
8 property arrangement is created when the nonvested property
9 interest or power of appointment in the original contribution
10 was created.
11 Section 3. Reformation. Upon the petition of an
12 interested person, a court shall reform a disposition in the
13 manner that most closely approximates the transferor's
14 manifested plan of distribution and is within the 90 years
15 allowed by Section 1(a)(2), 1(b)(2), or 1(c)(2) if:
16 (1) a nonvested property interest or a power of
17 appointment becomes invalid under Section 1 (statutory rule
18 against perpetuities);
19 (2) a class gift is not but might become invalid under
20 Section 1 (statutory rule against perpetuities) and the time
21 has arrived when the share of any class member is to take
22 effect in possession or enjoyment; or
23 (3) a nonvested property interest that is not validated
24 by Section 1(a)(1) can vest but not within 90 years after its
25 creation.
26 Section 4. Exclusions from Statutory Rule Against
27 Perpetuities. Section 1 (statutory rule against
28 perpetuities) does not apply to:
29 (1) a nonvested property interest or a power of
30 appointment arising out of a nondonative transfer, except a
31 nonvested property interest or a power of appointment arising
32 out of (i) a premarital or postmarital agreement, (ii) a
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1 separation or divorce settlement, (iii) a spouse's election,
2 (iv) a similar arrangement arising out of a prospective,
3 existing, or previous marital relationship between the
4 parties, (v) a contract to make or not to revoke a will or
5 trust, (vi) a contract to exercise or not to exercise a power
6 of appointment, (vii) a transfer in satisfaction of a duty of
7 support, or (viii) a reciprocal transfer;
8 (2) a fiduciary's power relating to the administration
9 or management of assets, including the power of a fiduciary
10 to sell, lease, or mortgage property, and the power of a
11 fiduciary to determine principal and income;
12 (3) a power to appoint a fiduciary;
13 (4) a discretionary power of a trustee to distribute
14 principal before termination of a trust to a beneficiary
15 having an indefeasibly vested interest in the income and
16 principal;
17 (5) a nonvested property interest held by a charity,
18 government, or governmental agency or subdivision, if the
19 nonvested property interest is preceded by an interest held
20 by another charity, government, or governmental agency or
21 subdivision;
22 (6) a nonvested property interest in or a power of
23 appointment with respect to a trust or other property
24 arrangement forming part of a pension, profit-sharing, stock
25 bonus, health, disability, death benefit, income deferral, or
26 other current or deferred benefit plan for one or more
27 employees, independent contractors, or their beneficiaries or
28 spouses, to which contributions are made for the purpose of
29 distributing to or for the benefit of the participants or
30 their beneficiaries or spouses the property, income, or
31 principal in the trust or other property arrangement, except
32 a nonvested property interest or a power of appointment that
33 is created by an election of a participant or a beneficiary
34 or spouse; or
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1 (7) a property interest, power of appointment, or
2 arrangement that was not subject to the common-law rule
3 against perpetuities or is excluded by another statute of
4 this State.
5 Section 5. Prospective application.
6 (a) Except as extended by subsection (b), this Act
7 applies to a nonvested property interest or a power of
8 appointment that is created on or after the effective date of
9 this Act. For purposes of this section, a nonvested property
10 interest or a power of appointment created by the exercise of
11 a power of appointment is created when the power is
12 irrevocably exercised or when a revocable exercise becomes
13 irrevocable.
14 (b) If a nonvested property interest or a power of
15 appointment was created before the effective date of this Act
16 and is determined in a judicial proceeding, commenced on or
17 after the effective date of this Act, to violate this State's
18 rule against perpetuities as that rule existed before the
19 effective date of this Act, a court upon the petition of an
20 interested person may reform the disposition in the manner
21 that most closely approximates the transferor's manifested
22 plan of distribution and is within the limits of the rule
23 against perpetuities applicable when the nonvested property
24 interest or power of appointment was created.
25 Section 6. Short title. See Section 0.01.
26 Section 7. Uniformity of application and construction.
27 This Act shall be applied and construed to effectuate its
28 general purpose to make uniform the law with respect to the
29 subject of this Act among states enacting it.
30 Section 8. (Blank).
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1 Section 9. Supersession. This Act supersedes the rule of
2 the common law known as the rule against perpetuities.
3 Section 90. The Statute Concerning Perpetuities is
4 amended by changing Sections 2 and 6 as follows:
5 (765 ILCS 305/2) (from Ch. 30, par. 192)
6 Sec. 2. Purpose. This Act modifies the common law rule of
7 property known as the rule against perpetuities, which,
8 except as modified by statutes in force at the effective date
9 of this Act and by this Act and the Uniform Statutory Rule
10 Against Perpetuities, shall remain in full force and effect.
11 (Source: P.A. 76-1428.)
12 (765 ILCS 305/6) (from Ch. 30, par. 196)
13 Sec. 6. Effective Date. This Act shall apply only to
14 instruments, including instruments which exercise a power of
15 appointment, which become effective after the effective date
16 of this Act. Except with respect to qualified perpetual
17 trusts, this Act applies only to nonvested property interests
18 and powers of appointment created before the effective date
19 of the Uniform Statutory Rule Against Perpetuities.
20 (Source: P.A. 76-1428.)
21 Section 92. The Perpetuities Vesting Act is amended by
22 changing Section 1 as follows:
23 (765 ILCS 310/1) (from Ch. 30, par. 153a)
24 Sec. 1. Deferred vesting; applicability.
25 (a) The vesting of any limitation of property, whether
26 created in the exercise of a power of appointment or in any
27 other manner, shall not be regarded as deferred for purposes
28 of the rule against perpetuities merely because the
29 limitation is made to the estate of a person or to a personal
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1 representative, or to a trustee under a will, or to take
2 effect on the probate of a will.
3 (b) The provisions of this Act shall apply only to
4 limitations created after the effective date hereof. This Act
5 applies only to limitations created before the effective date
6 of the Uniform Statutory Rule Against Perpetuities.
7 (Source: Laws 1951, p. 462.)
8 Section 94. The Trust Accumulation Act is amended by
9 changing Section 1 as follows:
10 (765 ILCS 315/1) (from Ch. 30, par. 153)
11 Sec. 1. No person shall, after this Act goes into effect,
12 by any deed, will, agreement or otherwise, settle or dispose
13 of any real or personal property, so and in such manner,
14 either expressly or by implication, that the income thereof
15 shall be wholly or partially accumulated for any longer term
16 after the effective date of such settlement or disposition
17 than a life or lives in being at that date and 21 years
18 beyond; and in every case where any accumulation shall be
19 directed otherwise, such direction shall be null and void,
20 and the income of such property so directed to be
21 accumulated, shall, so long as the same shall be directed to
22 be accumulated contrary to the provisions of this Act, go to
23 and be received by the person in whom the beneficial interest
24 in the corpus of the estate from which such income was
25 derived is vested. This Section does not apply to trusts to
26 which Section 5 of the Statute Concerning Perpetuities
27 applies, to qualified perpetual trusts as defined in Section
28 3 of the Statute Concerning Perpetuities, to trusts created
29 for the purpose of care of burial places, or to trusts
30 created as part of a plan for the benefit of some or all of
31 the employes of one or more employers, including but without
32 limitation, a stock bonus, pension, disability, death
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1 benefit, profit sharing, unemployment benefit or other plan,
2 for the purpose of distributing for the benefit of such
3 employes, including their beneficiaries, the earnings or the
4 principal, or both earnings and principal, of the fund so
5 held in trust. This Act applies only to instruments that
6 become effective before the effective date of the Uniform
7 Statutory Rule Against Perpetuities. Nothing in this Act
8 shall be deemed to affect or modify in any manner the rule of
9 property known as the "rule against perpetuities". For
10 purposes of this Act no settlement or disposition shall be
11 deemed effective as long as, by the terms of the instrument
12 creating it, the maker of the instrument has the power to
13 revoke the instrument or to transfer or direct to be
14 transferred to himself the entire legal and equitable
15 ownership of the property which is the subject matter of the
16 settlement or disposition.
17 The amendatory Act of 1953 applies only to deeds or
18 agreements inter vivos which become legally effective on or
19 after July 1, 1953, and only to wills of testators dying on
20 or after such date.
21 The amendatory Act of 1957 applies only to instruments
22 which become effective after July 1, 1957.
23 This amendatory Act of 1969 applies only to instruments
24 which become effective after the effective date of this
25 amendatory Act of 1969, but the last sentence of the first
26 paragraph of this amendatory Act of 1969 shall be deemed to
27 be declaratory of the law prevailing in this state at the
28 effective date of this amendatory Act of 1969.
29 (Source: P.A. 90-472, eff. 8-17-97.)