State of Illinois
91st General Assembly
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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

 
                            -2-                LRB9100019DJcd
 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
 
                            -3-                LRB9100019DJcd
 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
 
                            -4-                LRB9100019DJcd
 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
 
                            -5-                LRB9100019DJcd
 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).
 
                            -6-                LRB9100019DJcd
 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
 
                            -7-                LRB9100019DJcd
 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
 
                            -8-                LRB9100019DJcd
 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.)

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