Minnesota Session Laws - 1987, Regular Session

  

                         Laws of Minnesota 1987 

                         CHAPTER 60-S.F.No. 157 
           An act relating to property interests; enacting the 
          uniform statutory rule against perpetuities; amending 
          Minnesota Statutes 1986, section 500.17, subdivision 
          2; proposing coding for new law as Minnesota Statutes, 
          chapter 501A; repealing Minnesota Statutes 1986, 
          section 500.13. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  [501A.01] [STATUTORY RULE AGAINST 
PERPETUITIES.] 
    (a) A nonvested property interest is invalid unless: 
    (1) when the interest is created, it is certain to vest or 
terminate no later than 21 years after the death of an 
individual then alive; or 
    (2) the interest either vests or terminates within 90 years 
after its creation. 
    (b) A general power of appointment not presently 
exercisable because of a condition precedent is invalid unless: 
    (1) when the power is created, the condition precedent is 
certain to be satisfied or become impossible to satisfy no later 
than 21 years after the death of an individual then alive; or 
    (2) the condition precedent either is satisfied or becomes 
impossible to satisfy within 90 years after its creation. 
    (c) A nongeneral power of appointment or a general 
testamentary power of appointment is invalid unless: 
     (1) when the power is created, it is certain to be 
irrevocably exercised or otherwise to terminate no later than 21 
years after the death of an individual then alive; or 
    (2) the power is irrevocably exercised or otherwise 
terminates within 90 years after its creation. 
    (d) In determining whether a nonvested property interest or 
a power of appointment is valid under subsection (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. 
     Sec. 2.  [501A.02] [WHEN NONVESTED PROPERTY INTEREST OR 
POWER OF APPOINTMENT CREATED.] 
     (a) Except as provided in subsections (b) and (c) and in 
section 5, subsection (a), the time of creation of a nonvested 
property interest or a power of appointment is determined under 
general principles of property law. 
     (b) For purposes of this act, if there is a person who 
alone can exercise a power created by a governing instrument to 
become the unqualified beneficial owner of (i) a nonvested 
property interest or (ii) a property interest subject to a power 
of appointment described in section 1, subsection (b) or (c), 
the nonvested property interest or power of appointment is 
created when the power to become the unqualified beneficial 
owner terminates. 
     (c) For purposes of this act, a nonvested property interest 
or a power of appointment arising from a transfer of property to 
a previously funded trust or other existing property arrangement 
is created when the nonvested property interest or power of 
appointment in the original contribution was created. 
    Sec. 3.  [501A.03] [REFORMATION.] 
    Upon the petition of an interested person, a court shall 
reform a disposition in the manner that most closely 
approximates the transferor's manifested plan of distribution 
and is within the 90 years allowed by section 1, subsection 
(a)(2), subsection (b)(2), or subsection (c)(2) if: 
    (1) a nonvested property interest or a power of appointment 
becomes invalid under section 1 (statutory rule against 
perpetuities); 
    (2) a class gift is not but might become invalid under 
section 1 (statutory rule against perpetuities) and the time has 
arrived when the share of any class member is to take effect in 
possession or enjoyment; or 
    (3) a nonvested property interest that is not validated by 
section 1, subsection (a)(1) can vest but not within 90 years 
after its creation. 
    Sec. 4.  [501A.04] [EXCLUSIONS FROM STATUTORY RULE AGAINST 
PERPETUITIES.] 
    Section 1 (statutory rule against perpetuities) does not 
apply to: 
    (1) a nonvested property interest or a power of appointment 
arising out of a nondonative transfer, except a nonvested 
property interest or a power of appointment arising out of (i) a 
premarital or postmarital agreement, (ii) a separation or 
divorce settlement, (iii) a spouse's election, (iv) a similar 
arrangement arising out of a prospective, existing, or previous 
marital relationship between the parties, (v) a contract to make 
or not to revoke a will or trust, (vi) a contract to exercise or 
not to exercise a power of appointment, (vii) a transfer in 
satisfaction of a duty of support, or (viii) a reciprocal 
transfer; 
    (2) a fiduciary's power relating to the administration or 
management of assets, including the power of a fiduciary to 
sell, lease, or mortgage property, and the power of a fiduciary 
to determine principal and income; 
    (3) a power to appoint a fiduciary; 
    (4) a discretionary power of a trustee to distribute 
principal before termination of a trust to a beneficiary having 
an indefeasibly vested interest in the income and principal; 
     (5) a nonvested property interest held by a charity, 
government, or governmental agency or subdivision, if the 
nonvested property interest is preceded by an interest held by 
another charity, government, or governmental agency or 
subdivision; 
     (6) a nonvested property interest in or a power of 
appointment with respect to a trust or other property 
arrangement forming part of a pension, profit-sharing, stock 
bonus, health, disability, death benefit, income deferral, or 
other current or deferred benefit plan for one or more 
employees, independent contractors, or their beneficiaries or 
spouses, to which contributions are made for the purpose of 
distributing to or for the benefit of the participants or their 
beneficiaries or spouses the property, income, or principal in 
the trust or other property arrangement, except a nonvested 
property interest or a power of appointment that is created by 
an election of a participant or a beneficiary or spouse; or 
    (7) a property interest, power of appointment, or 
arrangement that was not subject to the common law rule against 
perpetuities or is excluded by another statute of this state. 
     Sec. 5.  [501A.05] [PROSPECTIVE APPLICATION.] 
     (a) Except as extended by subsection (b), this act applies 
to a nonvested property interest or a power of appointment that 
is created after December 31, 1987.  For purposes of this 
section, a nonvested property interest or a power of appointment 
created by the exercise of a power of appointment is created 
when the power is irrevocably exercised or when a revocable 
exercise becomes irrevocable. 
     (b) If a nonvested property interest or a power of 
appointment was created before January 1, 1988, and is 
determined in a judicial proceeding, commenced after December 
31, 1987, to violate this state's rule against perpetuities as 
that rule existed before January 1, 1988, a court upon the 
petition of an interested person may reform the disposition in 
the manner that most closely approximates the transferor's 
manifested plan of distribution and is within the limits of the 
rule against perpetuities applicable when the nonvested property 
interest or power of appointment was created. 
     Sec. 6.  [501A.06] [SUPERSESSION; REPEAL.] 
     This act supersedes the rule of the common law known as the 
rule against perpetuities and repeals Minnesota Statutes, 
section 500.13. 
     Sec. 7.  [501A.07] [SHORT TITLE.] 
     This act may be cited as the Uniform Statutory Rule Against 
Perpetuities. 
     Sec. 8.  [DEFINITION.] 
     Where used in sections 1 to 7, the term "this act" refers 
to sections 1 to 7. 
    Sec. 9.  Minnesota Statutes 1986, section 500.17, 
subdivision 2, is amended to read:  
    Subd. 2.  [ACCUMULATION.] Where the controlling will or 
other written instrument permits accumulation, either expressly 
or by necessary implication, rents and profits from real estate 
may be accumulated to the same extent and for the same period 
permitted by law for the accumulation of income from personal 
property.  This section shall not be deemed to extend the period 
during which the power of alienation may be suspended under the 
provisions of section 500.13.  Where any will or other 
instrument authorizes accumulation beyond the period permissible 
under this section, such authorization shall be void only as to 
the excess period.  
    Reasonable sums set aside for depreciation and depletion 
shall not be deemed an accumulation within the meaning of this 
section.  
    Sec. 10.  [TIME OF TAKING EFFECT.] 
    This act takes effect August 1, 1988. 
    Approved May 6, 1987