Assembly Bill No. 325–Assemblymen Goldwater and Parks

 

March 12, 2001

____________

 

Referred to Committee on Judiciary

 

SUMMARY—Revises provisions concerning rule against perpetuities. (BDR 10‑46)

 

FISCAL NOTE:            Effect on Local Government: No.

                                    Effect on the State: No.

 

~

 

EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted.

 

AN ACT relating to property; revising the provisions concerning the rule against perpetuities; and providing other matters properly relating thereto.

 

THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN

SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:

 

1-1    Section 1. NRS 111.1037 is hereby amended to read as follows:

1-2    111.1037  NRS 111.1031 does not apply to:

1-3    1.  A nonvested property interest or a power of appointment arising out

1-4  of a nondonative transfer, except a nonvested property interest or a power

1-5  of appointment arising out of:

1-6    (a) A premarital or postmarital agreement;

1-7    (b) A separation or divorce settlement;

1-8    (c) A spouse’s election;

1-9    (d) A similar arrangement arising out of a prospective, existing or

1-10  previous marital relationship between the parties;

1-11    (e) A contract to make or not to revoke a will or trust;

1-12    (f) A contract to exercise or not to exercise a power of appointment;

1-13    (g) A transfer in satisfaction of a duty of support; or

1-14    (h) A reciprocal transfer;

1-15    2.  A fiduciary’s power relating to the administration or management of

1-16  assets, including the power of a fiduciary to sell, lease or mortgage

1-17  property, and the power of a fiduciary to determine principal and income;

1-18    3.  A power to appoint a fiduciary;

1-19    4.  A discretionary power of a trustee to distribute principal before

1-20  termination of a trust to a beneficiary having an indefeasibly vested interest

1-21  in the income and principal;

1-22    5.  A nonvested property interest held by a charity, government, or

1-23  governmental agency or subdivision, if the nonvested property interest is

2-1  preceded by an interest held by another charity, government, or

2-2  governmental agency or subdivision;

2-3    6.  A nonvested property interest in , or a power of appointment with

2-4  respect to , a trust or other property arrangement forming part of a pension,

2-5  profit-sharing, stock bonus, health, disability, death benefit, income

2-6  deferral, or other current or deferred benefit plan for one or more

2-7  employees, independent contractors, or their beneficiaries or spouses, to

2-8  which contributions are made for the purpose of distributing to or for the

2-9  benefit of the participants or their beneficiaries or spouses the property,

2-10  income or principal in the trust or other property arrangement, except a

2-11  nonvested property interest or a power of appointment that is created by an

2-12  election of a participant or a beneficiary or spouse; [or]

2-13    7.  A nonvested property interest in, or a power of appointment with

2-14  respect to, a trust if:

2-15    (a) The trustee of the trust has the unlimited power to sell assets of the

2-16  trust or at least one person, including, without limitation, the trustee, has

2-17  the power to terminate the entire trust;

2-18    (b) The instrument creating the trust states that the rule against

2-19  perpetuities or the provisions of NRS 111.1031 do not apply to the trust;

2-20  and

2-21    (c) The trust:

2-22      (1) Is executed in this state;

2-23      (2) Has at least one trustee who is domiciled in this state;

2-24      (3) Is administered in this state, regardless of whether a portion or

2-25  all of the assets of the trust are physically deposited for safekeeping in

2-26  another state; or

2-27      (4) Has assets of which a substantial portion is located in this state;

2-28  or

2-29    8.  A property interest, power of appointment or arrangement that was

2-30  not subject to the common-law rule against perpetuities or is expressly

2-31  excluded by another statute of this state.

2-32    Sec. 2.  NRS 111.1039 is hereby amended to read as follows:

2-33    111.1039  1.  Except as extended by subsection 2[,] and as otherwise

2-34  provided in subsection 3, NRS 111.103 to 111.1037, inclusive, apply to a

2-35  nonvested property interest or a power of appointment that is created on or

2-36  after July 1, 1987. For purposes of this section only, a nonvested property

2-37  interest or a power of appointment created by the exercise of a power of

2-38  appointment is created when the power is irrevocably exercised or when a

2-39  revocable exercise becomes irrevocable.

2-40    2.  With respect to a nonvested property interest or a power of

2-41  appointment that was created before July 1, 1987, and that violates the rule

2-42  against perpetuities as that rule existed before that date, a court , upon the

2-43  petition of an interested person , may exercise its equitable power to reform

2-44  the disposition in the manner that most closely approximates the

2-45  transferor’s manifested plan of distribution and is within the limits of the

2-46  rule against perpetuities applicable when the nonvested property interest or

2-47  power of appointment was created.

2-48    3.  The provisions of subsection 7 of NRS 111.1037 apply to an

2-49  interest in property that is created by:

3-1    (a) A testamentary trust of a testator who dies on or after
December 1, 2002;

3-2    (b) An inter vivos trust that is executed on or after December 1, 2002;

3-3  or

3-4    (c) The exercise of a general power of appointment on or after

3-5  December 1, 2002.

3-6    Sec. 3.  This act becomes effective on December 1, 2002, only if

3-7  Assembly Joint Resolution No. 4 of the 70th session of the Nevada

3-8  Legislature is approved by the voters at the general election on
November 5, 2002.

 

3-9  H