46:2F-10. Permissible period of power of alienation under trust, future interest
14. a. (1) A future interest or trust is void if it suspends the power of alienation for longer than the permissible period. The power of alienation is the power to convey to another an absolute fee in possession of land, or full ownership of personalty. The permissible period is within 21 years after the death of an individual or individuals then alive.
(2) If the settlor of a living trust has an unlimited power to revoke, the permissible period is computed from termination of that power.
(3) If a future property interest or trust is created by exercise of a power of appointment, the permissible period is computed from the time the power is exercised if the power is a general power exercisable in favor of the donee, the donee's estate, the donee's creditors or the creditors of the donee's estate, whether or not it is exercisable in favor of others, and even if the general power is exercisable only by will; in the case of other powers the permissible period is computed from the time the power is created but facts at the time the power is exercised are considered in determining whether the power of alienation is suspended beyond the death of an individual or individuals alive at the time of creation of the power plus 21 years.
b.The power of alienation is suspended when there are no persons then alive who, alone or in combination with others, can convey an absolute fee in possession of land, or full ownership of personalty.
c.There is no suspension of the power of alienation by a trust or by equitable interests under a trust if the trustee has power to sell, either expressed or implied, or if there is an unlimited power to terminate in one or more persons then alive.
d.This section does not apply to limit any of the following:
(1) Transfers, outright or in trust, for charitable purposes;
(2) Transfers to one or more charitable organizations as described in Sections 170(c), 2055(a) and 2522(a) of the United States Internal Revenue Code of 1986 (26 U.S.C. ss. 170(c), 2055(a) and 2522(a), or under any similar statute;
(3) A future 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:
(a) a premarital or postmarital agreement;
(b) a separation or divorce settlement;
(c) a spouse's election;
(d) a similar arrangement arising out of a prospective, existing, or previous marital relationship between the parties;
(e) a contract to make or revoke a will or trust;
(f) a contract to exercise or not to exercise a power of appointment;
(g) a transfer in satisfaction of a duty of support; or
(h) a reciprocal transfer;
(4) Transfers 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; or
(5) 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.
L.1999,c.159,s.14.
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Last modified: October 11, 2016