HB-6539, As Passed House, December 3, 2008

SUBSTITUTE FOR

HOUSE BILL NO. 6539

     A bill to amend 2008 PA 148, entitled

"Personal property trust perpetuities act,"

by amending the title and sections 1, 2, 3, and 4 (MCL 554.91,

554.92, 554.93, and 554.94).

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

TITLE

     An act to exclude certain personal property held in trust from

the rule against perpetuities and similar rules that potentially

affect the duration of trusts.

     Sec. 1. This act shall be known and may be cited as the

"personal property trust "trust perpetuities act".

     Sec. 2. As used in this act:

     (a) "First power" means a nonfiduciary, nongeneral power of

appointment over personal property held in trust that is exercised

so as to subject the property to, or to create, another power of

appointment.

     (b) "Nonfiduciary" means, with respect to a power of

appointment, that the power of appointment is not held by a trustee

in a fiduciary capacity.

     (c) "Second power" means a nonfiduciary power of appointment

over personal property held in trust that is created or to which

property is subjected by the exercise of a first power and that is

not a presently exercisable general power.

     (d) "Uniform statutory rule against perpetuities" means the

uniform statutory rule against perpetuities, 1988 PA 418, MCL

554.71 to 554.78.

     Sec. 3. (1) Except as provided in subsection (3), an interest

in, or power of appointment over, personal property held in trust

is not invalidated by a rule against any of the following:

     (a) Perpetuities.

     (b) Suspension of absolute ownership.

     (c) Suspension of the power of alienation.

     (d) Accumulations of income.

     (2) Except as provided in subsection (3), all of the following

may be indefinitely suspended, postponed, or allowed to go on with

respect to personal property held in trust:

     (a) The vesting of a future interest.

     (b) The satisfaction of a condition precedent to the exercise

of a general power of appointment.

     (c) The exercise of a nongeneral or testamentary power of

appointment.

     (d) Absolute ownership.

     (e) The power of alienation.

House Bill No. 6539 (H-1) as amended December 3, 2008

     (f) Accumulations of income.

     (3) If a first power is exercised so as to subject the

property to, or to create, a second power, the period during which

the vesting of a future interest in the property may be postponed

by the exercise of the second power shall be determined under the

uniform statutory rule against perpetuities by reference to the

time the first power was created. A nonvested interest, general

power of appointment not presently exercisable because of a

condition precedent, or nongeneral or testamentary power of

appointment created, or to which property is subjected, by the

exercise of the second power is invalid, to the extent of the

exercise of the second power, unless the interest or power

satisfies the uniform statutory rule against perpetuities measured

from the time of the creation of the first power.

     Sec. 4. (1) This act applies only to a nonvested interest in,

or power of appointment over, personal property held in a trust

that is either revocable on , or created after , [the effective date

of this act May 28, 2008] and only to the extent that the trust is not

 a special

appointee trust.

     (2) For purposes of this section, a trust is a special

appointee trust to the extent that it was created or added to by

the exercise of a nongeneral power of appointment under a trust

that was irrevocable on September 25, 1985.

     Enacting section 1. This amendatory act does not take effect

unless House Bill No. 6540 of the 94th Legislature is enacted into

law.