SECTION 2-902 Uniform Probate Code . WHEN NONVESTED PROPERTY INTEREST OR POWER OF APPOINTMENT CREATED.

SECTION 2-902. WHEN NONVESTED PROPERTY INTEREST OR POWER OF APPOINTMENT CREATED.
(a) Except as provided in subsections (b) and (c) and in Section 2-905(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 [Subpart] 1 of this [part], 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 2-901(b) or (c), the nonvested property interest or power of appointment is created when the power to become the unqualified beneficial owner terminates. [For purposes of [Subpart] 1 of this [part], a joint power with respect to community property or to marital property under the Uniform Marital Property Act held by individuals married to each other is a power exercisable by one person alone.]
(c) For purposes of [Subpart] 1 of this [part], 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

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the original contribution was created.

Comment

Section 2-902 defines the time when, for purposes of Subpart 1 of Part 9, a nonvested property interest or a power of appointment is created. The period of time allowed by Section 2- 901 is measured from the time of creation of the nonvested property interest or power of appointment in question. Section 2-905, with certain exceptions, provides that Subpart 1 of Part 9 applies only to nonvested property interests and powers of appointment created on or after the effective date of Subpart 1 of Part 9.
Subsection (a). Subsection (a) provides that, with certain exceptions, the time of creation of nonvested property interests and powers of appointment is determined under general principles of property law. Because a will becomes effective as a dispositive instrument upon the decedent’s death, not upon the execution of the will, general principles of property law determine that a nonvested property interest or a power of appointment created by will is created at the decedent’s death. With respect to an inter-vivos transfer, an interest or power is created on the date the transfer becomes effective for purposes of property law generally, normally the date of delivery of the deed or the funding of the trust.
Nonvested Property Interests and Powers of Appointment Created by the Exercise of a Power of Appointment. If a nonvested property interest or a power of appointment was created by the testamentary or inter-vivos exercise of a power of appointment, general principles of property law adopt the “relation-back” doctrine. Under that doctrine, the appointed interests or powers are created when the power was created, not when it was exercised, if the exercised power was a nongeneral power or a general testamentary power. If the nonvested property interest or power of appointment was created by the exercise of a nongeneral or a testamentary power of appointment that was itself created by the exercise of a nongeneral or a testamentary power of appointment, the relation-back doctrine is applied twice and the nonvested property interest or power of appointment was created when the first power of appointment was created, not when the second power was created or exercised.
Example 1. G’s will created a trust that provided for the income to go to G’s son, A, for life, remainder to such of A’s descendants as A shall by will appoint.
A died leaving a will that exercised his nongeneral power of appointment, providing that the trust is to continue beyond A’s death, paying the income to A’s daughter, X, for her lifetime, remainder in corpus to such of X’s descendants as X shall by will appoint; in default of appointment, to X’s descendants who survive X, by representation.
A’s exercise of his nongeneral power of appointment gave a nongeneral power of appointment to X and a nonvested property interest to X’s descendants. For purposes of Section 2-901, X’s power of appointment and the nonvested property interest in X’s descendants is deemed to have been “created” at G’s death when A’s nongeneral power of appointment was created, not at A’s death when he exercised his power of appointment.

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Suppose that X subsequently dies leaving a will that exercises her nongeneral power of appointment. For purposes of Section 2-901, any nonvested property interest or power of appointment created by an exercise of X’s nongeneral power of appointment is deemed to have been “created” at G’s death, not at A’s death or at X’s death.
If the exercised power was a presently exercisable general power, the relation-back doctrine is not followed; the time of creation of the appointed property interests or appointed powers is regarded as the time when the power was irrevocably exercised, not when the power was created.
Example 2. The same facts as Example 1, except that A’s will exercised his nongeneral power of appointment by providing that the trust is to continue beyond A’s death, paying the income to A’s daughter, X, for her lifetime, remainder in corpus to such person or persons, including X, her estate, her creditors, and the creditors of her estate, as X shall appoint; in default of appointment, to X’s descendants who survive X, by representation.
A’s exercise of his nongeneral power of appointment gave a presently exercisable general power of appointment to X. For purposes of Section 2-901, any nonvested property interest or power of appointment created by an exercise of X’s presently exercisable general power of appointment is deemed to be “created” when X irrevocably exercises her power of appointment, not when her power of appointment or A’s power of appointment was created.
A’s exercise of his nongeneral power also granted a nonvested property interest to X’s descendants (under the gift-in-default clause). Were it not for the presently exercisable general power granted to X, the nonvested property interest in X’s surviving descendants would, under the relation-back doctrine, be deemed “created” for purposes of Section 2-901 at the time of G’s death. However, under Section 2-902(b), the fact that X is granted the presently exercisable general power postpones the time of creation of the nonvested property interest of X’s descendants. Under Section 2-902(b), that nonvested property interest is deemed not to have been “created” for purposes of Section 2-901 at G’s death but rather when X’s presently exercisable general power “terminates.” Consequently, the time of “creation” of the nonvested interest of X’s descendants is postponed as of the time that X was granted the presently exercisable general power (upon A’s death) and continues in abeyance until X’s power terminates. X’s power terminates by the first to happen of the following: X’s irrevocable exercise of her power; X’s release of her power; X’s entering into a contract to exercise or not to exercise her power; X’s dying without exercising her power; or any other action or nonaction that would have the effect of terminating her power.
Subsection (b). Subsection (b) provides that, if one person can exercise a power to become the unqualified beneficial owner of a nonvested property interest (or a property interest subject to a power of appointment described in Section 2-901(b) or 2-901(c)), the time of creation of the nonvested property interest (or the power of appointment) is postponed until the power to become the unqualified beneficial owner ceases to exist. This is in accord with existing common law. The standard example of the application of this subsection is a revocable inter- vivos trust. For perpetuity purposes, both at common law and under Subpart 1 of Part 9, the nonvested property interests and powers of appointment created in the trust are created when the

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power to revoke expires, usually at the settlor’s death. For another example of the application of subsection (b), see the last paragraph of Example 2, above.
Subsection (c). Subsection (c) provides that nonvested property interests and powers of appointment arising out of transfers to a previously funded trust or other existing property arrangement are created when the nonvested property interest or power of appointment arising out of the original contribution was created. This avoids an administrative difficulty that can arise at common law when subsequent transfers are made to an existing irrevocable inter-vivos trust. Arguably, at common law, each transfer starts the period of the Rule running anew as to each transfer. The prospect of staggered periods is avoided by subsection (c). Subsection (c) is in accord with the saving-clause principle of wait-and-see embraced by Part 9. If the irrevocable inter-vivos trust had contained a saving clause, the perpetuity-period component of the clause would be measured by reference to lives in being when the original contribution to the trust was made, and the clause would cover subsequent contributions as well.
Reference. Section 2-902 is Section 2 of the Uniform Statutory Rule Against Perpetuities (Uniform Act). For further discussion of this section, with examples illustrating its application, see the Official Comment to Section 2 of the Uniform Act.