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ASSEMBLY BILL 1577 (SHER – 1991)

CHAPTER 156, STATUTES OF 1991

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As enacted Assembly Bill 1577 affected various Civil Code sections and Probate Code sections relating to perpetuities.  (See Exhibit #1d) Assembly Bill 1577 was introduced by Assembly member Byron D. Sher on March 7, 1991 at the request of the California Law Revision Commission [hereinafter referred to as “the CLRC” or “the Commission”].  (See Exhibits #1a and #3, page 3)

 

Following its introduction, Assembly Bill 1577 was referred to the Assembly and Senate Committees on Judiciary. (See Exhibits #3 and #7)  The bill was amended by the Assembly on April 9 and May 7, 1991.  (See Exhibits #1b, #1c, and #2)  Assembly Bill 1577 was approved by the Legislature and sent to the Governor for signature on July 10, 1991.  Governor Pete Wilson signed the bill to become Chapter 156 of the Statutes of 1991.  (See Exhibits #1d and #2)

 

The Senate Committee on Judiciary analysis of the bill as amended May 7, 1991 indicated that the purpose of this was “to repeal the common law rule against perpetuities and enact the Uniform Statutory Rule Against Perpetuities (USRAP).”  (See Exhibit #7, page 1)

 

The Third Reading analysis of Assembly Bill 1577 prepared by the Office of Senate Floor Analyses described this bill as last amended as follows:

 

This bill adopts a 90-year wait-and-see period during which nonvested interests have the opportunity to work out, without the need to engage in speculation on possibilities required under the common law rule against perpetuities.  This is accomplished by retaining the common law rule as a validating rule, but suspends its operation as an invalidating rule for the 90-year wait-and-see period running from the creation of the interest.

 

In other words, this bill adopts the presumption that every disposition of a future interest is valid.  Only those future interests that remain nonvested after the 90-year wait-and-see period will be violative of the rule against perpetuities.

 

This bill makes various other miscellaneous changes regarding the rule against perpetuities as follows:

 

1.         Revises the marketable title statute to treat executory

interests affecting the use of real property in the same manner as powers of termination, making the 30 year expiration period for power of terminations applicable to these interests and to lease which must commence in possession within 30 years.

 

2.         Recognizes a trust for a non-charitable corporation or

unincorporated society as valid for a period of 21 years.

 

3.         Recognizes the validity of trust for the care of a designated

domestic or pet animal even though there is no beneficiary to enforce the terms of the trust.

(See Exhibit #9, page 2)