A. A future interest under the terms of a trust is contingent on the beneficiary surviving the distribution date. If a beneficiary of a future interest under the terms of a trust fails to survive the distribution date, the following apply:
1. Except as provided in subsection C of this section, if the future interest is not in the form of a class gift and the deceased beneficiary leaves surviving descendants, a substitute gift is created in the beneficiary's surviving descendants. Surviving descendants take by representation the property to which the beneficiary would have been entitled if the beneficiary had survived the distribution date.
2. Except as provided in subsection C of this section, if the future interest is in the form of a class gift, other than a future interest to issue, descendants, heirs of the body, heirs, next of kin, relatives, or family or a class described by similar language, a substitute gift is created in the surviving descendants of any deceased beneficiary.
The property to which the beneficiaries would have been entitled if all of them had survived the distribution date passes to the surviving beneficiaries and the surviving descendants of the deceased beneficiaries. Each surviving beneficiary takes the share to which that person would have been entitled if the deceased beneficiaries had survived the distribution date.
Each deceased beneficiary's surviving descendants who are substituted for the deceased beneficiary take by representation the share to which the deceased beneficiary would have been entitled if the deceased beneficiary had survived the distribution date.
B. Words of survivorship attached to a future interest are, in the absence of clear and convincing evidence to the contrary, a sufficient indication of an intent contrary to the application of this section. Words of survivorship include words of survivorship that relate to the distribution date or to an earlier or an unspecified time, whether those words of survivorship are expressed in condition-precedent, condition-subsequent or any other form.
C. If a governing instrument creates an alternative future interest with respect to a future interest for which a substitute gift is created by subsection A of this section, the substitute gift is superseded by the alternative future interest, whether or not an expressly designated beneficiary of the alternative future interest is entitled to take in possession or enjoyment.
D. If after the application of this section there is no surviving taker, the property passes in the following order:
1. If the trust was created in a nonresiduary devise in the transferor's will or in a codicil to the transferor's will, the property passes under the residuary clause in the transferor's will. For purposes of this paragraph, the residuary clause is treated as creating a future interest under the terms of a trust.
2. If no taker is produced by the application of paragraph 1 of this subsection, the property passes to the transferor's heirs under section 14-2711.
E. A residuary clause in a will does not create an alternative future interest with respect to a future interest created in a nonresiduary devise in the will, whether or not the will specifically provides that lapsed or failed devises are to pass under the residuary clause.
F. For the purposes of this section:
1. "Alternative future interest" means an expressly created future interest that can take effect in possession or enjoyment instead of another future interest on the happening of one or more events, including survival of an event or failure to survive an event, whether an event is expressed in condition-precedent, condition-subsequent or any other form.
2. "Beneficiary" means the beneficiary of a future interest and includes a class member if the future interest is in the form of a class gift.
3. "Class member" includes a person who does not survive the distribution date but who would have taken under a future interest in the form of a class gift if that person had survived the distribution date.
4. "Deceased beneficiary" means a class member who failed to survive the distribution date and left one or more surviving descendants.
5. "Distribution date", with respect to a future interest, means the time when the future interest is to take effect in possession or enjoyment. Distribution date does not mean a date that necessarily occurs at the beginning or end of a calendar day but that may occur at a time during the course of a day.
6. "Future interest" includes an alternative future interest and a future interest in the form of a class gift.
7. "Future interest under the terms of a trust" means a future interest that was created by a transfer creating a trust or to an existing trust or by an exercise of a power of appointment to an existing trust, directing the continuance of an existing trust, designating a beneficiary of an existing trust or creating a trust.
8. "Surviving beneficiary" or "surviving descendant" means a beneficiary or a descendant who neither predeceased the distribution date nor is deemed to have predeceased the distribution date under section 14-2702.