Thursday, October 20, 2022

Article: And the Heirs of His Trust Corpus: How the Fee Tail and Historical Limitations on Perpetuities Can Inform the Law of Perpetual Trusts

Liam Cronan (Boston University School of Law) recently published an article entitled, And the Heirs of His Trust Corpus: How the Fee Tail and Historical Limitations on Perpetuities Can Inform the Law of Perpetual Trusts, Boston University Law Review, Forthcoming. Provided below is the abstract to the article:

The fee tail, common recoveries to convert a fee tail to fee simple, and strict settlements to preserve family control of land are today regarded, if at all, as relics of legal history. Yet, these long obsolete facets of the common law demonstrate earlier solutions to a problem that is again posed today. Trust arrangements to perpetuate inherited wealth within lines of descent, caused in part by the abolition of the Rule Against Perpetuities in many states, are again posing problems for the larger society. These perpetual (or “dynasty”) trusts, trusts with no fixed time limit that can avoid tax liability in perpetuity, are a rapidly growing yet vastly underreported problem for trust law and tax law that affect broader societal concerns over increasing wealth inequality. The fee tail was the earliest example of a perpetuity, and as such, it provoked a series of judicial and legislative reactions against what were viewed as the pernicious effects of perpetuities. The efforts of judges and legislatures are again needed to prevent these arrangements from lasting indefinitely, solution to this problem, as this Note explains, is in broad strokes the same as that in our earlier legal history.

Inspired by the release of the “Pandora Papers” in October 2021, this Note aims to offer a comparison between historic limitations on perpetual intergenerational control over familial wealth and modern applications of judicial limitations to perpetual trusts. This Note looks to combat the problem of perpetual trusts by connecting the long history of judicial limitations on perpetuities to two modern solutions: (1) a proposed model statute and (2) renewed methods of interpreting existing trust statutes through the examples of South Dakota, Nevada, Delaware, and Tennessee, states that commonly harbor perpetual trust. This historical lens will then inform an understanding both of perpetual trust’s present issues and the potential solutions to the problems that perpetual trusts propose through the modification of state statutes or renovated interpretations of existing trust law. Once again, it is for courts or legislatures to curtail the worst effects of unreasonably long trust duration through better doctrines on the modification and termination of trusts.

https://lawprofessors.typepad.com/trusts_estates_prof/2022/10/article-and-the-heirs-of-his-trust-corpus-how-the-fee-tail-and-historical-limitations-on-perpetuitie.html

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