Estates and Trusts Commons^™

Taxing Dynasties, David Gamage, Brian D. Galle, Bob Lord

Faculty Publications

The estate tax and the broader wealth-transfer-tax system are even more broken than is commonly understood. Over the past two decades, researchers and policy experts have identified a handful of key tactics that mega-rich families use to pass wealth from generation to generation without paying tax. These tax dodges are notorious enough to be known by their acronyms, such as the IDGT and the GRAT. Scholars and policymakers have proposed reforms to block these tactics, or at least to make them more difficult.

In this Article, we present new analysis, backed by new empirical findings, to show that these proposed …

(Reverse) Piercing The Trust Veil, Eric Kades

Faculty Publications

Emergent doctrine deems trusts legal entities distinct from their trustees and beneficiaries. Venerable doctrine empowers creditors to "pierce the veil" separating entities' and their owners' property to avoid inequitable treatment. This article weaves together the new and old to craft a legal roadmap for reversing the ongoing race to the bottom among the states authorizing indefensible self-settled asset protection trusts (SSAPTs) designed solely for the purpose of swindling creditors. As a matter of both policy and doctrine, piercing (more precisely, reverse piercing) an entity's veil is ideally suited to empower the creditor of a SSAPT beneficiary to get paid from …

Anti Trusts: Reforming An Excessively Flexible Legal Tool, Eric Kades

Faculty Publications

Trusts are one of the most flexible legal tools in lawyers’ arsenals, deployed for socially desirable uses ranging from supporting orphans to structuring complex investments. Trusts, however, are also used for a host of socially undesirable purposes, including restraint of trade, cheating creditors, establishing family dynasties akin to feudalism, and avoiding taxes. This negative litany shows that flexibility has a dark side, and these undesirable trust uses have accelerated in the last few decades. Creative lawyers continuously find novel uses for moldable tools like the trust. This Article argues that long experience and recent developments teach us that dark eclipses …

Strange Statutory Foundations And Terribly Tricky Treasures In Trust, Thomas Simmons

Faculty Publications

This paper summarizes two distinct topics: statutory foundations and a varied collection of unique and potentially troubling kinds of assets that might be held by fiduciaries such as trustees. Statutory foundations have recently been legislative approved in two states; Wyoming and New Hampshire and they represent new and interesting planning opportunities for estate planners. Tricky assets can range from the difficult-to-inventory (such as comic books and baseball cards) to outright contraband.

Undoing Undue Influence: How The Doctrine Can Avoid Judicial Subjectivity By Omitting The Vulnerability Element, Robin Boyle-Laisure

Faculty Publications

(Excerpt)

The utility of the doctrine of undue influence has been declining for several decades because of its inclusion of the element of vulnerability or, put another way, inquiry into the mind of the one allegedly being influenced. I argue that the courts’ inquiry into the mind of the influencee to determine whether this person was vulnerable is not a useful construct as an element of the doctrine. This Article addresses three contexts in which assessing one’s vulnerability is problematic: (1) in the contract formation process occurring in the general population (meaning not within a high-control group), such as the …

A New Feudalism: Selfish Genes, Great Wealth, And The Rise Of The Dynastic Family Trust (Dft), Eric Kades

Faculty Publications

Today’s record levels of economic inequality are infecting our future as the top 0.01% bequeath vast wealth to their descendants. With the death of the Rule Against Perpetuities (RAP), this inequality has the potential to harden social class lines—not just for a generation or two, but forever. Although it may sound implausible, interviews with estate lawyers serving very high-net-worth clients reveal that some members of the wealthiest tier of testators are already exploiting the RAP’s elimination, along with a tax loophole, to establish dynasty trusts that will financially empower their bloodline as long as it continues. Recent work in evolutionary …

Estate Planning With Electronic And Regulated Assets, Thomas Simmons, Deborah Tedford, Jared Cloud, Shaheen Inami, Shari Levitan

Faculty Publications

Unique or unusual assets – from non-fungible tokens to firearms – pose novel challenges to estate planners and fiduciaries – particularly when it comes to administration of the estate. The need to both carry out the donor’s wishes and maintain the value for beneficiaries can come with different considerations from the more “garden variety” asset – particularly if the estate planner and/or fiduciary is not aware of their existence. In this webcast, our faculty of experienced estate planners – all Fellows of ACTEC – will explore different types of electronic and regulated assets and the issues you must take into …

Tax Crushing Trusts, Thomas Simmons

Faculty Publications

No abstract provided.

Trusts From A To Z: Legal Ethics, Thomas Simmons

Faculty Publications

No abstract provided.

An Estate Plan For Kanye West, Thomas Simmons

Faculty Publications

One inventory item in megastar Kanye West’s vast portfolio of assets merits a unique sort of care and safeguarding—his right of publicity. The right of publicity is a property interest which represents the commercial value of a celebrity’s name, image, and likeness. In some states, including California, the right survives the celebrity’s death and is freely alienable and devisable. A protective arrangement, such as a trust, is often pursued to impose postmortem use and transferability restrictions on property that has particular importance to the testator. This Article proposes a noncharitable purpose trust as a means by which Kanye West’s right …

Christian Purpose Trusts, Thomas Simmons

Faculty Publications

Noncharitable purpose trusts are recognized under the Uniform Trust Code and the non-uniform laws of many jurisdictions. In 2019, Oregon enacted a stewardship trust statutory scheme. A stewardship trust is a purpose trust which is designed to hold and preserve corporate stock. Properly drafted, a stewardship trust can soften the indefatigable pursuit of profits that drive corporate entities. A stewardship trust can substitute ethical ideals - at least in part - for shareholder return. The purpose trust statutes of other jurisdictionscould also partially permit ambitions similar to those which motivated the Oregon legislation to be realized. The concept of a …

Purpose Trusts As A Planning Tool For The 21st Century, Thomas Simmons, Brad Myers

Faculty Publications

No abstract provided.

Unwinding Irrevocable Trusts, Thomas Simmons

Faculty Publications

No abstract provided.

Purpose Trust Cy Pres, Thomas Simmons

Faculty Publications

No abstract provided.

Conflict-Of-Interest-Infected Virtual Representatives And A Cure, Thomas Simmons

Faculty Publications

The general rule that a person cannot be bound by an agreement or a decree unless she received notice encounters practical difficulties where a person is missing, incompetent, a minor, unascertained, or even unborn. In many trust proceedings, all beneficiaries are necessary parties. But short of appointing a guardian ad litem to represent persons who are difficult to notice, uncertainty and inefficiencies would be encountered were it not for the doctrines of representation and virtual representation. Under these common law doctrines persons -- even if not yet in existence -- can be held to be parties to a proceeding "virtually …

Of Piketty And Perpetuities: Dynastic Wealth In The Twenty-First Century (And Beyond), Eric Kades

Faculty Publications

For the first time since independence, in a nation founded in large part on the rejection of a fixed nobility determined by birth and perpetuated by inheritance, America is paving the way for the creation of dynastic family wealth. Abolition of the Rule Against Perpetuities in over half the states along with sharp reductions in, and likely elimination of, the federal estate tax mean that there soon will be no obstacles to creating large pools of dynastic wealth insuring lavish incomes to heirs for generations without end. The timing of these legal changes could hardly be worse. Marshaling innovative economic …

Dispensing (With) Electronic Wills, Thomas Simmons

Faculty Publications

No abstract provided.

A Will For Willa Cather, Thomas Simmons

Faculty Publications

Artists hold their creative works dear. Whether paintings, poems, or songs, their human creators treat them with special care and often desire that same care be exercised after death. Some may wish to ban the use of a song in a television commercial. Others may wish to stop their novel from being turned into an animated Disney movie. But directing particular uses of property from the grave can be met with several objections and legal impediments. The objections sound in alarmist responses to “dead hand control.” The impediments include the Rule Against Perpetuities, uncertainty, capriciousness, and the repugnancy of restraints …

The Madness Of Insane Delusions, Kevin Bennardo

Faculty Publications

This Article shares two ideas for reform of the law surrounding testators' expressed preferences and the doctrine of insane delusions.

First, the doctrine of insane delusions should not be applied to devises that seek to advance beliefs, ideas, or viewpoints. There is just too great of a risk that judges and juries will strike down such devises when the testator’s viewpoints diverge from their own.

Second, the time may have come to admit that the law of wills is not as committed to the principle of testamentary freedom as it is often espoused to be. The literature is rife with …

Income Tax Concerns With Purpose Trusts, Thomas Simmons

Faculty Publications

No abstract provided.

Introducing Virtual Representation, Thomas Simmons

Faculty Publications

The general rule that a person cannot be bound by an agreement or decree unless she received notice encounters practical difficulties where a person is missing, incompetent, a minor, unascertained, or even unborn. All beneficiaries are necessary parties in a trust proceeding. But short of appointing a guardian ad litem to represent persons who are difficult to notice, uncertainty and inefficiencies would be encountered were it not for the doctrine of virtual representation. Under the doctrine of virtual representation, persons - even if not yet in existence - can be held to be parties to a proceeding or an agreement …

Liberty In Loyalty: A Republican Theory Of Fiduciary Law, Evan J. Criddle

Faculty Publications

Conventional wisdom holds that the fiduciary duty of loyalty is a prophylactic rule that serves to deter and redress harmful opportunism. This idea can be traced back to the dawn of modern fiduciary law in England and the United States, and it has inspired generations of legal scholars to attempt to explain and justify the duty of loyalty from an economic perspective. Nonetheless, this Article argues that the conventional account of fiduciary loyalty should be abandoned because it does not adequately explain or justify fiduciary law’s core features.

The normative foundations of fiduciary loyalty come into sharper focus when viewed …

Wrongful Death Conflicts For Plaintiffs' Attorneys, Thomas Simmons

Faculty Publications

No abstract provided.

A Chinese Inheritance, Thomas Simmons

Faculty Publications

The cultural values of a society are often discernible in its laws of succession and intestacy. These laws govern the distribution of a decedent's estate when there is no estate plan in place. Intestacy schemes typically reflect basic societal values. Yet, perhaps remarkably, the laws of intestacy bear consistency across various countries, continents, and cultures, rewarding the closest surviving family members. Upon closer examination, unique characteristics also emerge. The most startling characteristic of Chinese inheritance law is its willingness to invoke judicial review of an heir's conduct in settling upon distribution percentages to govern intestacy. American succession law also considers …

Leach V. Hyatt: Recasting Indefiniteness, Thomas Simmons

Faculty Publications

No abstract provided.

Donative Trusts And Equity At Common Law, Thomas Simmons

Faculty Publications

The historical evolution of express donative trusts in the English Middle Ages down to today both explains and frames the basic elements of a common law trust. Today, trusts in common law countries - and also in many civil law jurisdictions with the exception of China - are utilized in the private donative context to preserve and administer family wealth in ways not otherwise achievable. This paper outlines the basic elements of a common law donative trust from a functional perspective, explaining how trust work as a form of gratuitous transfers and why,

Mapping Chinese Trusts With A Patrimony Compass, Thomas Simmons

Faculty Publications

Review of: Kai Lyu, Re-Clarifying China's Trust Law: Characteristics and New Conceptual Basis, 36 Loy. L.A. Int'l & Comp. L. Rev. 447 (2015).

International Implications Of The Will As An Implied Unilateral Arbitration Contract, S. I. Strong

Faculty Publications

In his article, The Will As An Implied Unilateral Arbitration Contract, Professor Gary Spitko offers an intriguing and innovative argument about how arbitration provisions in wills can be enforced even over the objection of a beneficiary and even in cases where the beneficiary seeks to set aside the will in its entirety. While I do not agree with all of the assertions in that Article (for example, the conclusion that "a consensus is developing that a testator may not compel arbitration of contests to her will"' appears somewhat premature, given a number of probate cases not discussed by Professor Spitko …

The Will As An Implied Unilateral Arbitration Contract, E. Gary Spitko

Faculty Publications

A consensus has begun to develop in the case law, the academic commentary, and the statutory reform movement that a testator’s provision in her will mandating arbitration of any challenge to the will should not be enforceable against a beneficiary who has not agreed to the arbitration provision, at least where the will contestant, by her contest, seeks to increase her inheritance outside the will. Grounding this consensus is the widespread understanding that a will is not a contract. This Article seeks to challenge both the understanding that the will is not a contract and the opposition to enforcement of …

The Wrongheadedness Of The Poms Pooled Trust Rules And An Unfortunate But Recently Noted Chinese Parallel, Thomas Simmons

Faculty Publications

Supplemental needs trusts of the pooled trust variety have offered important dignity-enhancing protections for individuals with disabilities for several decades. A pooled trust, properly structured according to Congressional requirements, allows the wealth of an individual with disabilities to be overseen by an independent third party trustee, supplementing without displacing means-tested government programs like Medicaid and Supplemental Security Income. Beginning in 2012, the Social Security Administration imposed new burdensome requirements on pooled trusts through its informal POMS manual. Those new requirements have intentionally or unintentionally eliminated as a practical matter the availability of pooled trusts in many states. This unfortunate result …