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Jurisdictional Competition For Trust Funds: An Empirical Analysis Of Perpetuities And Taxes, Robert H. Sitkoff, Max Matthew Schanzenbach

Law and Economics Papers

This paper presents the results of the first empirical study of the domestic jurisdictional competition for trust funds. In order to open a loophole in the federal estate tax, a rash of states have abolished the Rule Against Perpetuities. Based on reports to federal banking authorities, we find that through 2003 a state's abolition of the Rule increased its trust assets by $6 billion (a 20 percent increase on average) and increased its average trust account size by $200,000. These estimates imply that roughly $100 billion in trust funds have moved to take advantage of the abolition of the Rule. …