Wednesday, April 10, 2013

Can the Dead Own Property?

Over at Concurring Opinions, Meredith Render meditates on death and meaning of ownership:

Herein enters the perennial problem of death. When an owner is a natural person (rather than, for example, a corporation), then death would seem to present an obstacle to owning. When an owner dies, her capacity to make decisions about the use of an entity is terminated. Unlike in the newborn example, that capacity is not dormant, it is extinguished forever. If the capacity to exercise control over an entity is a necessary criterion of ownership, we would not expect deceased people to be capable of ownership. This intuition is supported by the fact that generally when an owner dies, the object of ownership passes (by will or intestate succession) to another owner. In this instance, there is no continuity of “ownership” – the new owner does not act on the behalf of the deceased owner – the ownership simply ends with the owner.

A notable exception to this scenario exists in the context of trusts. A trust presents challenge to our conventional understanding of “ownership,” – and particularly to the idea of ownership as a capacity. This is so not only because “ownership” is split in the context of a trust between equitable and legal owners, but also because some degree of control over the trust assets seems to be retained by the settlor. In this sense, the settlor seems to continue to act as a kind of “owner” of the assets, even though the settlor may be deceased. This phenomenon is sometimes referred to as “dead hand control.” Lately I’ve been thinking about this phenomenon in the context of the commitments implicit in our concept of “owner.” The interplay of these ideas is especially interesting in the context of what is sometimes described as a “dynasty trust.” A dynasty trust has the potential to endure into perpetuity, long after the settlor is deceased. I’ll be posting more on dynasty trusts, death and the concept of “owner” in the weeks to come.

Steve Clowney

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