Thursday, July 31, 2014
Steven J. Horowitz (Sidley Austin LLP) and Robert H. Sitkoff (Harvard Law School) recently published an article entitled, Unconstitutional Perpetual Trusts, 67 Vanderbilt Law Review, Forthcoming (June 16, 2014). Provided below is the abstract from SSRN:
Perpetual trusts are an established feature of today's estate planning firmament. Yet little-noticed provisions in the constitutions of nine states, including five states that purport to al-low perpetual trusts by statute, proscribe "perpetuities." This article considers those provisions in light of the meaning of "perpetuity" as a legal term of art across history. The article considers the constitutionality of perpetual trust statutes in states that have a constitutional ban on perpetuities and whether courts in states with such a ban may give effect to a perpetual trust settled in another state. Because text, purpose, and history all suggest that the constitutional proscriptions of perpetuities were meant to proscribe entails, whether in form or in function, and because a perpetual trust is in purpose and in function an entail, we conclude that recognition of perpetual trusts is prohibited in states with a constitutional prohibition of perpetuities.