Wills, Trusts & Estates Prof Blog

Incentive Trusts

The benefits of creating inventive trusts discussed in Catherine M. Allchin, In Some Trusts, the Heirs Must Work for the Money, NY Times, Jan. 29, 2006.

The articles explains that to receive benefits, beneficiaries "must reach milestones or take actions. For example, children might receive a $25,000 bonus when they graduate from college or marry. Or they might receive funds matching money they earn."

The article also explains that "[c]ritics, however, call incentive trusts too inflexible and say that some parents can be too controlling."

Special thanks to Prof. Joel C. Dobris of the University of California -- Davis for bringing this article to my attention.

ABA Client Brochure on Elder Law Ethics

The ABA Commission on Law and Aging has prepared an excellent client brochure entitled Why am I left in the waiting room?  Understanding the four C's of Elder Law Ethics.   The brochure explains why the attorney needs to meet with the client alone because of issues concerning (1) client identification, (2) conflicts of interest, (3) confidentiality, and (4) competency.

Special thanks to Clinical Prof. Kate Mewhinney (Wake Forest University School of Law) for bringing this brochure to my attention.

Resulting and Constructive Trusts -- Which Law Applies?

Adeline Chong (Lecturer in Law, University of Nottingham) has recently published her article entitled The Common Law Choice of Law Rules for Resulting and Constructive Trusts, 54 Int'l & Comp. L.Q. 855 (2005) [link requires Westlaw subscription].  Here is the conclusion to her article:

The common law choice of law rules for resulting and constructive trusts represent an area which has garnered too little attention from private international law lawyers. The common law is very relevant as the choice of law rules set out in the Hague Trusts Convention are inappropriate for resulting and constructive trusts and the Recognition of Trusts Act 1987 fails to extend the Convention's scope to foreign resulting and constructive trusts.

It has been argued that trusts claims involve a proprietary issue at heart; this is so even for civil law trusts and analogues which prima facie may appear to reject the concept of the 'beneficiary' having a proprietary entitlement to the trust property. It has been submitted that one should characterize trusts claims in accordance with their underlying proprietary nature and hence apply the property choice of law rules. It has been demonstrated that such a choice of law rule is practical, jurisprudentially sound, and represents the best option available.

This conclusion has particular repercussions for proprietary restitution in private international law. Claims for proprietary restitution are almost all in equity and will therefore involve trusts claims. As discussed earlier, some have asserted that the unjust enrichment choice of law rules should apply as it is argued that resulting and constructive trusts are imposed to reverse unjust enrichment.  Others would instead argue that proprietary restitution forms a separate category which is independent of unjust enrichment. However, the choice of law rules for proprietary restitution are not clear. In view of all this uncertainty, debates as to the correct cause of action for such claims or taxonomy of the law of restitution should be marginalized when determining the applicable choice of law rules. At the heart of trusts claims is the issue of whether property is impressed with a trust, that is, whether someone has absolute title over property. This is an essentially proprietary issue and should be categorized as such for choice of law purposes. It may well be that upon the application of the property choice of law rules, the lex situs will thereon dictate that unjust enrichment has to be established before a trust arises; but this is an issue to be determined by the lex situs as the lex causae, and should not be an issue at the choice of law stage. The approach suggested here, that is, choosing to characterize the response, has the added advantage of side-stepping the problems caused by the state of flux within the law of restitution.

RAP is a Good Thing?

Prof. Joel C. Dobris of the University of California -- Davis has posted a Comment on SSRN regarding the Rule Against Perpetuities.  Here is the abstract:

There has been a race to the bottom among a large minority of jurisdictions to repeal the Rule Against Perpetuities. This Comment discusses obstacles if we wish to rerun the race, at some point in the distant future, as well as some of the possible ways to bring back the Rule. The author also discusses the continued rejection of the repeal by academics. He concludes the professoriate may find it possible to live with the consequences of the race and that if the political will to bring back the Rule comes to exist, that Society will find a way to repeal the repeal.

The Perpetual-Trust GST-Tax Interface

Two professors from the Northwestern University School of Law, Robert H. Sitkoff and Max M. Schanzenbach, have recently released an article entitled Perpetuities or Taxes? Explaining the Rise of the Perpetual Trust. Here is the abstract as provided on SSRN:

By abolishing the Rule Against Perpetuities, 21 states have now validated perpetual trusts. The prevailing view among scholars is that enactment of the generation skipping transfer (GST) tax in 1986 prompted the movement to abolish the Rule by conferring a salient tax advantage on long-term trusts. However, an alternate view holds that demand for perpetual trusts stems from donors' preference for control independent of tax considerations. Proponents of both views have adduced supporting anecdotal evidence. Using state-level panel data on trust assets prior to the adoption of the GST tax, we examine whether a state's abolition of the Rule gave the state an advantage in the jurisdictional competition for trust funds. We find that, prior to the GST tax, a state's abolition of the Rule did not increase the state's trust business. By contrast, in a prior study we found that, between the enactment of the GST tax and 2003, states that abolished the Rule experienced a substantial increase in trust business. Accordingly, we conclude that the enactment of the GST tax prompted the rise of the perpetual trust. These findings bear on the debate over proposals to liberalize the law of trust termination and modification and to amend the GST tax. Our findings also contribute to the literature on the bequest motive.

Prof. Langbein Receives Order of the Coif Biennial Book Award

The following is from a press release issued by Yale Law School:

John H. Langbein, Sterling Professor of Law and Legal History, has won the Order of the Coif Biennial Book Award for his book The Origins of Adversary Criminal Trial (Oxford U.P. 2003). The award recognizes the authors of legal publications that evidence creative talent of the highest order. Langbein was the selection of the Order of the Coif Book Award Committee for the period 2003-04.

The Origins of Adversary Criminal Trial traces the history of the Anglo-American adversary system of justice, focusing on how lawyers assumed a preeminent role in criminal trials in the 18th Century. The book also provides a detailed account of the formation of the law of criminal evidence.

Langbein will receive the award at the Association of American Law Schools annual luncheon in Washington, D.C., on January 5, 2006.

Haleigh Poutre Update

Earlier on this blog, I reported on the case of an 11-year old girl, Haleigh Poutre, who was removed from life support after the Massachusetts Department of Social Services obtained court permission.

Instead of dying as expected, she has continued to improve.  She is no longer on a ventilator and "she can now move her eyes toward sound."  USA Today, Jan. 27, 2006.

Top SSRN Downloads

Here are the top downloads from SSRN for papers announced November 29, 2005 to January 28, 2006:

Rank	Downloads	Paper Title
1	57	Did Reform of Prudent Trust Investment Laws Change Trust Portfolio Allocation? Max M. Schanzenbach, Robert H. Sitkoff, Northwestern University - School of Law, New York University - School of Law, Date posted to database: December 9, 2005 Last Revised: January 23, 2006
2	45	Perpetual Trusts, Conservation Servitudes, and the Problem of the Future Susan Fletcher French, University of California, Los Angeles - School of Law, Date posted to database: November 23, 2005 Last Revised: December 1, 2005
3	24	A Prudential Exercise: Abstention and the Probate Exception to Federal Diversity Jurisdiction Christian J. Grostic, University of Michigan, Date posted to database: October 27, 2005 Last Revised: January 18, 2006
4	20	Article Five of the UTC and the Future of Creditors Rights in Trusts Robert T. Danforth, Washington and Lee University - School of Law, Date posted to database: November 18, 2005 Last Revised: December 14, 2005

Probate Exception to Federal Diversity Jurisdiction

Christian J. Grostic has recently released his paper entitled A Prudential Exercise: Abstention and the Probate Exception to Federal Diversity Jurisdiction on SSRN. The abstract explains:

Despite criticism, the probate exception has endured in the U.S. federal court system for over two hundred years. Looking back, we can now see that the probate exception fits remarkably well within another widely-criticized doctrine developed by the federal courts - abstention doctrine. The two doctrines are built on similar practices and prudential justifications, practices and justifications that extend from eighteenth century England through modern America.

Federal courts should apply the route test to determine the boundaries of the probate exception. The route test best reflects the proper understanding of the probate exception as a category of abstention doctrine, as well as the historical and modern practices and justifications for the probate exception. While applying the route test, courts still have the ability to appropriately limit expansion and contraction of the probate exception without violating the underlying prudential justifications for the exception.

More on Gonzales v. Oregon

For additional insights into the ramificantions of the United States Supreme Court's Gonzales v. Oregon opinion which upheld Oregon's assisted suicide law discussed earlier on this blog, see Molly McDonough, More Tests for Assisted Suicide Likely -- Advocates for Each Side See More Cases After High Court Ruling, ABA J. e-Report, Jan. 20, 2006.