Friday, September 23, 2022
Jack Whiteley (Georgetown University Law Center) recently published an article entitled, Inheritance in an Unequal Age, Northwestern University Law Review (Forthcoming 2023). Provided below is the abstract to the paper:
For centuries, the common law limited aristocratic wealth. In the last three decades, that has changed. One by one, state legislatures have eliminated the Rule against Perpetuities, and now dynasty trusts can make carefully controlled payments to a trust settlor’s descendants for hundreds of years. This change occurred soon before a large and ongoing intergenerational wealth transfer in the United States. Trusts scholars have roundly criticized the Rule’s removal, and some have described it as charting a path to a new Gilded Age.
This Article draws a theoretical lesson from the Rule’s demise. I argue that part of the reason for the Rule’s end was its complexity: most lawyers, and most citizens, do not really know what the Rule is, or how it operates. Thus, in spite of its value, the Rule found too few defenders when special-interest advocates from financial industries competing jurisdictionally for trust fees sought to remove it. Complexity in inheritance law has this specific and timely cost: it can enable mechanisms for aristocratic wealth defense, even when it is meant to do the opposite. This is because rule complexity causes asymmetric information among future players. This dynamic should figure into proposals for reform.