UNDOING REPEAL OF THE RULE AGAINST
PERPETUITIES: FEDERAL AND STATE TOOLS FOR
BREAKING DYNASTY TRUSTS
Joel C. Dobris*
I want to thank Stewart Sterk and Melanie Leslie for inviting me.
It’s an honor to be here and to have a chance to see old friends and to
meet people I’ve only read or written to. I’ve known Susan French for
almost thirty years. I learned a lot about the Rule from her.1
I’m a trust guy so I’m going to respond in the trust context.2 We
* Professor of Law, UC Davis, School of Law. I thank Jack Ayer, Alan Brownstein, Holly
Doremus, Christopher Elmendorf, Chante Gordon, Kevin Johnson, Carlton Larson, Melanie
Leslie, Evelyn Lewis, Rex Perschbacher, Robert Sitkoff, Stewart Sterk, Bruce Wolk, James Yi,
and attendees at the conference at Cardozo where this comment was presented.
This essay is the footnoted text, as edited, of Professor Dobris’s Comment on Professor
French’s paper given to the Trusts in the Twenty-First Century conference on September 19,
2005, subsequently published at 27 CARDOZO L. REV. 2537 (2006). Schedules and events led the
author and the editors to publish the comment as it was given at the conference.
1 See Susan F. French, Perpetuities: Three Essays in Honor of My Father, 65 WASH. L. REV.
323, 349 (1990).
2 Professor French also deals with perpetual conservation easements that have been treated
as charitable donations. Those involved with easements have assumed a judicial power to make
appropriate changes and the analyses to date have assumed a cy pres or a changed circumstances
analysis. The cy pres analysis, taken from trust law, is an old friend—as is the perhaps less
familiar changed circumstances analysis taken from the general law of servitudes affecting real
property. See, e.g., Carol Necole Brown, A Time to Preserve: A Call for Formal Private-Party
Rights to Perpetual Conservation Easements, 40 GA. L. REV. 85 (2005); Andrew Dana &
Michael Ramsey, Conservation Easements and the Common Law, 8 STAN. ENVTL. L.J. 2, 39-42
(1989) (discussing doctrines of changed circumstances and cy pres to terminate or modify
conservation easements); Julia D. Mahoney, Perpetual Restrictions on Land and the Problem of
the Future, 88 VA. L. REV. 739, 770-79 (2002) (discussing potential avenues for modifying,
terminating, or extinguishing conservation easements); Nancy A. McLaughlin, Rethinking the
Perpetual Nature of Conservation Easements, 29 HARV. ENVTL. L. REV. 422 (2005) (discussing
application of cy pres to conservation easements). The point for us is that no one intends to sit
around wringing her hands if there’s a long duration-based easement problem. Everybody
assumes that we can roll up our sleeves and clean up any easement mess. I discussed this with
Professor Holly Doremus prior to Professor French’s presentation of the same point. I thank
Professor Doremus for pointing out this problem to me (and for many other comments on this
comment).
I am interested by the idea of a charitable trust in a repeal state that is not qualified as tax
exempt for tax purposes. If the estate tax doesn’t affect such a trust, and if distributions of
income to established charitable beneficiaries attracts a charitable deduction, then little is lost by
the lack of tax exemption. I assume it would still be a charitable trust for state law purposes.
There is also the possibility of perpetual purpose trusts. See Adam J. Hirsch, Bequests for
Purposes: A Unified Theory, 56 WASH. & LEE L. REV. 33, 49-50 (1999).
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all understand perpetual3 trusts are here for a good long time.4 It seems
to me we5 are nervous because we don’t have termination mechanisms.6
We obviously need them.7 We’ll get them. If we come to see that
perpetual trusts can be terminated, if necessary, we can relax and let
things take their natural course.
I see my job today as talking about termination tools.8 That means
3 A useful review of the pro-RAP arguments and the recent pro-RAP literature follows
section 29 of the RESTATEMENT (THIRD) OF TRUSTS (2003). Most but not all law professors
want to keep the Rule. See Eric Rakowski, The Future Reach of the Disembodied Will, 4 POL.
PHIL. & ECON. 91 (2005); Angela M. Vallario, Death By A Thousand Cuts: The Rule Against
Perpetuities, 25 J. LEGIS. 141 (1999); John G. Shively, Note, The Death of the Life in Being—The
Required Federal Response to State Abolition of the Rule Against Perpetuities, 78 WASH. U. L.Q.
371 (2000). Perpetual, or dynasty trusts are a source of in-state income for states that repeal the
Rule Against Perpetuities. Robert H. Sitkoff & Max M. Schanzenbach, Jurisdictional
Competition for Trust Funds: An Empirical Analysis of Perpetuities and Taxes, 115 YALE L.J.
356 (2005). Professor Sitkoff has also written about long duration accumulations of trust income
in Robert H. Sitkoff, The Lurking Rule Against Accumulations of Income, 100 NW. U. L. REV.
501 (2006). Cy pres is first cousin to the court’s jurisdiction over accumulations of income for
charitable purposes. Thus
[i]n some situations, a charity begins with a small fund, the income of which its
founder intends to accumulate until the principal grows to a certain amount. The law
accommodates such plans by permitting the accumulation of income even for long
periods of dormancy if for a charitable purpose. However, regardless of legislated
limits on accumulations, courts exercise equity powers to require that accumulations be
reasonable in light of the charitable purpose and public policy.
PRINCIPLES OF THE LAW OF NONPROFIT ORGANIZATIONS 280 (Proposed Draft No. 3, May
2005). Note the idea of retained equitable jurisdiction even if the legislation allows the
accumulation. I would argue that this idea of retained equitable jurisdiction in the face of
legislation can be carried over to perpetual trusts created by statute.
I am struck by the apparent practitioner/professor disconnect. With no basis in fact I am
comfortable guessing that most trust practitioners like the repeal and would keep it, and that most
professors don’t like the repeal. We profs seem impotent in the face of this repeal movement of
which we disapprove. Received university wisdom is being ignored. I’m shocked. I’m shocked.
4 This comment is a time capsule, a note in a bottle, a cache on the trail should anyone come
this way again.
5 The problem with the expressive “we” is that it is a shortcut. There is no “we” and “we”
all never agree.
6 I believe that most folks don’t trust banks or believe in the efficacy of fiduciary duty and
yet there is a willingness to create these trusts. I don’t understand. It does not compute. Why are
folks willing to commit their stuff and their families to the eternal deep?
7 To the extent any dynasty trust can be called well-drafted, well-drafted dynasty trusts
provide great flexibility. By my lights, if the trust is well-drafted, the trustee, a trust protector or
the beneficiaries can modify or terminate the trust under appropriate circumstances. For instance,
settlors could appoint protectors and vest them with sufficient powers to oversee the trustee and
even dissolve the trust under certain specified circumstances. That means that ultimately we are
talking about specific, and arguably special, circumstances, including poorly drafted trusts that
have no flexibility built into the trust terms. Or we are talking about trusts where flexible powers
are available, but those holding the powers won’t use them. In theory, if everyone agreed that
perpetual trusts are a tool from the devil’s workshop, every fiduciary or beneficiary with the
power to modify or terminate a perpetual trust would do so. But that is unlikely. For a general
discussion of dynasty trusts, see Garrett Moritz, Note, Dynasty Trusts and the Rule Against
Perpetuities, 116 HARV. L. REV. 2588 (2003).
8 I went to law and economics “summer camp” for law professors a number of years ago.
2006]
BREAKING DYNASTY TRUSTS
2539
I’m here to talk to you about tattoo removal.9 “It seemed like such a
good idea at the time.”
Many future problems might justify such an attack.10 In that
regard, I have to say the toxic combo is perpetual trusts and asset
protection11 trusts.12 If it’s happy hour, and doubles cost the same as
singles, lots of folks will order a double.13
I see possible agency problems,14 concentration-of-power
On the last night we “students” put on a show. The opening line, spoken in an empty dormitory
common room, was, “Assume a stage set.” In the same spirit, I ask the reader to assume it’s the
year 2206 and our descendants, or at least some of them, deeply regret our collective decision to
repeal the Rule Against Perpetuities in a number of jurisdictions. This comment explores some
tools for dealing with unanticipated problems created by long-duration or perpetual trusts in the
far off future (let me say a couple hundred years from now). In this comment I assume that for
good and sufficient reason different polities want to reinstate the Rule in a variety of situations
and/or that they want to arrange the world so that established perpetual trusts are terminated, or
eviscerated, and that no new ones are created.
9 See Tattooremoval.org, www.tattooremoval.org (last visited Mar. 22, 2006); Josee Rose,
Blame It on My Youth: Tattoo Removal Takes Off, WALL ST. J., Oct. 25, 2005, at D4.
10 In RAP jurisdictions there were problems we ignored because we knew that every 100
years the property would be owned in fee and the problem would disappear.
11 See generally Robert T. Danforth, Article Five of the UTC and the Future of Creditors’
Rights in Trusts, 27 CARDOZO L. REV. 2551 (2006); John K. Eason, Policy, Logic, and
Persuasion in the Evolving Realm of Trust Asset Protection, 27 CARDOZO L. REV. 2621 (2006);
Adam J. Hirsch, Fear Not the Asset Protection Trust (and Other Reflections), 27 CARDOZO L.
REV. 2685 (2006); Jeffrey A. Schoenblum, In Search of a Unifying Principle for Article V of the
Uniform Trust Code: A Response to Professor Danforth, 27 CARDOZO L. REV. 2609 (2006).
Other relevant articles include: Karen E. Boxx, Gray’s Ghost—A Conversation About the
Onshore Trust, 85 IOWA L. REV. 1195 (2000); Randall J. Gingiss, Putting a Stop to “Asset
Protection” Trusts, 51 BAYLOR L. REV. 987 (1999); Adam J. Hirsch, Spendthrift Trusts and
Public Policy: Economic and Cognitive Perspectives, 73 WASH. U. L.Q. 1, 83-92 (1995); Henry
J. Lischer, Jr., Domestic Asset Protection Trusts: Pallbearers to Liability, 35 REAL PROP. PROB.
& TR. J. 479 (2000); Richard W. Nenno, Planning With Domestic Asset Protection Trusts: Part I,
40 REAL PROP. PROB. & TR. J. 263-356 (2005); Gideon Rothschild, Establishing and Drafting
Offshore Asset Protection Trusts, 23 EST. PLAN. 65 (1996); Stewart E. Sterk, Asset Protection
Trusts: Trust Law’s Race to the Bottom, 85 CORNELL L. REV. 1035, 1042 (2000).
12 These are silly trusts for silly people. Shirkers and their descendents; Hobbesian settlors
and their descendants, and people who fear life in what they see as a Hobbesian world and their
descendants. Maybe protecting awful people through eternity is more than we bargained for. If
you want one example of such folks, let’s focus on Professor French’s example—cryonicists.
And there seem to be herding and cascade effects.
13 And if brands cost the same as well drinks, I’ll take a Johnnie Walker . . . Blue Label.
14 As to agency problems in trust law, see Robert H. Sitkoff, An Agency Costs Theory of Trust
Law, 89 CORNELL L. REV. 621 (2004). Agency costs could eventually reduce a trust to a mere
shadow of itself. The same point is to be made about unitrust erosion. I believe that perpetual
trusts run as unitrusts may end up reducing their principal dramatically. See Joel C. Dobris, Why
Five? The Strange, Magnetic, and Mesmerizing Affect of the Five Percent Unitrust and Spending
Rate on Settlors, Their Advisers, and Retirees, 40 REAL PROP. PROB. & TR. J. 39 (2005).
Investment of long duration trusts is discussed in James P. Garland, Long-Duration Trusts and
Endowments, J. PORTFOLIO MGMT., Spring 2005, at 44. Beneficiary lawsuits may also deplete
trusts. Professor Leslie points out the agency problem of fiduciaries as repeat players in Melanie
Leslie, Trusting Trustees: Fiduciary Duties and the Limits of Default Rules, 94 GEO. L.J. 67
(2005).
To my mind the most interesting agency problem to pop up is as follows. According to a
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problems,15 moral hazard,16 monitoring problems, an anti-commons,17
recent article the great fear of banks that cater to rich folks is that, when this current generation
dies, their inheritors will fire the bank. See Suzanne McGee, The New Battleground: Brat Patrol,
BARRON’S, Oct. 17, 2005, at 29-30 (noting that “One study . . . found that a full 92% of heirs
switch advisers soon after getting their inheritances.”). Peddling dynasty trusts is a good way to
lock in some of the money going to those heirs. If those trusts give the bank great discretion, a
wise beneficiary wants the bank on her side. An angry bank is not a generous bank when it’s
time to invade principal. How does the beneficiary keep the bank on her side? Give the bank
more business. Wallah!
And there’s information asymmetry. Who is likelier to understand this, the banker or the
settlor considering a perpetual trust? For a discussion of information asymmetry in a trust context
see Leslie, supra.
The truth I see is that the generic bank trust officer’s first duty is protecting his pension, the
second duty is protecting the bank, and a distant third duty is protecting the beneficiary. Thus the
beneficiary is the residual claimant on the trust assets after the creditors and the bank. Thus the
duty of loyalty.
15 It turns out to be true—banks holding the legal title to zillions of dollars in publicly traded
securities in perpetuity is bad for society. The bankers really do abuse their powers. Lord Acton
was right.
Jim Powell, Great Thinkers on Liberty: Lord Acton, LibertyStory.net, at
http://www.libertystory.net/LSTHINKACTON.html (last visited Oct. 28, 2005). Professor
French puts the point, or a related one, as one of perpetual trusts disturbing markets, as opposed
to obstructing marketability. Rachel Emma Silverman, quoting Professor Harl, writes of the
concentration of “enormous economic power in the hands of banks and trust companies.” Rachel
Emma Silverman, Looser Trust Laws Lure $100 Billion, WALL ST. J., Feb. 16, 2005, at D1
(quoting Neil E. Harl); see also Civil Rights: Conference Kick-Out, THE ECONOMIST, Oct. 1,
2005, at 53 (“If you give people power they will use it.”).
16 To the extent that dynasty trusts are spendthrift trusts one could argue that the beneficiaries
are unaccountable for their actions and thus the existence of a moral hazard. One might think of
future, ruined, beneficiaries as zombies. George Romero is the king of the zombie movies. His
latest is LAND OF THE DEAD (Universal Pictures 2005). That trusts weaken beneficiaries has long
been a concern of the policy oriented. Some reader undoubtedly thinks there are problems with
my zombie hypothetical. He’s thinking, “It’s hard to distinguish, in isolation, between an income
beneficiary of a hundred year trust and an income beneficiary of a perpetual trust. Both are
rentiers.” He wants to know, “Why are the zombies zombies? What is the difference between a
regular beneficiary and a perpetual trust beneficiary? The knowledge that the trust is perpetual?
The environment at home being different?” I say, How about all of the above?
While there is an argument that plain vanilla beneficiaries and perpetual beneficiaries are
the same, I am comfortable suggesting that over the decades and centuries there will be a change.
I think it is relevant that the beneficiary knows the money is coming from a perpetual trust versus
a 100-year trust. We like to say the dollar doesn’t know if it is principal or income. Can we also
say the beneficiary doesn’t know if the trust is perpetual or not? I think the beneficiary does
know. It’s hard to be bitter about a perpetual trust. “If only Gramps had given me my money
outright instead of in trust, I could have been a real man.” See Mary Louise Fellows, Spendthrift
Trusts, Roots and Relevance for Twenty-First Century Planning, 50 REC. ASS’N B. CITY N.Y.
140 (1995). You can say that with a straight face if you are the first income beneficiary under
Gramps’s will, but not if you are the fifth or fifteenth in a perpetual line of income beneficiaries.
My imagined cranky reader might say, “The real complaint is with all trust beneficiaries,
except widows and orphans or with overall increase in the population of trust beneficiaries as the
centuries go by because so many are drawn to dynasty trusts or because the dynasty trust crowd is
such a bunch of prolific breeders.”
I have never been able to decide if trusts make beneficiaries weak. All of my direct
experience suggests that trusts do make beneficiaries weak. When I think about the question in
the abstract I remain uncertain. I will never forget the story I believe to be true about the Milbank
trusts and estates partner who was underneath his desk looking for something he dropped. There
was a young associate in the room. The partner continued his conversation with the associate.
2006]
BREAKING DYNASTY TRUSTS
2541
rudderless ships in the lanes of commerce and revenue loss. Maybe the
revenue loss will be too great. The beast starves and dies on our porch.
It rots and it smells bad.
I have been thinking about the various tools available to undo
perpetual trusts. I’m showing the defense plan of the castle to the
enemy. Would all the bankers and lawyers in the room please leave,
now. There are several ways to slice and dice this: state/federal;
tax/non-tax; states willing to repeal, states unwilling to repeal. Here
goes, and please remember I’m oversimplifying. The motto of the
Economist magazine is “simplify, then exaggerate.” My motto is
“oversimplify, then exaggerate.”
Susan suggested to me in an email that federal tax law is the best
tool for undoing perpetual trusts. I’d say the best tool for undoing them
is “oppressive” taxation. Taxes will cause fiduciaries with the power or
determination to undo their trusts. Fiduciaries without power can lobby
for changes in state law.18 At worst, tax payments will weaken trusts.
There is no vested interest in a pattern of taxation. We can tighten
From underneath the desk a disembodied voice floated out. Speaking of one of his most
important trust beneficiary clients, and taking in vain the name of one of the great wealthy
families in America, he is said to have said, “‘Richie Richkid’ is a turd.” Lawyer and client are
both dead. The story lives on.
One might be tempted to focus, in a negative way, on Paris Hilton as a trust beneficiary.
This would be unfair. She is actually a hard working entrepreneur and a classic capitalist.
For the case against inherited wealth, see Mark L. Ascher, Curtailing Inherited Wealth, 89
MICH. L. REV. 69 (1990).
17 See Michael A. Heller & Rebecca S. Eisenberg, Can Patents Deter Innovation? The
Anticommons in Biomedical Research, 280 SCIENCE 698 (1998), available at
http://www.sciencemag.org/cgi/reprint/280/5364/698.pdf (“A resource is prone to overuse in a
tragedy of the commons when too many owners each have a privilege to use a given resource and
no one has a right to exclude another. By contrast, a resource is prone to under use in a ‘tragedy
of the anticommons’ when multiple owners each have a right to exclude others from a scarce
resource and no one has an effective privilege of use. In theory, in a world of costless
transactions, people could always avoid commons or anticommons tragedies by trading their
rights. In practice, however, avoiding tragedy requires overcoming transaction costs, strategic
behaviors, and cognitive biases of participants, with success more likely within close-knit
communities than among hostile strangers. Once an anticommons emerges, collecting rights into
usable private property is often brutal and slow.”); Wikipedia, The Free Encyclopedia, Tragedy of
the anticommons, http://en.wikipedia.org/wiki/Tragedy_of_the_anticommons (last visited Mar.
22, 2006). People with small stakes who are globally dispersed won’t bother complaining. An
adversarial system doesn’t work if beneficiary oversight isn’t feasible. After 200 years, the
interests in a perpetual trust may become so fractionalized, and the payouts so small, that
individual beneficiaries will have no incentive to enforce the trust against the trustee. Even if one
thinks the trustee is not meeting her duty, when the trust only generates four dollars per month for
each beneficiary, who’s going to get involved? This is problematic because we count on the
adversarial system to ensure proper trustee behavior.
18 It may be that every court has the power to amend a trust to realize the settlor’s intended
tax goals. See Walker v. Walker, 744 N.E.2d 60 (Mass. 2001). And, bite my tongue, a trustee can
always act at his peril and terminate the trust ultra vires—act and bear the consequences, if any.
If the beneficiaries are only getting four dollars a month and instead they get a once in a lifetime
check for a $1,000, who’s to raise the hue and cry?
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the generation skipping transfer tax anytime we want.19 If the tax took
effect ten years out, there’d be plenty of time to terminate trusts and
lobby for state termination legislation. Or we could put in a wealth tax.
There are more ideas in the Joint Committee Report that came out
recently.20 There’s also bankruptcy law. We could change the
bankruptcy statute. That would be useful to the extent these trusts are
asset protection trusts. We could change our definition of fraudulent
transfer.
One imagines property law solutions as state law solutions, but I
believe21 Congress could regulate most trusts. I argue that Congress
could legislate perpetual trusts out of existence in a reasonable
fashion,22 if nothing else, by canceling only the interests of unborn
beneficiaries.23
19 See Jesse Dukeminier & James E. Krier, The Rise of the Perpetual Trust, 50 UCLA L. REV.
1303, 1342-43 (2003); see also Ira Mark Bloom, The GST-Tax Tail is Killing the Rule Against
Perpetuities, 87 TAX NOTES 569 (2000) (“Will the property and tax laws of each state cease to be
based on principles and societal good? I hope not.”). The GST tax is discussed in RAY D.
MADOFF ET AL., PRACTICAL GUIDE TO ESTATE PLANNING § 9.04[B] (2001).
20 STAFF OF J. COMM. ON TAXATION, 109TH CONG., OPTIONS TO IMPROVE TAX
COMPLIANCE AND REFORM TAX EXPENDITURES 393 (Comm. Print 2005), available at
http://www.house.gov/ jct/s-2-05.pdf. For an article about traditional future interest reform, see
T.P. Gallanis, The Future of Future Interests, 60 WASH. LEE. L. REV. 513 (2003).
21 Every sentence in this comment that causes the reader to wonder, wander or bristle
contains the modifier “I believe.” In the spirit of the preceding sentence, I believe that Article I,
sections 9 and 10 of the Constitution might offer support for any federal law reinstating the Rule
insofar as those sections forbid the badges and emblems of nobility. See U.S. CONST art. 1, §§ 910. A perpetual, dynasty trust smacks of nobility to me.
22 I believe the same could be done with spendthrift trusts. One can argue that all spendthrift
trusts potentially have a negative effect on interstate commerce by interfering with our credit
economy. Or, less dramatically, Congress could say that tort creditors can reach equitable
interests in perpetual trusts. States could do this, too, but the problems of the race to the bottom
would be present. As to spendthrift trusts and the Uniform Trust Code, see generally Danforth,
supra note 11; Schoenblum, supra note 11. To tell the truth, I believe that there’s not much
concern about tort creditors in trust law. Insurance covers enough tort injuries to leave uncovered
tort creditors too small a group to get relief from society.
23 Let’s talk about the interests of unborn beneficiaries. They can, of course, be represented
by a guardian ad litem or by their ancestors under the doctrine of virtual representation. A
guardian ad litem is an officer of the court appointed by the court to represent the interests of
persons unable to represent themselves. But, putting that to one side, either the settlor’s purposes
or society’s needs have to trump the interests of the unborn beneficiaries, or we have to give the
unborn something, or we have to have a rationale, because otherwise we’re stealing from them.
In that process of cancellation, or cheap buyout, the more trivial the unborn beneficiaries’
interests the easier to end them. One is tempted to use present discounted value rhetoric to
trivialize the interests of the unborn. But cf. Michael D. Klausner, When Time Isn’t Money:
Foundation Payouts and the Time Value of Money, 1 STAN. SOC. INNOVATION REV. 51 (2003)
(arguing that the interests of future charitable beneficiaries cannot be so dismissed). But, since it
is only a rhetorical device anyway, and a make-weight argument, why not make the argument?
The Restatement deals with virtual representation in section 65, Reporter’s Note on comments b
and c and the Uniform Trust Code deals with it in section 304. See RESTATEMENT (THIRD) OF
TRUSTS § 65 Reporter’s Notes, cmts. b & c (2003); UNIF. TRUST CODE § 304 (2005). Some of
these issues are discussed in a non-RAP context in Gregory S. Alexander, The Dead Hand and
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Perhaps Congress could give federal judges cy pres power over all
long-duration trusts that touch interstate commerce.24 That’s a lot of
trusts. Perhaps Congress could give all living beneficiaries the power to
vote to terminate a trust in a fair and reasonable manner.25 Give
beneficiaries that power and they will fight like fiends to end their
trusts.26 Congress could deny highway funds to any state that didn’t reenact the rule.27
We could have a Sarbanes-Oxley for perpetual trusts.28 If these
the Law of Trusts in the Nineteenth Century, 37 STAN. L. REV. 1189, 1204 (1985); Gail Boreman
Bird, Trust Termination: Unborn, Living and Dead Hands, Too Many Fingers in the Trust Pie, 36
HASTINGS L.J. 563 (1985); Jeffrey G. Sherman, Posthumous Meddling: An Instrumentalist
Theory of Testamentary Restraints on Conjugal and Religious Choices, 99 U. ILL. L. REV. 1273
(1999).
24 I believe that most trusts, given investment patterns and beneficiary dispersion, are
involved with interstate commerce. See Wickard v. Fillburn, 317 U.S. 111 (1942). Simply put,
surely almost every trust, unless it is entirely local in every aspect from domicile of the fiduciary
and beneficiaries to the domicile of the corporate assets, is connected to interstate commerce and
surely Congress can say that “any trust that is connected to interstate commerce cannot be a
perpetual trust.” More realistically Congress might pass a law saying “Twenty-five years hence
all dynasty trusts not sooner terminated shall terminate . . . ” or pass a law saying as of January
first next year no more dynasty trusts can be created.
I further argue that given the relative ease of changing trust situs, that the idea of a trust
rooted in a situs is beginning to unravel. I do, however, acknowledge the idea that probate is
inherently local. See In re Marshall, 392 F.3d 1118 (2004), cert. granted, 126 S. Ct. 35 (2005)
(Anna Nicole Smith’s bankruptcy claim against her dead husband’s estate); LEWIS M. SIMES &
PAUL E. BASYE, PROBLEMS IN PROBATE LAW 732-41 (1946). Changing trust situs offers a tool
for termination. When in agreement, trustee and beneficiaries could move the situs of the trust to
another state that either didn’t have the Rule, or more likely, had extensive statutory or
precedential law allowing modification and termination of trusts, including perpetual trusts.
I also note the possibility of changing trustees to get one more amenable to termination.
25 A statute might allow for termination if X percent of beneficiaries sign off in a petition to
the court. The legislature could also pass a statute allowing either the trustee, or protector, if any,
or settlor’s agent, if any, or one or more of the living beneficiaries to seek the judicial termination
or modification of the trust. For a discussion of the judicial role in trust administration, see Philip
H. Wile, Judicial Administration in the Administration of a Trust, 14 STAN. L. REV. 231 (1962).
26 Beneficiaries are often unhappy in my limited experience. Robert Whitman, Resolution
Procedures to Resolve Trust Beneficiary Complaints, 39 REAL PROP. PROB. & TR. J. 829 (2005).
27 The statement in the text is a joke.
28 Congress enacted the Sarbanes-Oxley Act in 2002. Sarbanes-Oxley Act of 2002, Pub. L.
No. 107-204, 116 Stat. 745 (codified at 15 U.S.C. §§ 7201-7266). Sarbanes-Oxley added a
number of provisions to the Securities Act of 1933 and the Securities Exchange Act of 1934 to
improve corporate audits and financial disclosure, to make honest officers and directors more
accountable. and to penalize dishonest ones.
The idea of a Sarbanes-Oxley for trusts is not all that absurd. It’s already being proposed
for nonprofits and then it’s only one step more to trusts. See, e.g., Philoan M. Tran, A SarbanesOxley Act For Nonprofits?, PRAC. LAW., Oct. 2005, at 47. Professor Sterk’s point, made at the
event, that professional protectors will likely emerge over time comes close, I believe, to a
private, quasi Sarbanes-Oxley bureau for perpetual trusts. A recent series of articles in the Los
Angeles Times on the sins of professional conservators in Southern California gives one reader
pause. See Jack Leonard, Robin Fields & Evelyn Larrubia, Guardians for Profit, L.A. TIMES,
Nov. 14, 2005, at A16. These issues are discussed in another context in Neha Patel, The
Homeless Mentally Ill and Guardianship: An Assessment of Current Issues in Guardianship and
Possible Application to Homeless Mentally Ill Persons, 11 GEO. J. ON POVERTY L. & POL’Y 495,
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trusts are going to be around forever we’ll need a bureau of trust
enforcement.29 I’m cynical about the value of protectors.30 Rules
affecting national banks could be tightened as to perpetual trusts. We
could give my Bureau of Trust Enforcement the power to enforce trust
law if hyper-fractionalization of beneficiary interests sets in.31 Congress
could make banks miserable. That would quickly lead to state law
reform—where does the 800-pound banker sit? Anywhere he wants.32
508 (2004).
29 That we might need a bureau of trust enforcement is strange because a glory of the trust has
been that there is no need for regulation because of the adversary system and the free ride society
gets from beneficiary oversight before judges. I say we may need a bureau because it’s always
been a given that the agency problems are substantial if there’s no one watching. As to agency
problems in trust law, see Sitkoff, supra note 14. To the extent the agency costs arise from an
essentially unsupervised trustee, settlors could require periodic traditional accountings in
perpetual trusts. Then we have transaction costs.
30 See generally Gregory S. Alexander, Trust Protectors: Who Will Watch the Watchmen?, 27
CARDOZO L. REV. 2807 (2006); Stewart E. Sterk, Trust Protectors, Agency Costs, and Fiduciary
Duty, 27 CARDOZO L. REV. 2761 (2006). Professor Sterk predicted at the conference that
professional protectors (a private bureau) would take over the job of being protector from
individuals. Settlors choose which powers to give the protector. See David Hayton, English
Fiduciary Standards and Trust Law, 32 VAND. J. TRANSNAT’L L. 555, 583-84 (1999). While the
protector solution is one way to deal with agency costs that perpetual trusts present, it may also
lead to potential agency costs as well. For instance, protectors may not end trusts to keep their
jobs or may end trusts inappropriately to get rid of their sorrows as fiduciary. See Sitkoff, supra
note 14. And protectors will need to be watched by “enforcers.” See ROSE-MARIE BELLE
ANTOINE, TRUSTS AND RELATED ISSUES IN OFFSHORE FINANCIAL LAW 50-55, 75-76 (2005).
Who will watch the enforcers?
31 The trust that only pays four dollars a month in the twenty-third century isn’t doing harm
so much as it is not doing much good for the beneficiary. It’s like the argument my parents used
to have when dinner was a porterhouse steak. What’s to happen to the filet mignon? My mother
wanted everyone to get an equal (small) piece. My father wanted to give the filet to a different
person each time we had porterhouse so that the filet would be worth having. My mother always
won. One might argue that there is a fundamental difference between fractionalized land and
fractionalized income streams and that wee income streams don’t do much harm while little plots
of land do. The money likely gets spent. I would argue that it doesn’t get spent thoughtfully and
that such consumption is less than good. The beneficiary of a four-dollars-a-month interest in a
trust also isn’t monitoring the trustee. Unmonitored trustees are bad for society. See In re
Blumstein, 801 N.Y.S.2d 299 (App. Div. 2005).
32 See Joel C. Dobris, Changes in the Role and the Form of the Trust at the New Millennium,
or, We Don’t Have to Think of England Anymore, 62 ALB. L. REV. 543, 578 (1998) (“When the
bankers want something, they get it.”). If bank interests and beneficiary interests are congruent,
all the better. Banks can use their lobbying power to get the local legislatures to make changes.
If banks and beneficiaries have similar interests, beneficiaries will be protected to some extent.
For example, we would make some progress if we could align the banks’ reputational interests
with the beneficiaries’ interests. See Daniel J.H. Greenwood, Democracy and Delaware: The
Mysterious Race to the Top/Bottom, 23 YALE L. & POL’Y REV. 381, 395 (2005) (“The race to the
top can exist only if managers can demonstrate to potential investors that managerial and investor
interests are aligned. There are two basic ways to do this: reputation or external regulation.”). If
the banks of State Red were getting a reputation for ripping off beneficiaries because of the
agency and transaction costs of running perpetual trusts in the twenty-third century then it is easy
to imagine a change in the law. Or, a state could enact a race to the top perpetual trust regime that
might lure some existing trusts from State A to State B. One of the things banks could
theoretically lobby for in any state would be a commission schedule that dramatically increased
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And so it goes.33
There is also a catalog of tools available to the states. Some of
them are imperfect. To consider them involves daunting questions of
federalism, conflicts of law,34 state tax jurisdiction,35 and the like. Of
course we’re talking about undoing a race to the bottom.36 Unringing a
bell. To believe in some of this stuff is like believing in Esperanto or
single world government.
Once again the power to tax is useful. I would dream that a state
could increase the tax on spendthrift income because of extra costs
associated with the moral hazards.37 I would dream of a state wealth tax
assessed against world-wide wealth, with a higher rate for spendthrift
income.38 I have other dreams, too, like owning a new Porsche.
Let me switch to non-tax remedies. States could repeal their race
termination commissions, or put termination commission terms into perpetual trusts, perhaps tied
to statutory powers of termination. This would greatly increase trust department income short
term, a very powerful lure. See Note, The Case for Federal Threats in Corporate Governance,
118 HARV. L. REV. 2726 (2005); Abraham Bell & Gideon Parchomovsky, Of Property and
Federalism, 115 YALE L.J. 72 (2005).
33 Obviously, it’s a question of political will. When things get bad enough, legislatures will
act. They did in Hawaii. See SAMUEL P. KING & RANDALL W. ROTH, BROKEN TRUST: GREED,
MISMANAGEMENT, & POLITICAL MANIPULATION AT AMERICA’S LARGEST CHARITABLE TRUST
(2006); Susan N. Gary, Regulating the Management of Charities: Trust Law, Corporate Law, and
Tax Law, 21 HAWAII L. REV. 593 (1999).
34 See Eugene F. Scoles, Choice of Law in Trusts: Uniform Trust Code Sections 107 and 403,
67 MO. L. REV. 213 (2002).
35 Professor Danforth considers the state property law/federal tax law intersection and the
related question of a federal common law of property when tax outcomes are concerned in Robert
T. Danforth, The Role of Federalism in Administering a National System of Taxation, 57 TAX
LAW. 625 (2004). The topic is in vogue. See David A. Super, Rethinking Fiscal Federalism, 118
HARV. L. REV. 2546 (2005).
36 See Stewart E. Sterk, Jurisdictional Competition To Abolish the Rule Against Perpetuities:
R.I.P. for the R.A.P., 24 CARDOZO L. REV. 2097 (2003). I easily assume State Red (my race to
the bottom state) is quite happy with the extra revenue and payroll that comes with “foreign” trust
business and is not troubled with zombie beneficiaries or the like. “Come on in, the water’s fine.”
Putting it differently, distant courts may not provide full relief for local (zombie) problems. Then
the question becomes, can a state that is bearing the brunt of the externalities exuded by perpetual
trusts impose its will on trusts created in the race to the bottom state? How does State Blue deal
with the perpetuities harms inflicted by State Red? How can I get the people at the next table to
stop smoking? By offering to pay for their dinner. States negatively affected by perpetual trusts
could pay race to the bottom states to changes their laws. Or, might they sue under doctrines of
public nuisance? I see answering this question as outside the scope of this comment.
37 See Bacardi v. White, 463 So. 2d 218 (Fla. 1985).
38 If a state tries to tax foreign state trusts in a different way than domestic trusts, there are
dormant commerce clause issues. A state can tax income producing activities that come within
its taxing jurisdiction but not if it’s functionally a tariff, burdens interstate commerce or protects
in-state interests (let us say perhaps local lawyers and banks). See Peter D. Enrich, Saving the
States From Themselves: Commerce Clause Constraints on State Tax Incentives for Business,
110 HARV. L. REV. 377 (1996). Professor Fogel has written about the state income taxation of
trusts. See Bradley E.S. Fogel, What Have You Done for Me Lately? Constitutional Limitations
on State Taxation of Trusts, 32 U. RICH. L. REV. 165 (1998); Bradley E.S. Fogel, State Income
Taxation of Trusts, PROB. & PROP., July/Aug. 2005, at 36.
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to the bottom statutes. Obviously the repeal could be prospective.39 I
believe it could be done retroactively if done fairly and cleverly.40
Think of the statutes canceling rights of entry and possibilities of
reverter.41
States could give courts a cy pres power over perpetual trusts.42
We could buttress and expand trust termination rules.43 We could
39 The point is trivial. People have no vested interest in a rule of property law if they have
taken no action in reliance on its existence.
40 I would propose that a rule is not unconstitutionally retroactive if it addresses ongoing
effects in a fair way. For illustration’s sake let me propose that a very very reasonable
termination would be to allow the trust to continue for the common law period of the Rule and
then terminate in favor of the then-living income beneficiaries. Simply put, if the Rule was good
enough for five hundred years it is likely still good enough. Who might be undone by such a
statute? The most obvious persons harmed are the unborn members of the class—future income
beneficiaries. A less obvious class of beneficiaries harmed might be current or future living
beneficiaries who are advantaged by the trust (perhaps for tax reasons or perhaps because they are
debtors protected by a dynasty trust that is also a spendthrift trust and who don’t want it to end).
Let’s talk about the interests of unborn beneficiaries. They can, of course, be represented by a
guardian ad litem. See Martin D. Begleiter, The Guardian Ad Litem in Estate Proceedings, 20
WILLAMETTE L. REV. 643 (1984). But, putting that to one side, either the settlor’s purposes or
society’s needs have to trump the interests of the unborn beneficiaries, or we have to give the
unborn something, or we have to have a rationale. In that process of cancellation, or cheap
buyout, the more trivial the unborn beneficiaries’ interests the easier to end them. At some point
the unborn begin to look as ghostly as the long dead settlor. It’s easiest to focus on the living and
their immediate descendants. It’s a bit of a bell curve, with the dead and the unborn as the
outliers. But see Hodel v. Irving, 481 U.S. 704 (1987).
41 See, e.g., CAL. CIV. CODE § 885.040 (West 2005); N.Y. REAL PROP. ACTS. LAW § 1951
(McKinney 2005). A state could require that perpetual trusts that wish to remain perpetual have
to be registered and reregistered periodically. This is currently required in some states for
possibilities of reverter and rights of entry. See also KY. REV. STAT. ANN. § 381.221 (West
2006). The Kentucky statute only allowed preservation of interests created before the enactment
of the statute:
Every possibility of reverter and right of entry created prior to July 1, 1960, shall cease
to be valid or enforceable at the expiration of thirty (30) years after the effective date of
the instrument creating it, unless before July 1, 1965, a declaration of intention to
preserve it is filed for record with the county clerk of the county in which the real
property is located.
Id. § 381.221(1). There does not seem to be a renewal process for interests created after the
Kentucky statute was passed. Statutes that killed all possibilities of reverter and rights of entry
that out-lived the statutory time period include: FLA. STAT. ANN. § 689.18 (West 2005); 765 ILL.
COMP. STAT. 330/4 (2005); NEB. REV. STAT. § 76-2, 102 (2005).
42 Ronald Chester, Modification and Termination of Trusts in the 21st Century: The Uniform
Trust Code Leads a Quiet Revolution, 35 REAL PROP. PROB. & TR. J. 697, 724 (2001) (suggesting
the same tools to alter charitable trusts may be used against perpetual private trusts). Surely we
can fiddle with private trusts if we can fiddle with charitable trusts when private trusts don’t offer
the net social welfare increases that charitable trusts offer. We revere charities more than rich
people and we have never had any problem pushing around charities, so why the
concern/reverence for rich folks and their intent? Maybe it’s the golden rule—she who has the
gold rules.
43 Cf. N.Y. EST. POWERS & TRUSTS LAW § 7-1.19 (McKinney 2005) (stating that the trustee
or beneficiary can apply for termination of a trust if it is economically impractical to continue its
operation. New York does not recognize perpetual trusts.). For an article about the ethics of trust
terminations, see Joel C. Dobris, Ethical Problems for Lawyers Upon Trust Terminations:
2006]
BREAKING DYNASTY TRUSTS
2547
require courts to consider family benefit44 in termination litigation and
allow living beneficiaries to always represent the unborn. Jesse
Dukeminier’s last article, finished by Jim Krier, catalogs a number of
wise suggestions for statutory reform and courts could imply45 various
Conflicts of Interest, 38 U. MIAMI L. REV. 1 (1983). Judges, in a host of litigations, could
demonstrate hostility to perpetual trusts to encourage legislation, litigation and the exercise of
modification and termination powers by trust fiduciaries. Courts could try to push the legislature
into reenacting RAP by questioning long duration trusts or by indicating a willingness to dissolve
these trusts, on equitable grounds, in dicta. A state legislature, or a brave judge taking a statute in
another jurisdiction as a sensible justification for changing common law, or as a source of
common law, could provide for the termination of perpetual trusts under various circumstances if
administration of such a trust (or trusts) becomes too burdensome administratively for the trustee
or the state. This is easily imagined in the event the trust becomes small and the number of
beneficiaries becomes an unwieldy large number. See CAL. PROB. CODE § 15408 (West 2005);
DEL. CODE ANN. tit. 12, § 3542 (2005); UNIF. TRUST CODE § 414 (2005); Alan Newman, The
Intention of the Settlor Under the Uniform Trust Code: Whose Property is it, Anyway?, 38
AKRON L. REV. 649, 668 (2005) (discussing UTC section 414, specifically, and the role of the
settlor’s intent extensively). The National Conference of Commissioners on Uniform State Laws
(NCCUSL) could enact a statute providing for the termination, via any of the mechanisms
discussed, of perpetual trusts. One could then piously hope that many, most, or all jurisdictions
would enact the statute and that a large number of enactments would give a judge exercising her
common law powers courage to change the common law of her jurisdiction. A well-known
British beer brand is Courage. The brand’s advertising motto at one time was “Take Courage.”
The topic of statutes as a source of common law is discussed in Harlan Fiske Stone, The Common
Law in the United States, 50 HARV. L. REV. 4, 11-16 (1936). The topic of interstate tax
cooperation is discussed in Dwight Denison, Interstate Tax Coordination: Lessons from the
International Fuel Tax Agreement, 58 NAT’L TAX J. 591 (2005)
44 Terminations for family benefit are dealt with under CAL. PROB. CODE § 15409 (West
2005), as discussed, among other places, in Chester, supra note 42, at 701-02. It’s easy enough to
accept the family benefit or quid pro quo doctrine if the trust is terminated to get capital to pay for
special medical care to save the life of a living beneficiary so that the unborn beneficiary can be
born. Other family benefit statutes include ARK. CODE ANN. § 28-69-401 (2005); WIS. STAT.
ANN. § 701.12 (2004). The California statute is derived from the Wisconsin statute. Montana
puts power in a guardian ad litem to disclaim for the unborn based on general family benefit. See
MONT. CODE ANN. § 72-2-811 (2005).
45 Common law judges could imply terms into particular trusts (as opposed to state common
law). Then I would submit there’s a spectrum of implication. I would like to think most courts
would imply a modern administrative power into a particular deficient trust. It would be less easy
to imply a power to modify a trust in a meaningful manner and even less easy to imply a power to
terminate the trust. But, haven’t we been in the business of implying powers into trusts for a long
time? Why wouldn’t we imply a catalog of powers into perpetual trusts? The question is, will
we imply the big one: “All trusts governed by the law of this jurisdiction which are not charitable
trusts and which are designed to last beyond the period of the common law Rule Against
Perpetuities shall include the power in the trustee to terminate said trust.” When our legislature
allowed perpetual trusts they impliedly reserved in our courts the power to terminate them in a
reasonable fashion in appropriate circumstances. In reaching this result we are reminded of the
public trust doctrine. See Matthews v. Bay Head Improvement Assn., 471 A.2d 355 (N.J. 1984),
cert denied, 469 U.S. 821 (1984); Carol Rose, Comedy of the Commons, 53 U. CHI. L. REV. 711,
712 (1986).
Public trust cases and the doctrine generally are heavily reliant on history. I would submit
that the general history of the Rule could provide a similarly strong historical base for such a
dramatic implication. Or if that is too grand one can imagine less dramatic terms or even the
implication of such a power into a single trust. I have to believe courts are going to be willing to
deal with unintended consequences.
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powers into trusts.46 We could seek to harness the abilities of the class
action bar to charge/enforce and end trusts.47
Courts have been trying to find ways to deal with asset protection
trusts.48 They’ll try to find ways to deal with this, too. I can’t believe
that reverence for some dead49 guy’s intent50 is going to determine
I am drawn to the analog of the implied warranty of habitability in landlord tenant law. I
would, however, be the first to admit it’s a bit hard to imagine those landlord tenant cases coming
down today in the current era of attacking judges for being too activist. See Cass R. Sunstein,
Must Formalism Be Defended Empirically?, 66 U. CHI. L. REV. 636, 638-39 (1999). Social
context can make implication easier or harder. Simply put, all property rights come from the state
and the state sometimes retains rights, even as it grants right, e.g., the retained right of beach
access via public trust doctrine.
As to implication of modern rules in a trust and estates context, see In re Alleged Will of
Ranney, 589 A.2d 1339 (N.J. 1991).
46 See Dukeminier & Krier, supra note 19.
47 David Zaring, National Rulemaking Through Trial Courts: The Big Case and Institutional
Reform, 51 UCLA L. REV. 1015 (2004).
48 See SEC v. Brennan, 230 F.3d 65 (2d. Cir. 2000) (affirming the district court’s order to
repatriate funds from an offshore asset protection trust to pay judgment); Breitenstine v.
Breitenstine, 62 P.3d 587 (Wyo. 2003) (affirming lower court’s method of dealing with husband’s
asset protection trust that attempted to shield assets from his creditors, including his wife). For a
discussion of intent-defeating rules and intent-serving rules, see John H. Langbein, Mandatory
Rules in the Law of Trusts, 98 NW. U. L. REV. 1105 (2004).
49 Truth be told there’s only limited respect for the dead in our culture. I have to say that I
have no interest in a museum of the settlor’s mind, where we find his desiccated skull preserved
like Jeremy Bentham’s body is, in a glass case at University College in London. See Dorothy
Nelkin & Lori Andrews, Do the Dead Have Interests? Policy Issues for Research After Life, 24
AM. J. L. & MED. 261 (1998) (“The body of the nineteenth century philosopher Jeremy Bentham
is on display in a glass cage at University College, London.”). But see Alfred L. Brophy, Grave
Matters: The Ancient Rights of the Graveyard (2005) (Univ. of Ala. Public Law Research Paper),
available at http://ssrn.com/abstract=777747 (discussing the property rights of descendents to
visit cemeteries).
50 The Restatement (Third) of Trusts is turning, under Ed Halbach, from a focus on donor’s
intent to a focus on beneficiary welfare. This is bound to provide tools for solving problems that
arise long after creation in long duration trusts. Thus judges are allowed to change administrative
and dispositive provisions when the situation calls for it. See RESTATEMENT (THIRD) OF TRUSTS
ch. 13, introductory note (2003) (noting that “the growing recognition that trusts should serve the
beneficiaries’ best interests” justifies liberalizing trust rules); id. § 66. This is bound to provide
tools for solving problems that arise long after creation in long duration trusts.
Historically, we revere the settlor’s intent but we have no modern experience interpreting,
or respecting, the settlor’s intent when it’s over 100 years old and the context is private property
rights. The last time we had to do that was in the 17th century. Duke of Norfolk’s Case, 22 Eng.
Rep. 931 (Ch. 1682). And the truth is that we fiddle with the settlor’s intent all the time when it
comes to charitable trusts. And another truth is that most folks have little or no power to see into
or imagine the future. A standard, common sense explanation for the Rule is that a settlor can get
out as far as his grandchildren and after that it’s beyond the capacity of most human minds. And
at that point it’s better to leave things to the living. It’s recently been suggested that even when
there’s money to be made investors cannot see forward more than five years. Mark Hulbert,
Looking Long Term? Get Your Glasses, N.Y. TIMES, June 19, 2005, at 9 (“But even
when . . . [investors] do try to consider factors that will affect a company’s long-term
profitability, they still don’t see far.”). Hulbert cites Stefano DellaVigna & Joshua M. Pollet,
Attention, Demographics, and the Stock Market (Nat’l Bureau of Econ. Research, Working Paper
No. W11211, 2005), available at www.nber.org/papers/w11211. Professor Tate argues that
settlors may have true dynastic dreams in Joshua C. Tate, Perpetual Trusts and Settlor’s Intent,
2006]
BREAKING DYNASTY TRUSTS
2549
major outcomes.51 We have the capacity to eliminate economically
inefficient property forms.52 Maybe we don’t have to end all perpetual
trusts, just the outliers where the abuses are untenable. As Justice
Weintraub said, “Property rights serve human values. They are
recognized to that end and are limited by it.”53
Never forget economist Herb Stein’s law. “If it can’t go on
forever, it won’t.”54 And if all else fails, Susan and I can offer you our
governor. Arnold Schwarzenegger. He’s going to run for re-election
53 KAN. L. REV. 595 (2005). While I assume the bank acts as trustee of any number of dynasty
trusts, the latest U.S. Trust periodic survey of rich folks shows no sign of dynastic concern
extending beyond grandchildren. See U.S. TRUST, U.S. TRUST SURVEY OF AFFLUENT
AMERICANS XXIV, at 13 (2005) (on file with author).
I would also suggest that people may act irrationally in the face of the unknown and I
would suggest these trusts represent the unknown. There’s little we know about these trusts. See
John A. List & Daniel L. Millimet, Bounding the Impact of Market Experience on Rationality:
Evidence from a Field Experiment with Imperfect Compliance (S. Methodist Univ. Dept of Econ.,
Working
Paper
No.
0505,
2005),
available
at
http://pless.princeton.edu
/conference_files/MillimetPrinceton.pdf.
Intent formation is such a flawed process, as is our attempt to understand intent, that we are
entitled to give the effort our best modern shot and not be bound by stale ideas. Surely we are
entitled to modernity, flexibility and the best wisdom of the times. See Mary Louise Fellows, In
Search of Donative Intent, 73 IOWA L. REV. 611 (1988).
51 We are not required to sit still, wringing our collective hands, and let private property
rights interfere with society’s functioning or obstruct social progress. The point could not be
plainer to me. We relearned it in 2005 when the Supreme Court upheld the right of New London,
Connecticut to use its power of eminent domain to condemn property that stood in the way of
modern development. Kelo v. City of New London, 125 S. Ct. 2655 (2005). I say “relearned”
because for me the point was made in Berman v. Parker, 348 U.S. 26 (1954). I learned the point,
in a trust context, from Colonial Trust Co. v. Brown, 135 A. 555 (Conn. 1926). In that case the
ornery settlor had fixed ideas about how real estate should be managed and imbedded them in the
terms of his trust. The result was that a block of downtown Waterbury, Connecticut was going to
rack and ruin. The court had no problem changing the terms of the trust to accommodate
society’s needs, with the judge saying, as far as I am concerned, “As long as I’m on the bench, no
dead guy is gonna ruin the face of downtown Waterbury.” I understand quite clearly that
Colonial Trust is a case about equitable deviation for administrative purposes and not
rearrangement of beneficiary interests and that the change served the interests of all concerned,
but I maintain that if the case is abstracted enough, it stands for the proposition I make. Indeed,
the whole point of the Rule Against Perpetuities is that it was a judicial determination that
property rights have to give way to society’s needs. Cf. Sherman, supra note 23. It’s a three
legged stool: Settlor, Beneficiary, Society.
52 Jeffrey Evans Stake, Evolution of Rules in a Common Law System: Differential Litigation
of the Fee Tail and Other Perpetuities, 32 FLA. ST. U. L. REV. 401 (2005) (arguing that common
law systems tend to eliminate economically inefficient aspects of property law, such as fee tails
that limit alienation).
53 State v. Shack, 277 A.2d 369, 372 (N.J. 1971). Putting the matter differently, property “is
held under the implied obligation that the owner’s use of it shall not be injurious to the
community.” Mugler v. Kansas, 123 U.S. 623, 665 (1887).
54 “Academic economists often cite Stein’s Law, a principle enunciated by the late Herbert
Stein, chairman of the Council of Economic Advisers during the Nixon administration. The law
comes with various wordings; my favorite is: ‘Things that can’t go on forever, don’t.’ Believe it
or not, that’s a useful reminder.” Paul Krugman, This Can’t Go On, N.Y. TIMES, Nov. 4, 2003, at
A25.
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and he, of course, is The Terminator.55
Thank you.
55
THE TERMINATOR (Hemdale Film Corp. 1984).
[Vol. 27:6