Over the last thirty years, most jurisdictions in the United States have repealed or abrogated the Rule Against Perpetuities, which prohibits perpetual donor control over property. This, in turn, has led estate planning practitioners to consider whether a trust created to comply with the Rule could, after the Rule’s repeal, be extended in perpetuity to provide for future generations of the settlor’s descendants upon petition of the trustee. Trust term extension in this context implicates fundamental questions about the purpose of a trust: For whose benefit—the beneficiaries’, the settlor’s, or the trustee/fiduciary’s—does the trust exist? This Article argues that the purpose of a private donative trust is to benefit beneficiaries selected by the settlor and that perpetual trust conversions are inconsistent with this purpose because they impair the interests of existing beneficiaries by converting remainder interests into less valuable life interests. Financial institutions serving as corporate fiduciaries, however, would further their own pecuniary interests by seeking perpetual trust conversions that extend the duration of commissions charged to the trust for performing administrative and managerial services. The possibility of trust term extension, therefore, not only implicates problems associated with dead hand control of property, but it also creates the potential for tension between corporate trustees and beneficiaries selected by the settlor. This Article, the first to examine the topic of trust term extension critically, argues that courts should reject trustee-proposed perpetual trust conversions for at least two reasons. First, modification should not be granted for the benefit of the fiduciary, particularly at a beneficiary’s expense. Second, an important recent trend in trust law has sought to favor the rights of living beneficiaries over a settlor’s right to exercise dead hand control over trust property, so evidence of what the settlor would have wanted but for the Rule should therefore not override vested beneficial interests.
September 2016, Vol. 68, No. 5
Leslie C. Levin, Lawyers Going Bare and Clients Going Blind
Aya Gruber, Amy J. Cohen, & Kate Mogulescu, Penal Welfare and the New Human Trafficking Intervention Courts
Caprice Roberts, Supreme Disgorgement
Anthony Jose Sirven, Undue Process: A Father's Proprietary Interest in an Embryo and Its Clash with Casey
Maris Snell, Section 875C: Not for All Intents and Purposes