The Stripping of the Trust: A Study in Legal Evolution

65 University of Toronto Law Journal 1-47 (2015)

Hebrew University of Jerusalem Legal Research Paper No. 15-5

46 Pages Posted: 26 May 2014 Last revised: 11 Jan 2017

Adam S. Hofri-Winogradow

Hebrew University of Jerusalem; University of Connecticut - School of Law

Date Written: May 25, 2014

Abstract

The law of trusts has spent the last twenty years rapidly shedding many traditional requirements, forms and restrictions which imposed liability on negligent trustees, protected vulnerable beneficiaries and prevented the use of trusts to avoid the claims of settlors' and beneficiaries' creditors, including their spouses, their children, and their governments. This article studies seven aspects of this "stripping of the trust", examines its consequences from both a distributive justice and a corrective justice point of view, and inquires whether the resulting stripped-down model coheres with the traditional functionality of donative private trusts. I found that most of the current reforms have welfare-reducing distributive consequences, in some cases inflicting externalities on all except the parties to a given trust, in others transferring value from settlors and beneficiaries to the trust service providers serving them. Most of the reforms discussed also create potential for infringements of corrective justice which either did not exist, or was less significant, pre-reform. I conclude that all but one of the seven reforms I examine should be reversed.

Keywords: trust, trustee, settlor, beneficiary, protector, enforcer, jurisdictional competition, offshore, debtor, creditor, tax avoidance, tax evasion, negligence, exemption clauses, exculpatory clauses, equity, donative

JEL Classification: K11, K19, K20, K29, K30, K39

Suggested Citation

Hofri-Winogradow, Adam S., The Stripping of the Trust: A Study in Legal Evolution (May 25, 2014). 65 University of Toronto Law Journal 1-47 (2015); Hebrew University of Jerusalem Legal Research Paper No. 15-5. Available at SSRN: https://ssrn.com/abstract=2441709

Adam S. Hofri-Winogradow (Contact Author)

Hebrew University of Jerusalem ( email )

Mt. Scopus Campus
Jerusalem, 9190501
Israel
523592980 (Phone)
523592980 (Fax)

HOME PAGE: http://en.law.huji.ac.il/people/adam-hofri

University of Connecticut - School of Law ( email )

65 Elizabeth Street
Hartford, CT 06105
United States

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