54 Pages Posted: 18 Jun 2014 Last revised: 22 Nov 2014
Date Written: August 8, 2014
Perpetual trusts are an established feature of today’s estate planning firmament. Yet little-noticed provisions in the constitutions of nine states, including in five states that purport to allow perpetual trusts by statute, proscribe “perpetuities.” This Article examines those provisions in light of the meaning of “perpetuity” as a legal term of art across history. We consider the constitutionality of perpetual trust statutes in states that have a constitutional ban on perpetuities and whether courts in states with such a ban may give effect to a perpetual trust settled in another state. Because text, purpose, and history all suggest that the constitutional perpetuities bans were meant to proscribe entails, whether in form or in function, and because a perpetual trust is in purpose and in function an entail, we conclude that recognition of perpetual trusts is prohibited in states with a constitutional perpetuities ban.
Keywords: perpetuities, perpetuity, entail, fee tail, jurisdictional competition, state constitution, perpetual trust, dynasty trust
JEL Classification: K11, K34
Suggested Citation: Suggested Citation
Horowitz, Steven J. and Sitkoff, Robert H., Unconstitutional Perpetual Trusts (August 8, 2014). 67 Vanderbilt Law Review, Forthcoming; Harvard Public Law Working Paper No. 14-27. Available at SSRN: https://ssrn.com/abstract=2451083