Baselines in Trust Term Extension
5 Pages Posted: 11 Jul 2015 Last revised: 16 Jul 2015
Date Written: July 1, 2015
The next battleground in the rancorous war over the Rule Against Perpetuities may be trust term extension. Seeking to take advantage of the abolition of the Rule in many states, trustees of irrevocable trusts settled before such a change in law might petition the court to extend the term of the trusts they administer, perhaps indefinitely. Professor Weisbord is rightly skeptical of this move, and he recommends a simple but elegant solution: prohibiting the use of modification doctrines to add beneficiaries not identified in the original trust document. This essay makes two related points and suggests an alternative solution. First, the legal analysis of trust term extension is highly sensitive to the baseline one selects, which, in turn, incorporates many policy preferences about dead hand control. Thus, the debate about trust term extension risks devolving into a debate about whether or not to abolish the Rule Against Perpetuities. Second, one’s view of trust term extension need not flow directly from one’s view of dead hand control, as the practical problems in divining settlor intent with regard to perpetual trusts will be shared by disputants on both sides of that debate. A reform addressed to these concerns would permit trust term extension, but require proponents of modification to provide clear and convincing evidence of settlor intent to create a perpetual trust.
Keywords: baseline, dead hand control, perpetual, trust, Rule Against Perpetuities
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