Perpetuities in an Unequal Age

Abstract

For centuries, the common law limited aristocratic wealth. In the last three decades, that has changed. One by one, state legislatures have eliminated the Rule against Perpetuities, and now dynasty trusts can make controlled payments to a settlor’s descendants for hundreds of years. This change occurred soon before a large and ongoing intergenerational wealth transfer in the United States. Trusts scholars have criticized the Rule’s removal, and some have described it as charting a path to a new Gilded Age.

This Article draws a theoretical lesson from the Rule’s demise. I argue that part of the reason for the Rule’s end was the complexity of its function, operation, and rationale. Thus, in spite of its value, the Rule found too few defenders when special-interest advocates from financial industries competing jurisdictionally for trust fees sought to remove it. Complexity in inheritance law has this specific and timely cost: it can enable mechanisms for aristocratic wealth defense, even when it is meant to do the opposite. This is because rule complexity causes asymmetric information among future players. This dynamic should figure into proposals for reform.

Keywords: trusts and estates, property