Document Type
Article
Publication Date
2015
Publication Information
67 Fla. L. Rev. F. 85 (2015).
Abstract
To compete for trust assets following a change in the federal tax code, many states repealed or abrogated the Rule Against Perpetuities (RAP). By repealing the RAP, these states allow a settlor to create a trust that lasts forever: a “dynasty trust” or “perpetual trust.” In a thoughtful article, Trust Term Extension, Reid Kress Weisbord asks: “[C]ould the duration of a trust settled in a jurisdiction governed by the Rule Against Perpetuities be extended indefinitely after the jurisdiction’s repeal of the Rule Against Perpetuities?” While I believe that Weisbord is correct in the starting point of his analysis (the settlor's intent) and his conclusion (the law should not allow a trustee to extend a trust beyond the perpetuities period), I would suggest a different mode of analysis: an economic analysis of trust term extension. An economic analysis of trust term extension (as well as trust modification more generally) should analyze the costs of specifying contingencies in a trust, including potential changes in the law, and the error costs and decision costs of discerning a settlor’s probable intent. Thus, after criticizing three of Weisbord’s arguments, I offer a brief economic analysis of trust term extension and suggest why economic arguments may provide an alternative yet superior justification for generally not allowing perpetual trust conversions of existing trusts.
Recommended Citation
Daniel B. Kelly,
Trust Term Extension: An Economic Analysis,
67 Fla. L. Rev. F. 85 (2015)..
Available at:
https://scholarship.law.nd.edu/law_faculty_scholarship/1664
