Trusts & Estates

Paula Monopoli

In his article, Toward Economic Analysis of the Uniform Probate Code, Dan Kelly fills a significant gap in the inheritance law literature.  As he notes, a number of scholars have brought the lens of economic analysis to bear on trusts but few, if any, have taken a comprehensive look at intestacy and wills using the tools of economic analysis.  Kelly takes on this task and the result is an important contribution to the field.

Kelly begins by tracing the important historical move from formalism to a functional view of inheritance law and gives the reader a succinct synopsis of the work of important inheritance law scholars like John Langbein and Larry Waggoner.  He then describes the work of a younger generation of scholars like Rob Sitkoff, who has brought empiricism to trust law in particular.  This literature summary is helpful in identifying the scholarly gap in the area of intestacy and wills, i.e., succession law.

Kelly applies three tools of economic analysis to succession law: (1) transaction costs; (2) the ex ante/ex post distinction; and (3) rules versus standards.  He focuses on what he characterizes as second-order questions of institutional design rather than on first-order questions that address the very purpose of succession, e.g. freedom of testation, replicating or effectuating decedents’ intent and the efficient reallocation of property at death.  Kelly hones in on the choice of rules themselves.  For example, he notes that there are a number of benefits that flow to the testator by opting out of the default rules of intestacy.  These include the ability to choose one’s executor and the guardian of one’s children, to leave bequests to people or institutions who may not be one’s heirs, and to minimize tax liability in some cases.  But as Kelly points out, more than half of Americans fail to execute wills.  This is, in part, due to transaction costs like the time and effort necessary to find an attorney and pay her fee.  If these costs are greater than the benefits of having a will, many people will choose to die intestate.  Thus, rules that increase the ease with which one can execute a will presumably produce more will-making.  Whether or not that is a social good is another question that Kelly raises but does not answer in this article.  He simply makes the point that the choice of rules drives the behavior of citizens one way or another.

Similarly, Kelly cites legal economists Louis Kaplow and Steven Shavell for the proposition that economists embrace the ex ante as opposed to ex post perspective as the superior mode of legal and policy analysis.  This view is grounded in the idea that ex ante analysis “incorporates ‘the fact that the choice of legal rules may affect how individuals behave at the outset, which has an important influence on individuals’ well-being.’” It also reflects the view that the ex ante perspective “avoids the possibility of ‘hindsight bias’ by considering ‘all possible outcomes an individual might experience’ rather than just a salient, perhaps atypical, outcome that happens to occur.”  Kelly offers a useful example from succession law citing the work of inheritance law scholar Adam Hirsch.  He notes that some would argue that the law should limit one’s ability to waive the elective share.  But ex ante analysis illuminates the possibility that if that were the rule, some people would not marry at all even though their potential spouses might be willing to waive the elective share.  Kelly points out that ex ante analysis by itself does not determine whether waiving the elective share is a good or bad policy choice.  But it does yield information that may be useful to policymakers in the process of choosing a rule.

Finally, Kelly turns to a third tool of economic analysis – rules versus standards.  He describes this concept in terms of legal commands taking two forms.  Rules are “commands that are given their content ex ante or before a person acts. (e.g., a rule that a driver not exceed 55 m.p.h.).” Alternatively, standards are “commands that are given their content ex post or after a person acts (e.g., a standard that a person drive “reasonably”).”  Choosing which is optimal is aided by an evaluation of the costs and benefits of each in a particular context.  Kelly notes that “rules entail higher drafting costs, lower decision costs, greater predictability and consistency, . . . lower agency costs” but less flexibility to do justice in a particular case.  Standards, on the other hand, “involve lower drafting costs, higher decision costs, less predictability and consistency, higher agency costs and more flexibility” to make a contextual decision that may enhance fairness.   In the context of the Uniform Probate Code, which incorporates both rules and standards, intestacy provisions that give a specific share to a surviving spouse constitutes a rule while the provisions that govern whether a parent-child relationship exists that turn on whether someone “functioned as a parent” constitute a standard.  Kelly argues that being aware of the costs and benefits of each helps explain some of the choices made by the drafters of the Uniform Probate Code and will enhance its future development.

In the final part of his article, Kelly turns these three tools of economic analysis toward various provisions of the Uniform Probate Code.  He concludes that “[m]oving towards an economic analysis of succession law that combines theoretical as well as empirical research has the potential to pay dividends for future law reform.”  This article persuaded me that, in fact, Kelly is absolutely correct.  With clear, elegant prose, Kelly has given the reader an excellent primer in the tools of economic analysis and has offered inheritance law scholars an important addition to the canon. I look forward to more scholarship by Kelly that builds on this very strong foundation.

Solangel Maldonado

In their forthcoming article, Torts and Estates: Remedying Wrongful Interference with Inheritance, John C.P. Goldberg and Robert H. Sitkoff illustrate the potential pitfalls of recognizing causes of action without any awareness or consideration of how other areas of law deal with claims arising out of similar facts.  They argue that courts’ relatively recent recognition of the tort of wrongful interference with an expected inheritance is ill-conceived for two reasons.  First, it is unnecessary given the remedies available under inheritance law—a will contest or action for restitution by way of constructive trust.  Second, it conflicts with specialized inheritance law doctrines and procedures (such as inferences, presumptions, and burden shifting schemes, higher evidentiary standards, bench trials, and short statutes of limitations) developed to address the evidentiary challenges raised when the only person who can conclusively clarify or confirm his donative wishes is dead.  A disappointed expectant beneficiary who brings a claim for tortious interference with an expected inheritance will have fewer procedural hurdles to clear because courts have rejected or ignored the rules and procedures that apply to will contests and restitution claims.  A tort plaintiff may also recover substantial damages—including nonpecuniary and punitive damages—remedies that are unavailable in a will contest or action for restitution.

Goldberg and Sitkoff further argue that interference with expected inheritance claims are problematic conceptually.  Since a donor’s wishes are the guiding principle of inheritance law, a disappointed expectant beneficiary has no independent right to the donor’s property absent the donor’s exercise of his freedom of disposition.  As such, when a disappointed expectant beneficiary brings a wrongful interference with an expected inheritance claim, she is suing to vindicate the donor’s right to freedom of disposition rather than her own rights.  However, as every first year law student knows, a tort plaintiff cannot recover for a wrong done to another person.  She can only sue for a wrong done to her.  Of course, we suspect that a disappointed expectant beneficiary doesn’t sue only (or primarily) to vindicate the donor’s freedom of disposition but to secure her interest in the property.  While that may be the case, Goldberg and Sitkoff point out that the law cannot recognize her interest in the decedent’s property independent of decedent’s wishes because such interest would directly conflict with decedent’s freedom of disposition.

As a Torts teacher and Estates & Trusts teacher, I am a bit embarrassed not to have recognized the conceptual inconsistencies inherent in the tort of wrongful interference with an expected inheritance.  I also had not thought about its conflict with the specialized rules and procedures that have been developed to address the evidentiary problems created by posthumous litigation.  According to Goldberg and Sitkoff, neither did the American Law Institute (ALI) nor Dean William Prosser, a reporter of the Restatement (Second) of Torts.  Goldberg and Sitkoff posit that subject matter specialization is partly to blame for this oversight.  Torts professors and practitioners often know very little about inheritance law and, as a result, failed to recognize before endorsing the tort of interference with an expected inheritance, that it conflicted with fundamental inheritance law doctrines and policies.  Goldberg and Sitkoff also attribute some responsibility to the ALI’s “top-down law reform of the common law through innovative Restatement … provisions that have not been tested in practice or vetted in the literature.”  Few courts had recognized the tort in 1979 when it was included in the Restatement (Second) of Torts but which has since been adopted by a significant minority of appellate courts and is increasingly the subject of law review articles and discussion in leading casebooks.  Law students also tend to remember the most famous tortious interference case—Marshall v. Marshall, 547 U.S. 293 (2006)—involving Playboy Playmate Anna Nicole Smith’s claim against her deceased husband’s son (her former stepson).

I must admit that until I read this article I commended courts’ willingness to award damages to petitioners who had been deprived of an expected inheritance or bequest as a result of defendant’s undue influence or fraudulent or coercive inducement of the donor to make a will or nonprobate transfer in defendant’s favor.  In my view, although the disappointed expectant beneficiary could honor the decedent’s wishes by bringing a will contest or action for restitution, it did not seem just that the wrongdoer would merely lose the property he wrongfully secured and not suffer any other financial consequences.  The risk of a will contest or restitution action also seemed insufficient to deter a potential wrongdoer given the unavailability of damages.  In addition, plaintiffs often assert tort claims alongside or in lieu of equitable claims.  For example, a custodial parent who has been wrongfully deprived of his child’s custody is entitled to the child’s return but can also sue for tortious interference with custodial rights.

After reading the article, I am no longer sure whether I support the tort.  Goldberg and Sitkoff suggest that tort law, as compared to inheritance law and its specialized rules and procedures, is unlikely to improve the accuracy of the court’s determination of the donor’s wishes.  Nevertheless, I am not yet convinced that inheritance law’s specialized rules and procedures are always better able to ascertain donor’s wishes.  Is it possible that those rules make it easier for a wrongdoer to circumvent a donor’s wishes? After all, the wrongdoer has little to lose in a will contest or restitution action given that even the cost of defending the suit will be paid out of the donor’s estate.

Goldberg and Sitkoff acknowledge that inheritance law’s specialized rules and procedures may not be optimal but they object to courts’ ad hoc rejection of these rules by recognizing “a rival tort action” without reason.  I agree that unprincipled reform could potentially be disastrous and agree that it is troubling that in those states that recognize the tort, a disappointed expectant beneficiary can “choose between two causes of action with differing standards of proof.”  But I do not believe that courts have recognized the tort of interference with an expected inheritance without reason and those reasons might be equity and deterrence.  Even if inheritance law’s rules are better able to protect decedent’s wishes, in those cases where courts determine that the defendant wrongfully obtained decedent’s property, inheritance law’s remedies are arguably inadequate.  The petitioner is not compensated for the money, time, and energy expended on the litigation, and the wrongdoer will have gotten away with making a mockery of decedent’s wishes even if only during the pendency of the litigation as he shamelessly uses the donor’s property to finance his ongoing attempt to retain the property in circumvention of the decedent’s wishes.

I hope that Torts scholars and Estates & Trusts scholars will read this article and conclude, as I have, that we must address the inconsistencies between inheritance law and tort law.  We might conclude that courts should eliminate inheritance law’s specialized rules and procedures or should extend them to tortious interference with an expected inheritance claims.  Or we might conclude that inheritance law adequately protects a donor’s freedom of disposition and that there is no need or room for tort law.  Whatever we decide, this article demonstrates the benefits of collaboration across fields.  Had the drafters of the Restatement (Second) of Torts had the benefit of the insights of Estates & Trusts scholars, these questions might have been addressed before 1979.

Jeffrey Cooper

One of the notable current developments in modern estate planning is that of the dynasty trust, a device for passing family wealth though the generations without the imposition of estate, gift or generation-skipping tax along the way.  Fueled by the combination of clients seeking a measure of immortality, state legislatures seeking to attract trust business, and lawyers and trust companies seeking to secure a “client” that will last for generations, the device has become a must-consider technique for wealthy Americans.

Professor Lawrence Waggoner does not think dynasty trusts represent good public policy, a theme he has addressed in many of his earlier writings.  However, his argument in this piece is slightly different.  Addressing his remarks not only to state legislatures, but to those clients considering implementing a dynasty trust, he contends that dynasty trusts may not serve any useful interest for the very clients clamoring to establish them.  His argument takes two major forms.  First, utilizing some mathematical modeling, he illustrates how the passage of time dramatically multiplies the number of eligible trust beneficiaries of a hypothetical dynasty trust and dramatically dilutes their genetic relationship to the individual who originally establish the trust.  For example, Prof. Waggoner calculates that some 325 years after its inception, a typical dynasty trust might have over 100,000 beneficiaries, and after 450 years might have well over one million such beneficiaries.

Waggoner calculates that the genetic relationship between these beneficiaries and the original grantor would be infinitesimal (indeed no stronger than that of any two average Americans), raising the question of whether a client establishing a dynasty trust today truly would have any affinity towards these distant future relatives.   In illustrating this problem, he doesn’t rely on numbers alone.   Rather, he offers the visual illustration of the descendents of a single grantor being so numerous after 350 years later that the 114,500 members of this “family” could not fit in Michigan Stadium or the Rose Bowl.  He also offers the case of Samuel Hinkley, who died in 1662 and is a common ancestor of George H.W. Bush, George W. Bush and Barack Obama.  Had Hinkley established a dynasty trust, the Bushes and the Obamas would be current beneficiaries.  Genetically, politically, economically, and just about any other way one can imagine, the Obamas and the Bushes are about as diverse as Americans can be.  It’s hard to imagine what any estate planning goal would be served by those two families being sustained by a common source of funds established by a common ancestor.

Second, Professor Waggoner contends that this dramatic increase in the number of eligible beneficiaries creates a whole host of undesirable administrative problems.  Included among these are concerns that current dynasty trust documents may ultimately prove to be as antiquated as their once “cutting-edge” predecessors such as the entail and the strict settlement.  Waggoner also raises concerns about the administrative difficulties in dealing with trustee turnover, as well as the seemingly impossible task of a trustee exercising that trustee’s duty of impartiality when owed to so many beneficiaries in so many different stations of life.  Professor Waggoner contends that these administrative complexities are a concern not only for society at large but for the very individuals contemplating establishing today’s dynasty trusts.  If the wealthy really considered these complexities, Waggoner argues, they might conclude that dynasty trusts simply are not worth the tax advantages.

As with any article, those with differing viewpoints can certainly quibble with aspects of Professor Waggoner’s approach.  Specifically, critics may suggest that he seems to tilt the analysis somewhat in his favor by characterizing the typical dynasty trust as a single trust for cascading generations of beneficiaries.  In reality, as Professor Waggoner discusses in the footnotes of his Article, many of these trusts will subdivide over time so that only one family unit will be the beneficiaries of a given trust at a given time.  If one envisions this structure being the practical norm, then some (but not all) of the administrative challenges he attributes to a dynasty trust (such as inevitable conflicts among multiple generations of beneficiaries) are no more problematic in the dynasty trust context than anywhere else in trust law.  Indeed, one could even contend that it is more administratively efficient to have one trustee or trust company administer hundreds of trusts established under the same master document than it would be to have each generation retain new lawyers to draft new documents to be administered by new trustees.

Despite these potential minor objections, Professor Waggoner’s central thesis remains undisturbed:  trusts lasting for centuries create a host of administrative and interpersonal complexities that clients should more carefully consider.  In sum, this article represents a brief, entertaining, and enlightening contribution to the policy debate surrounding the continued utility of the rule against perpetuities and the desirability of establishing a dynasty trust.  I recommend it highly.

Camille Davidson

Fame, Family Feuds, Lack of Estate Planning, and Ethical Misconduct in the Administration of the Billion-Dollar Legacy of Bob Marley reads like a fact pattern for a law school final examination. In the article, Professors McKen Carrington and Christopher Ogolla discuss the controversy surrounding the estate of Robert Nesta “Bob” Marley. Famed reggae icon and Rastafarian Marley died intestate in 1981 with an estate valued at approximately 30 million dollars at the time of his death. Although Carrington and Ogolla focus on Jamaican law, the issues they highlight extend far beyond Jamaica and provide a backdrop for discussing several issues important in the administration of a decedent’s estate. With respect to the administration of Marley’s estate, those issues included adopted children, out of wedlock children, intellectual property rights, fiduciary obligations of a trustee, ethical obligations of an attorney, and choice of law issues. Further, there were allegations of forgery and fraud. Carrington and Ogolla merely scratch the surface with each of these topics. I would love to see them expand on several of the topics they highlight. Real life stories make great topics for writing and teaching in the area of decedents’ estates.

One of the first issues addressed in the paper is who should be included in Marley’s family. The article provides a brief section on the Marley family structure. Although Marley was survived by a spouse, Rita and the three children born to their marital union, he was also survived by two children of Rita that he had adopted and six other children that he had fathered with other women while he was married to Rita. I would have liked for the authors to have included a little more detail about the Marley family.

Although this article relegates to one sentence that Rita was the custodial mother and caretaker of all the children, one unanswered question is why did she take on that role? Why did Marley father so many children outside of his marriage? Were all of the children really Marley’s? Where were their mothers? Who is a decedent’s child under Jamaican law? Is a genetic connection all that is necessary to inherit from one’s father in Jamaica? Is a genetic connection necessary in order to inherit from one’s purported father in Jamaica? In most jurisdictions in the United States, biological connection is generally not enough for a child to inherit from or through his father. A parent-child relationship or other acknowledgment is often required.¹

The authors suggest that the Jamaican intestacy system failed Marley’s heirs. They mention Marley’s mother, Cedella Marley Booker, and indicate that she and Marley were extremely close, yet under the law she received nothing. Marley’s surviving spouse Rita was entitled to 10 percent of his estate outright and a life interest in 45 percent of his estate. The children were entitled to 45 percent outright and the remainder of the life interest. The authors suggest that the couple built the 30 million dollar empire together and we are to infer that Rita should be entitled to more. In fact, the authors mention Texas law as an example of where a surviving spouse would be entitled to more. Perhaps a little more detail about community property states and separate property states is warranted. Why is the life interest not beneficial to Rita? We often create spousal trusts for lifetime use as an estate tax savings mechanism.  Did the Jamaican system really fail Marley’s heirs?

The authors suggest that Marley was unlike most individuals who die intestate. Although he was a shrewd business person, his failure to devise an estate plan was for religious reasons. Some background on the Rastafarian religion may be helpful to the reader. Given the non-traditional nature of Marley’s family, an estate plan would have been a business plan. The authors could draft a practice-ready piece that highlights the importance of an estate plan especially for non-traditional families.

The second half of the article focuses on the many companies that Marley created and the ethical conduct of his spouse and business attorney. The authors state that the Model Rules of Professional Conduct do not adequately address the problems faced by estate planning attorneys. Indeed estate planning attorneys are often faced with potential conflicts of interest as they determine who exactly they represent. Carrington and Ogolla also remind us that there is a fine line between asset protection and fraud. But, the authors suggest that Marley’s estate problems arose because Marley did not have an estate plan. It appears from the article that some of the fraudulent transfers or misappropriations that Rita Marley made (with the assistance of David Steinburg took place prior to Marley’s death. Thus, an estate plan may not have prevented the fraudulent acts. Further, lawsuits filed by co-songwriters and band members probably would have still occurred even if Marley had a will. Even when a decedent dies with a will, determining the property that the decedent owns at the time of death may be controversial. Although everyone should have an estate plan, such plan will not prevent litigation.

Family Feuds reminds us that estate planning is essential for everyone and that being a lawyer is a noble profession.

1. Camille M. Davidson, Mother’s Baby, Father’s Maybe! Intestate Succession: When Should A Child Born Out of Wedlock Have a Right to Inherit From or Through His or Her Biological Father, 22 Colum. J. Gender & Law 531 (2011). [↩]

Phyllis Smith

Gerry W. Beyer’s Will Contests-Prediction and Prevention starts with a discussion of reasons to anticipate a will contest. He points out society has come to accept nontraditional families as a societal norm and yet the likelihood of a will contest increases when a decedent makes bequests that pass outside of what we define as a traditional family. Thus, for example, from a planning standpoint the best option for a testator involved in a same-sex relationship is to create a will because the intestacy laws will not make provision for the surviving partner. The article points out that even when the testator plans in advance, the likelihood of this will being challenged by a blood relative is much higher than when bequests are made to traditional family members.

Professor Beyer points out that historically, no-contest clauses have been used as a weapon to deal with the potential threat of a will contest. Even so, Professor Beyer points out that no-contest clauses are becoming less reliable as a deterrent because enforceability may be called into question. With that in mind, Professor Beyer offers an alternative solution — an incentive not to contest the will: In exchange for not challenging the will for a period of 2 years after the date of death, the beneficiary would receive a gift. Such a provision may be especially valuable for states where no-contest clauses are not enforceable.

Professor Beyer also suggests the use of technology to provide “will insurance.” We’ve seen countless television shows where a decedent leaves a “video will.” I certainly cannot think of a circumstance where I would suggest that a client make a video will alone, although videotaping the execution ceremony is quite different. Certainly if a testator’s capacity may be called in to question a video could provide “will insurance,” but even in circumstances where competence is not questioned the testamentary intent may be established by use of statements made by the testator contemporaneous with the will execution. When properly done, the video execution could provide evidence of the adages estate planners and professor use frequently, such as the testator understanding the natural objects of his bounty, understanding the nature and extent of his property, understanding the disposition of his property under the will, and so on. The bequest to a same-sex surviving partner has more protection when supported by video evidence, but it still has inherent risk.

Professor Beyer also provides suggestions regarding witnesses to the will. The article is written in the context of an anticipated will contest. Thus it discusses the importance of the witnesses’ role in the execution process. In many cases, witnesses are persons who happen to be in the right place at the right time.  They tend to have no personal relationship to the testator and can only testify about the testator’s demeanor at the time of the execution, if they remember. However, as Professor Beyer points out, if witnesses were specifically chosen with a will contest in mind, the witnesses could be much more useful. If attorneys chose witnesses who were personally acquainted with the testator, these witnesses are more likely to remember the execution and have a frame of reference to testator’s intent and capacity on the date of execution as well as a prior time when it is uncontested that testator had such capacity. In addition, it would be much easier to locate witnesses with whom there is a personal relationship in the event their testimony is required.

I highly recommend this article to academics, and to transactional attorneys as well as litigators. This article provides the framework to minimize the risk of a will contest or provide the best protection in the event of one.

Alyssa DiRusso

Sometimes a will is not just a will.  In Mark Glover’s recent article, he illuminates the psychological power that the law of wills and the process of estate planning can have.  Although I’ve long suspected many of us who work in the world of trusts and estates do so for psychological reasons (what drives us to attempt to control death?), I’ve never seen the connection between psychology and the law of death made so persuasively and concretely.

Professor Glover begins with a useful introduction to therapeutic jurisprudence.  It seems a gentle and unobtrusive movement; it largely suggests that, all other things being equal, the law should tilt toward rendering positive psychological consequences rather than negative ones.  Fair enough.  The model requires an analysis of the impact of laws on people, noting both the negative and positive psychological effect of the constructs law has created.  An analysis should lead to an adjustment in the law if the primary goals of the law could be accomplished in a way with better net psychological impact.

In the trusts and estates context, Professor Glover notes both negative and positive (“antitherapeutic” and “therapeutic”) psychological consequences of estate planning.  Anxiety about death and dying, and being forced to address issues relating to that source of angst, can by psychically troublesome.  Familial conflict and estate disputes also render negative psychological consequences.  Fear of the probate and administration process may provoke an anxiety reaction as well.  For clients most strongly affected by these concerns, the estate planning process can be a source of worry, anxiety, and negative emotions.

Much of estate planning, however, has therapeutic consequences, according to Professor Glover.  Many testators can experience “peace and satisfaction” from both the anticipated result of estate planning and the process itself.  The freedom of testation afforded by estate planning can produce satisfaction in a testator’s implementation of his individual preferences, not the least of which may be provision for the testator’s family after death.  The lawyer as “counselor” in the estate planning process can also have positive psychological benefits; the relationship and interpersonal support, in addition to the expert advice provided, can reduce death anxiety and minimize other negative emotions associated with wills.  The will execution ceremony itself may provide the comfort and satisfaction of ritual.  Finally, the execution of a will provides an avenue for self-expression, conveying the testator’s values and emotional connections.  On the whole, the positive psychological impact of estate planning appears to outweigh the negative.

Having applied a basic therapeutic analysis to estate planning as a whole, Professor Glover next demonstrates how the theory could be applied to a specific example of wills law: military wills.  Drawing on the general framework of the negative and positive psychological impact to be anticipated from the estate planning process, Professor Glover analyzes two reform movements within military wills: the reduction of states recognizing a privileged status for military wills, and the narrowing of the circumstances under which military wills may be executed (construing active military service more strictly).  Given that those in active combat are less likely to be able to access any of the psychological benefits of estate planning if significant formalities of will execution are required, Professor Glover argues that therapeutic analysis weighs against removing the privilege of military wills in many states.  Noting, however, that additional therapeutic benefits of estate planning may be accessed through attested wills if time permits (the counseling benefits of an attorney, the satisfaction of ritual), Professor Glover explains that the therapeutic balance weighs in favor of the restriction of access to military wills to those in active duty.

In conclusion, Professor Glover notes that a therapeutic jurisprudential framework can be applied to a variety of aspects of wills law.  Indeed, his list of selected publications shows that he will apply the analysis to will execution in his next article (Mark Glover, The Therapeutic Function of Testamentary Formality, 61 U. Kan. L. Rev. __ (forthcoming)).  I am sure it will be as satisfying a read as this article was.  Until it is released, I suppose I will have to console myself with the therapeutic benefits of a nice cup of green tea, or maybe just update my will.

Tom Gallanis

This fascinating book stems from the author’s Ph.D. dissertation at the University of London, supervised by Professor (now the Honorable Mr. Justice) David Hayton and Professors James Penner and Paul Matthews.

The book is a response to academic writing from the United States emphasizing the contractarian or organizational basis of trust law.¹ As Dr. Lau explains, his book sets out to achieve two purposes: “The first is to introduce and defend a property-based economic account of trusts. … The second is to influence legal scholarship on and developments of trusts” (P. 17).

The book is divided into three parts. Part I examines contractarian theories of the trust. Dr. Lau finds these theories unpersuasive. He argues that the contractarian theories “took corporate law and economics theories and forcefully transplanted them onto trusts without paying due regard to the trust’s unique attributes” (P. 19). Part II explores whether trusts should be thought of as legal entities (or economic organizations). Dr. Lau responds in the negative, recognizing that while “labeling trusts as entities has a lot of aesthetic and pragmatic appeal”, particularly in civil-law jurisdictions, “this does not mean [that] common-law trusts are or should be legal entities” (P. 79). Part III develops the author’s property-based account of the trust. As Dr. Lau observes:

In modern times, the key contribution of the trust is that it extends property’s coordination function. It is the trust’s role in enabling fluctuating interests in a fund of fluctuating assets—at relatively low information processing costs—that makes it a unique legal institution. For sure, some of these functions can indeed be fulfilled by contracts, agencies, and entities. But, ultimately, the trust is a derivative form of property and the beneficial interest is a derivative form of ownership. No matter how default or how anti-agency-costs trust rules are or how much asset-partitioning features trusts have, one cannot escape from the fact that trusts are about property and ownership” (P. 181).

Dr. Lau’s proprietarian account of trusts is fully consistent with English law, which views the trust as a “proprietary relationship.”²

Dr. Lau’s account is also relevant to American trust law, even though our law will never be as proprietarian as the English law from which it descends. Still, American trust law, particularly as articulated in the Uniform Trust Code and the Restatement Third of Trusts, is experiencing a renewed appreciation of the property rights of the beneficiaries.³ Scholars of U.S. trust law will find much of interest in Dr. Lau’s thought-provoking book.

1. See John H. Langbein, The Contractarian Basis of the Law of Trusts, 105 Yale L.J. 625, 627 (1995) (“Trusts are contracts.”); Robert H. Sitkoff, An Agency Costs Theory of Trust Law, 89 Cornell L. Rev. 621, 623 (2004) (“this Article develops an agency costs theory of trust law as organizational law”). See also Robert H. Sitkoff, Trust Law as Fiduciary Governance Plus Asset Partitioning, in The Worlds of the Trust (L. Smith ed., Cambridge University Press, forthcoming 2012) (“Trust law is organizational law.”).

   For a proprietarian approach to trust law, see, Thomas P. Gallanis, The New Direction of American Trust Law, 97 Iowa L. Rev. 215, 234-37 (2011). [↩]

2. John Mowbray et al., Lewin on Trusts 7 (18th ed. 2008). See also David Hayton et al., Underhill and Hayton: Law of Trusts and Trustees 19 (18th ed. 2010) (referring to “the traditional emphasis on the proprietary nature of the trust”); J.E. Penner, The Law of Trusts 39 (7th ed. 2010) (“Unfortunately the ‘obligational’ view of the trust still occasionally raises its bewildered head to confuse and annoy …”) [↩]
3. See Gallanis, supra note 1, at 237. [↩]

Stewart Sterk

Under what circumstances should courts permit a donor to undo what appears to be a completed gift – particularly when the gift is embedded in a real or imagined romantic relationship?  After surveying existing law, Ruth Sarah Lee concludes that traditional doctrine does not adequately deter donees from subtly misleading donors into making generous gifts that the donor would never make if the donee had been honest about his or her intentions.  Although the article’s focus is on a subspecies of lifetime gifts, its conclusions suggest possible application to testamentary gifts, and to how courts might approach doctrines of undue influence and tortious interference.

Although the conventional wisdom is that gifts are gestures of altruism, love, or kindness, that conventional wisdom does little to explain why a donor makes particular gifts.  Much recent scholarship recognizes that gift-giving helps build relationships, in part by enhancing trust between donor and donee.  Gifts, particularly gifts that require the donor to learn about the donee’s individual preferences, or gifts that are particularly expensive, perform an important signaling function:  they indicate to the donee that the donor has an interest in a long-term relationship.  As Ms. Lee points out, “[i]f the donor expected only a short-term relationship with the donee, he would not expect enough in return, in terms of affection or trust, for the gift to be worth its cost.”   If gifts were freely revocable, they would lose that signaling advantage, because the donor would not be making the same sort of commitment to a relationship with the donee.  Nevertheless, as Ms. Lee indicates, engagement gifts are routinely treated as revocable at the donor’s behest if the marriage does not occur.  Courts invoke either the theory that the gift was conditioned on occurrence of the marriage, or that the theory that the gift was given only as consideration for the marriage.

Even when a romantic gift is not enmeshed in an engagement to be married, courts sometimes hold that the donor is entitled to revoke the gift on a theory of unjust enrichment or fraud.  Why should that be?  Ms. Lee points out that much as a donor sends a signal when the donor makes a gift, the donee sends a signal by accepting the gift:  a signal of interest in developing the relationship.  If a donee who has no interest in the relationship accepts gifts without communicating his or her lack of interest, the donor may be misled into making still more gifts.  For this reason, Ms. Lee argues that explicit gold-digging is far less serious a problem than subtle gold-digging; the donor who makes gifts to the explicit gold-digger knows precisely what he (or she) is doing.

The problem, Ms. Lee argues, is that traditional remedies for unjust enrichment and fraud do not provide the right incentives for subtle gold-diggers. If doctrine only requires a donee to disgorge gifts received under false pretenses, a scheming donee faces no effective deterrent:  if his (or her) chicanery is discovered, he must return the ill-gotten gains; if not, he gets to keep them.  (Ms. Lee does ignore the time and effort the donee might spend cultivating an unpleasant donor’s interest.)  She then identifies a recent case, United States v. Saenger, No. CR11-223RAJ, (W.D.Wash. 2012), in which a donee was convicted of mail fraud and sentenced to 46 months in prison for her role in convincing her elderly boyfriend to send her more than $2 million over the course of a five-year “relationship,” and suggests that in a limited set of cases, criminal penalties might be effective in inducing donees like Saenger to turn down extravagant gifts when they have no interest in a long-term relationship with the donor.  Ms. Lee cautions, however, that “[p]unishment beyond the cost of the gift should be applied very sparingly” because it is only the role of the courts to protect donors from true fraud, not from “the manipulations of their partners, the entreaties of their lovers, or the generous whims of their own hearts.”

Whether gold-digging donees know enough law to worry about the legal consequences of their actions is a question that plagues deterrence-based arguments in this area.  But if we take Ms. Lee’s argument on its own terms, the problems she identifies are not limited to lifetime gifts.  Gold-diggers — both those who feign romantic interest and those who mislead testators in other ways – can lead those testators to make substantial bequests in their favor.  The traditional remedy for misconduct by will beneficiaries is invalidation of the will on undue influence grounds.  But that remedy suffers from the same defect as the unjust enrichment remedy against lifetime donees who induce donors to make extravagant gifts under false pretenses: its deterrence potential is limited.  Ms. Lee’s analysis implicitly suggests that courts should consider punitive damages awards in at least some undue influence cases (see Estate of Stockdale, 953 A.2d 424 (N.J. 2008)), or should become more receptive to tortious interference with inheritance claims if punitive damages appear unfeasible in the context of a will contest proceeding.

Paula Monopoli

One of the most important and interesting conversations among inheritance law scholars has been the role genetic connection should play in establishing parentage and rendering a nonmarital child eligible to inherit from her father.  The advent of easy and reliable genetic testing has crystallized the issue and focused scholars on which paradigm we should adopt now that we no longer need “surrogate” rules in intestacy statutes, e.g., acknowledgement by a putative nonmarital father, to help establish whether a child is likely that man’s child.   There is a spectrum in terms of potential paradigms, running from a purely genetic model at one end where a DNA test establishing paternity would make a nonmarital child eligible to inherit even if she had no relationship with her father to a purely functional approach where the father’s behavior and intent would be the linchpin of whether the child is eligible to inherit, regardless of her genetic connection.  I would characterize the former  model as a “child-centric” model where the interests of the nonmarital child trump that of the father and his other marital children since the nonmarital child does not have to rely on the father to take any affirmative action like acknowledgement in order for the child to be eligible to inherit.

In her recent article Mother’s Baby, Father’s Maybe!-Intestate Succession: When Should a Child Born Out of Wedlock Have a Right to Inherit from or Through His or Her Biological Father?, Camille Davidson argues for the adoption of such a child-centric model of establishing paternity in the area of inheritance law. She highlights some of the historical antecedents of our current patchwork of state laws on defining paternity.  Davidson also adopts a comparative lens in evaluating how states should embrace the genetic connection between a nonmarital child and her father as dispositive of not only of paternity but of her eligibility to inherit from him.  In so doing, Davidson makes a compelling argument for this approach and adds an important voice to the academic conversation in this area of inheritance law.

Davidson begins by noting the dramatically different results in eligibility for inheritance between some other countries and many states in the United States. She contrasts Iceland with North Carolina and notes that a nonmarital child would inherit in Iceland simply by virtue of establishing a genetic connection with her father. As Davidson correctly notes, this is not the case in many American states where a child would have to establish more – for example, that her father acknowledged her – in order to be eligible to inherit.  She advocates for a uniform rule akin to the rule in Iceland where genetic connection alone would entitle that child to take her share of her father’s estate. This would be regardless of the father’s knowledge that the child even existed or despite behavior on his part that would indicate a lack of intent for a nonmarital child to inherit.

To support her argument, Davidson traces the history of United States Supreme Court jurisprudence as it establishes the parameters for states to enact statutes that apply different inheritance rules for children born inside and outside of wedlock.  She then details the various state laws that govern intestacy and inheritance as applied to no marital children. These include statutes like that in North Carolina, which requires that a formal adjudication of paternity or the father must acknowledge the child in writing and file it with the court. Davidson attributes these requirements, in part, to the period during which slavery existed in this country. The slave masters, who were white, had both legitimate and non-legitimate families. Despite the genetic connection between the master and the nonmarital children who were slaves, they could not be heirs.  She quotes from a 19th century Kentucky case in which the judge wrote, “the father of a slave is unknown to our law…”

Davidson argues that the inconsistent treatment of nonmarital children not only yields inconsistent results, it is also violative of the Equal Protection Clause. She notes that with the advent of easy DNA testing, there is no longer an arguable state interest in the orderly disposition of estates that the United States Supreme Court has found justifies different burdens in the past. I agree and have argued that the entire analytical framework of cases like Trimble ((Trimble v. Gordon, 430 U.S. 762 (1977).)) and Lalli ((Lalli v. Lalli, 439 U.S. 259 (1978).)) is undermined by the advances in such testing and that the cases warrant reconsideration.¹

I would like to see Davidson identify and grapple a bit more with the counter-arguments to the adoption of a model which provides that a pure genetic connection renders a nonmarital child eligible to inherit.  Those counter-arguments have been made by scholars like Lee-ford Tritt who would adopt a purely functional approach to parentage² and there are important counterpoints to the argument that Davidson makes that it is the interest of the nonmarital child which should trump those of the genetic father or his other children, even in cases where the father has not relationship with the child.

It would also be useful for Davidson to more fully address the sound arguments in favor of a child-centric paradigm.  For example, such fathers can always opt out of the default rules and exclude nonmarital children by will.  There are also different goals for establishing paternity for family law purposes, for example determining custody and child support, as opposed to those of inheritance law which is more focused on the reallocation of property post-death.³  I hope to see Davidson build on these arguments in future articles.  In this article, Davidson contributes much to the ongoing conversation by once again staking out the ground for a child-centric model of parentage in inheritance law.

1. See Paula A. Monopoli, Nonmarital Children and Post-Death Parentage: A Different Path for Inheritance Law, 48 Santa Clara L. Rev. 857 (2008). [↩]
2. See Lee-ford Tritt, Sperms and Estates: An Unadulterated Functionally Based Approach to Parent-Child Property Succession, 62 SMU L. Rev. 101 (2009). [↩]
3. See Monopoli, Nonmarital Children and Post-Death Parentage: A Different Path for Inheritance Law. [↩]

Gerry Beyer

Kristine Knaplund’s well-written and researched article, Synthetic Cells, Synthetic Life, and Inheritance, discusses the legal and regulatory implications of new advances in synthetic biology that may one day lead to the creation of synthetic human gametes or embryos that are made without the use of existing genetic materials.  The article first discusses the current state of assisted reproduction in the United States and the various techniques that are currently available for individuals with fertility problems.  Next the article examines the existing regulations that may apply synthetic gametes and either encourage or prohibit research in this area.  Finally, the article tackles the question of who will be the legal parents of a child created using synthetic gametes.

Prof. Knaplund notes that assisted reproduction is “big business” in the United States, with the exchange of eggs (ova) alone being worth $4.5 billion in the United States.  The use of in vitro fertilization, where the egg and sperm are joined in a Petri dish and later implanted in a woman’s uterus, was first successfully used in 1978 and since then over 3 million babies have been born worldwide using assisted reproduction technologies (“ART”).  Cryopreservation (freezing) of sperm, ova and embryos is commonly used today and preimplantation genetic diagnosis is used to screen for certain genetic or chromosomal diseases.  If a synthetic sperm or ovum were created, the user could select for genetic characteristics that are not present in the intended parents.

Which existing regulations apply to synthetic gametes may affect whether research in this area is encouraged or restricted.  ART have been largely unregulated by the federal government and the states and can quickly move from the experimental context to clinical practice.  Additionally, many of the existing regulations would not apply to synthetic gametes because they do not contain human genetic material.  More stringent FDA regulations may or may not apply to synthetic gametes depending on how broadly courts read the regulations.  If the FDA regulations apply, it could prevent research into synthetic gametes until safety issues are resolved.

If a child is created using synthetic gametes, there remains the question of who the law will recognize as the child’s parents.  Many state statutes have not been updated do include ova donations, which causes a problem when a donated ovum is placed in the intended mother because the ovum donor may claim to be the child’s parent.  Some states have also had problems with gestational carriers because the law presumes the birth mother to be the child’s parent even though this is not what the parties intend.  There also remains the problem of who will be considered the parents of a child who is created using synthetic gametes after one or both of the intended parents has died.  If the decedent’s genetic material is used, the decedent can be presumed to be a parent of the child.  However, if a synthetic gamete is used, the decedent has no biological connection to the child.  While the Uniform Probate Code allows the decedent’s intent to be a parent to be shown by a written record, only three jurisdictions have enacted the UPC section on assisted reproduction.  Courts may have difficulties in determining who the parents are of a child created using synthetic gametes because of the lack of a genetic parent.

Prof. Knaplund’s article points out several issues that may arise if (or when) synthetic gametes are able to be used to create a child, while also noting the current regulatory and legal problems caused by ART.  While many ART have been left largely unregulated, others have been restricted due to safety concerns.  While the creation of synthetic gametes would be a breakthrough in the scientific community, some may have safety concerns about creating a child without the use of human genetic material.  Whether this new ART is cautiously regulated or left unfettered could determine how long it will be before a child is created using synthetic gametes.  The complex issues of parentage that could arise for a child created from synthetic materials could cause problems under the current laws of many states.  These issues as well as those raised by current ART may force more states to follow the lead of the Uniform Probate Code and focus on intended parents of a child rather than genetic parents.

I highly recommend this article to anyone interested in this cutting-edge area of the law.  Although the number of children born in this manner is relatively small, the numbers will increase and if the law does not take Prof. Knaplund’s advice seriously to resolve these issues timely, significant problems along with time-consuming and costly litigation are sure to follow.

[Special thanks to the outstanding assistance of Mr. Bryan Jinks, J.D. Candidate, The Ohio State University Moritz College of Law, for his assistance in preparing this review.]