Allison Anna Tait, Inheriting Privilege
, 106 Minn. L. Rev.
__ (forthcoming 2022), available at SSRN
Over one’s lifetime, advantage processes have a cumulative and potentially significant impact on inequality. The notion of cumulative advantage, or behavior processes whereby wealth continues to fall into the hands of individuals based upon how much they have already accumulated, is a concept to which many labels are applied: preferential attachment; “the rich get richer”; the Matthew effect. Most law school courses on trusts and estates consider (to some extent) the privilege, power, and opportunity that flows from economic wealth. Conversely, inherited social and cultural capital create advantage processes that are arguably no less significant, driving behaviors that produce tacit economic benefits—the parent who pays for extra tutoring so that a child may outperform peers on an entrance exam; the professional able to develop an instant sense of rapport and connection with other successful professionals; the job candidate who comports herself with high cultural knowledge (au courant but appropriate attire, elegant table manners, knowledge of fine arts, broad functional vocabulary). Although the intergenerational impact of inherited cultural capital is fascinating and relevant as an advantage process, the implications have been largely overlooked by legal scholars contemplating inheritance frameworks. Inheriting Privilege by Allison Anna Tait considers the family trust as a mechanism for intergenerational transfer of privileged social standing and cultural hierarchies.
The article encourages us to think more broadly about patrimonies: family resources usually considered by legal scholars in the narrow context of financial assets. Social and cultural capital is manifest within the patrimonies of the wealthy, with season tickets to the polo club, country club memberships, fee-paid legacy status within initiation-based social clubs, or box seats to performing arts events. Cultural objects, heirloom possessions, and shared rituals may also be part of the patrimony. Notably, treasured collectibles may sometimes be a part of both the economic patrimony and the family’s cultural capital. Trust beneficiaries may have access to priceless antiquities without ever investing capital to purchase them (“only middle-class people buy furniture (because upper-class people inherit it)”). Access to high-value antiquities, artwork, and social memberships—or any of the conspicuous markers of elite white culture—is a mantle of privilege and one inherits unearned opportunities when cloaked with this mantle. Professor Tait’s argument that young people are paid more and promoted far earlier when they possess a wealth of social capital is thoroughly supported.
The family trust may facilitate control over a patrimony for centuries. The structural flexibility of a trust arguably allows it to operate as both sword and shield when it comes to protecting the capital within the patrimony. The power of a trustee to treat the trust principal as sacred, allowing distributions only from income generated by the principal, allows wealth to be preserved for as long as the state’s perpetuities will permit. Settlor-imposed restrictions that micromanage spending may be so explicit as to place the trustee in the position of substitute parent to the beneficiaries. And with a properly drafted trust, the assets within the trust may not be reached by generations of beneficiaries’ creditors. Professor Tait takes examination of family trusts a step further and considers the specific ways in which structural flexibility allows social and cultural capital to be protected and preserved: restrictions may be placed upon the trustee to preserve family assets and preclude their sale or disposition (e.g., vacation homes, farm properties, closely-held businesses, art collections, family heirlooms); a statement of values may be incorporated in the preamble of the trust, as a way of setting forth some sense of shared identity among family members; and, wielding both carrots and sticks, incentive provisions may be incorporated into a trust to encourage socially productive behavior, specific educational outcomes, or mandate philanthropic involvement.
Professor Tait notes that seven of the twenty wealthiest families on the Forbes Richest 400 list have inherited intergenerational wealth that was “strategically transferred . . . from one generation to the next through a complicated system of trusts, charitable foundations, and corporate entities.” She observes that to the extent trusts play an important role in preserving and concentrating wealth for an elite segment of society, conversations about structural inequity must necessarily involve trust law. This well-researched journey through the trust as a “unique catalyst of inequality” shifts gears and then reimagines the family trust as a tool for equality. Professor Tait contemplates the use of “citizen trusts” to address the needs of historically marginalized or vulnerable persons or communities. By way of a model, the article considers the First Nation Settlement Trusts in Canada, which are currently used to manage, preserve, and protect settlement funds received by displaced aboriginal communities, and the Alaska Permanent Fund, which has grown from $900 million in 1980 to $60 billion in 2017 and is used to support the community-at-large in Alaska.
This type of scholarship serves as a departure point for important conversations that need to happen in the classroom about the benefits and disadvantages arising from the plasticity of the family trust, and the ability of the trust to preserve intergenerational wealth and privilege. Professor Tait has also made an extraordinarily important contribution in helping to frame a pivot: harnessing the advantages of the trust enjoyed by the wealthy to advance community-supported causes. An article is a noteworthy contribution when it leaves us with new thoughts and ideas of our own, and when we are inspired to incorporate those ideas into our classes.
Cite as: Victoria J. Haneman, Wealth, Privilege, Power, And Opportunity
(December 22, 2021) (reviewing Allison Anna Tait, Inheriting Privilege
, 106 Minn. L. Rev.
__ (forthcoming 2022), available at SSRN), https://trustest.jotwell.com/wealth-privilege-power-and-opportunity/
In the Estates textbook I use, most of the will execution cases involve testators whose clear intent is unrealized because they bungled strict execution requirements. The Uniform Probate Code and the Restatement (Third) of Property: Wills and Other Donative Transfers—mainstays in any Estates class—are drafted to minimize the possibility of formal requirements interfering with testator intent. Reis Kress Weisbord and David Horton’s Inheritance Forgery is a counter-narrative that demonstrates how forgery remains a real and substantial risk of which the law must take account.
Weisbord and Horton argue that “counterfeit donative instruments are a serious problem.” (P. 855.) They focus on three donative transfers: wills, deeds, and life insurance beneficiary designations. To explore the prevalence of forged wills, the authors conduct empirical research in Alameda County, California. In a dataset consisting of every matter on the probate court’s docket in a one-year period, ten percent of will contests involved a forgery claim. (P. 876.) To document the forgery risk with deeds, the authors examine reported opinions since 2000, grand jury reports, and journalistic accounts of cases that were never litigated. As Weisbord and Horton explain, “these cases and stories share a common thread: deed forgers tend to prey on property that is owned by a decedent’s estate.” (P. 883.) To demonstrate that courts “routinely preside over claims that a life insurance form was falsified or fabricated,” the authors study reported opinions since 2000. (P. 889.) This empirical works reveals the extent to which forgery threatens the integrity of donative transfers.
Will forgery remains such a problem because policy makers fail to appreciate that it is a problem. Instead, the popular perception is that “forged wills are rare” and “just the stuff of novels.” (P. 870.) The Restatement (Third) does not even include forgery on its list of grounds for refusing to probate a will. (P. 871.) The Uniform Probate Code and some states have abolished purging statues that disincentivize beneficiaries from serving as witnesses; the Uniform Probate Code allows testators to use a notary instead of two witnesses; and in the most recent developments the Uniform Law Commission and some states have endorsed electronic wills. Unless policy makers appreciate the prevalence of forgery, they underestimate the risks inherent in each of these statutory changes. Moreover, Weisbord and Horton argue, the lack of attention to will forgery creates “festering areas of doctrinal uncertainty”, including issues about the burden of proof and burden shifting; whether a judge may look beyond the four corners of an instrument to determine due execution; and the “shaky science” of forensic handwriting analysis. (P. 882.)
The risk of forgery also plagues life insurance beneficiary designations, largely because life insurance companies lack adequate incentives to police for forgery. Under the rules of interpleader, the insurer that sues to compel adverse claimants to resolve their conflict can recover costs and attorney’s fees. Moreover, an insurer who learns of a forgery after it has paid the death benefit can fall back on facility-of-payment statutes. These statutes shield insurers from liability if they have acted in good faith and paid proceeds to the beneficiaries named on the policy—even if the names of those beneficiaries were forged. (P. 890.) Moreover, impleader rules and facility-of-payment statues “create perverse incentives for insurers to avoid scrutinizing death-beneficiary designations.” (P. 890.) This is because the less insurers know about the authenticity of the signature, the easier it is for the insurer to reap the benefit of the facility-of-payment statute and recover costs and fees in the interpleader action. Because less knowledge is advantageous to the insurer, companies make only “hollow gestures toward discouraging forgery.” (P. 891.)
Forgery on deeds may seem like a real property problem, not an estates problem. But Weisbord and Horton explain that forgers have “discovered another soft target: vacant real estate owned by the recently deceased.” (P. 885.) When a parcel is unoccupied and moving through the probate process, a counterfeit deed or trespasser may not be immediately detected. (P. 885.) Often the forger’s job is simple because recording a fake deed is “shockingly easy.” (P. 884.) The “overwhelming majority of Deed Registers [do] not try to authenticate legal instruments,” and many states expressly prohibit them from passing upon the validity of deeds because Registers are merely “ministerial officers.” (P. 884.) While all fake deeds are void, “untangling these legal knots can be time-consuming and expensive.” (P. 887.)
Weisbord and Horton’s explanation of why forgery is a contemporary problem previews their solutions. For beneficiary designations, they propose rule changes that would force life insurance companies to shoulder the burden of deterring forgery. For deeds, they suggest authentication protocols that would make it difficult to record a forged document. For wills, they are careful to note that many of the Uniform Probate Code’s innovations—harmless error, the abolition of purging statues, and holographic wills that only have material portions in the decedent’s handwriting—do not appear to increase the possibility of forgery. (Pp. 895-96.) However, Weisbord and Horton are skeptical of the trend to allow a notary to substitute for witnesses because “crooked notaries” appear in an alarmingly number of the will forgery cases. (P. 878.) The authors also are concerned about the potential of forgery with electronic wills and argue that authentication characteristics must be hard to fabricate, such as biometric measures. (P. 898.) Weisbord and Horton also advocate for reform of burden shifting and other doctrinal rules so as to eliminate the “powerful procedural advantage” held by the proponent of a will. (P. 899.)
From the first sentence to the last, Inheritance Forgery functions as a wake-up call: forgery is a modern-day problem that thwarts the intent of decedents and weakens our system of donative transfers. Policy makers should take note.
Adam J. Hirsch, Models of Electronic-Will Legislation
, San Diego L. Stud. Res. Paper No. 21-014 (June 20, 2021), available at SSRN
A conventional paper will must be in writing, signed by the testator, and signed by two witnesses. Statutes that authorize electronic wills (“e-wills”), by contrast, largely replicate the conventional will execution formalities in a digital format by giving legal effect to electronic documents that “are never reduced to paper.” (P. 164.) As of June 30, 2021, nine American states have enacted validating statutes for e-wills, and seven more states are considering e-will legislation. (Pp. 164, 165.) Currently, only one state, Oregon, expressly invalidates e-wills. (P. 166.) While American states are only recently beginning to address the validity of e-wills, certain foreign countries have had over two decades of experience with the concept. (P. 165.)
In Models of Electronic-Will Legislation, Professor Adam Jay Hirsch surveys the current landscape of e-will legislation in the United States and argues that states’ limited experience on the ground with e-wills renders the Uniform Law Commission’s approval in 2019 of the Uniform Electronic Wills Act (“Uniform Act”) premature. To enrich our understanding of the various options for validating e-wills, Professor Hirsch examines four competing legislative models that warrant policy and empirical analysis: (1) general validating statutes, such as the Uniform Act, which create general protocols for testators to formalize an e-will; (2) limited validating statutes, which are more limited designs for treating certain electronic records as an e-will; (3) emergency statutes, which validate only e-wills that serve a specific purpose, such as creating an estate plan during an emergency; and (4) remedial statutes, which validate e-wills that are otherwise not valid but are demonstrably intended as testamentary vehicles. (P. 165.) In thoroughly analyzing each legislative model, Professor Hirsch supports (among other things): (1) rejecting general validating legislation for e-wills because legislatures need time to develop substantive rules for e-wills, (2) enacting legislation explicitly proscribing e-wills, and (3) giving time to state legislatures to evaluate different models of e-will legislation, arguing that, because, among other things, there is currently little domestic experience with e-wills, the Uniform Electronic Wills Act is premature. (Pp. 206, 231-35.) This jot summarizes only some of the substantive rules discussed by Professor Hirsch and can only hint at the impressive depth and breadth of his analysis.
The first model, to which Professor Hirsch devotes the most attention, is a general validating statute. Professor Hirsch analyzes four aspects of this model: the writing requirement, the signature requirement, the self-proving affidavit, and will revocation.
As to the writing requirement, e-wills necessarily differ from paper wills because electronic documents are, of course, paperless. Under the Uniform Act, an e-will must be “readable as text” and, therefore, cannot be an audio or video file. (P. 168.) Professor Hirsch persuasively argues that, once wills are in the digital realm, words can be interchangeable between sound and text; he also notes that Uniform Law Commissioners acknowledge in a comment that “a will dictated by a testator onto a computer file using voice-recognition technology qualifies as an e-will.” (P. 169) The Uniform Act allows the remote witnessing of an e-will, but states have diverged on how witnesses should attest an e-will: some require the physical presence of witnesses, others permit remote witnessing, while still others permit remote witnesses only under limited circumstances. (P. 174.) I found persuasive Professor Hirsch’s critique of remote witnessing because the alarming rise of elder financial abuse and recent scourge of predatory caretakers pose a heightened risk of undue influence, duress, or fraud. (P. 176.)
As to the signature requirement for both testators and witnesses, the Uniform Act and seven states accept names typed into the file of an e-will as a form of electronic execution. Two other states, by contrast, require electronic signatures that are unique to the signatories. (P. 178.) The acceptance of typed (non-unique) names as signatures and the non-requirement of a date to an e-will in the Uniform Act and in six states (with three states requiring a dated e-will) leads Professor Hirsch to propose a notarization requirement for e-wills. (Pp. 181-83.) Notarization can protect against fraud or tampering with the e-will by, among other things, verifying the identities of witnesses and providing a record of the date of signing. (P. 184.)
A paper will can be “self-proved” if attesting witnesses sign an affidavit swearing to their participation in the will-formalizing process. (P. 185.) The Uniform Act, however, authorizes a self-proving e-will “only if the parties execute the e-will and affidavit ‘simultaneously’”—the Uniform Probate Code, by contrast, provides that the parties can “self-prove a conventional will immediately or at any time after the will’s execution.” (P. 187.) Two states currently have draft e-will legislation that omits the Uniform Act’s requirement of simultaneity. (P. 187.) Whether a self-proving affidavit is signed simultaneously with the will or not, allowing the affidavit to appear in the same digital file as the e-will exposes the e-will to tampering because metadata timestamps an electronic file’s last revision, but not the date or time of the e-will’s execution. Professor Hirsch proposes an elegant solution to this problem: “lawmakers could require parties to store any self-proving affidavit created ex post in a file separate from the e-will” so that the parties “could maintain the digital purity of an e-will.” (P. 189.)
Professor Hirsch explains that allowing an e-will to be revoked by physical act (rather than by express revocation by executing a subsequent writing) raises a host of novel issues. To revoke a conventional will by physical act, the testator must perform a revocatory physical act upon the original will with the intention to revoke it. But, assuming that deletion is the digital equivalent of a revocatory act, what file should be deleted? If an e‑will is signed and electronic copies are made immediately (or, even, at a later time), are they all originals? Does revocation of an original e-will by deletion also revoke all copies? The Uniform Law Commissioners nonetheless allowed revocation of an e-will by physical act because “many people would assume that they could revoke their wills by deleting them.” (P. 192.)
Revocation by physical act of an e-will without copies does not seem problematic, but revocation by physical act of an e-will with multiple copies does. One state (Indiana) requires the testator to permanently delete each copy of the electronic will, not just one of them—the Uniform Act, however, indicates in a comment that a “physical act ‘performed on one’ among ‘multiple copies’ suffices [for revocation].” (P. 194.) To explore whether Indiana law or the Uniform Act is more likely to correspond to people’s assumptions, Professor Hirsch undertook the “first-ever survey of popular assumptions about the revocation of e-wills.” (P. 195.) He asked 1,004 Americans if, assuming electronic wills are valid in your state and you created an electronic will in a file on one drive and made a copy of the will in a file on another drive, what do think you would have to do to revoke your will?—respondents could answer: (1) “Delete either one of the electronic will files,” or (2) “Delete both of the electronic will files.” 78% of the respondents indicated that they believed they would have to delete both of the files to revoke their electronic will. (P. 195.) Professor Hirsch concludes, “These data suggest that the Indianians’ rule of revocation better fits natural assumptions, and hence is more likely to minimize legal error, than the Commissioners’ rule.” (P. 195.)
Professor Hirsch’s analysis of the diverse treatment of the foregoing substantive laws (including a discussion of partial revocation and electronic trusts that are beyond the scope of this jot) leads to a view, expressed throughout his article, that legislatures need more time to develop the substantive laws of e-wills. Accordingly, Professor Hirsch supports a rejection of general validating legislation for e-wills. (P. 206.) To prevent existing conventional will legislation from being extended to e-wills, Professor Hirsch believes that the “safer course” is to “enact legislation explicitly proscribing e-wills.” (P. 206.)
The second model for e-will legislation provides for limited validating statutes, which “offer testators digital mechanisms for doing a more limited range of things.” (P. 206.) One example is a draft act in California allowing electronic pour-over wills but not other e-wills. (P. 209.) Professor Hirsch argues that, if a pour-over will is exclusively a pour-over will, then such an “abbreviated” will does not raise independent issues of fraud and allows the trust to become the “focus of attention.” (Pp. 209-10.) In those cases, Professor Hirsch proposes that the fate of the pour-over will can be tied to the fate of the trust. (P. 210.)
A third model for e-will legislation allows e-wills in emergencies. Emergency e-will legislation can co-exist with general validating statutes, but testators in emergencies should be allowed to dispense with formalities. (P. 214.) Although no American or foreign jurisdiction has enacted legislation authorizing e-will only in emergencies, two American states have draft legislation. Ohio has a draft e-will act allowing oral wills “made in the last sickness” with two disinterested witnesses in the testator’s physical or electronic presence, thus allowing for telephone wills. California has a draft e-will act allowing a textual, audio, or video e-will if the testator executed the e-will while “in contemplation, fear, or peril of imminent death, including self-created peril” and only if the testator does not survive “such imminent peril within 48 hours of creating” the e-will. (P. 215.)
The fourth model for e-will legislation provides for open-ended remedial rules, which allow an e-will to become valid “if a court determines that a testator intended an electronic record to function as a will, even though it is improperly formalized.” (P. 219.) A remedial rule could exist with or without any general validating statute for e-wills. (Id.) In 1990, the Uniform Probate Code added a dispensing power (allowing courts to dispense with formalities on a case-by-case basis when proponents seek to probate noncompliant wills), but, as of 2021, only eleven American states have enacted some version of the so-called “harmless-error” rule. (P. 220.) The Uniform Act combines a general validating statute with a harmless-error rule for defective e-wills. (P. 222.)
Of the nine states that enacted e-will legislation, two harmless-error jurisdictions have extended the dispensing power to e-wills. (P. 225.) Professor Hirsch notes that lawmakers considering remedial legislation for e-wills have several choices. First, although the Uniform Act allows for the harmless-error rule to be applied to an improperly-formalized e-will that is “readable as text,” Professor Hirsch supports expanding the rule to validate audio and video wills, noting that, if the harmless-error rule applies to emergencies, then the dispensing power should be broad. A second matter is the burden of proof—currently, the Uniform Act requires that proponents produce “clear-and-convincing evidence” to invoke the remedy of harmless error. Professor Hirsch theorizes that this heightened standard (over the usual civil preponderance of the evidence standard) was lawmakers’ attempt to make “outcomes more predictable and resistant to litigation, except where the equities are too glaring to ignore.” (P. 229.) He argues that the clear-and-convincing standard should be rejected because it is vaguer than a preponderance of the evidence standard and “generates less predictable outcomes, and hence invites more litigation, without any compensating benefits in terms of substantive justice.” (Id.) Professor Hirsch proposes shifting decisions over remediation from probate judges to “a higher court, in which lawmakers have greater confidence.” (Id.)
Professor Hirsch’s comprehensive discussion of four possible legislative models of e-will legislation and his impressive analysis of current and draft legislation in the United States and certain other countries have convinced me that e-wills require their own substantive rules because e-wills can sometimes differ greatly from paper wills. Currently, overall, American legislatures, courts, people, and society appear to have insufficient experience with e-wills. Professor Hirsch, this article, and his previous work on e-wills will help guide us in developing sophisticated and equitable substantive laws for e-wills.
One of my favorite forms of academic writing is the Note or Comment. Students have an uncanny ability to make the most of issues that professors might overlook.
A case in point is Francesca Torres’s Note, Electronic Wills: COVID-19 Relief or Inevitable Trouble For California? Torres, a rising 3L at McGeorge, skillfully tells the story of California’s failed electronic will statute, Assembly Bill 1667.
As Torres observes, one would have expected AB 1667 to pass. For one, nine U.S. jurisdictions expressly validate wills that are memorialized in pixels rather than on paper, and cases have been trickling into courts in which someone has tried to express their last wishes on a smartphone app or tablet computer. In addition, lawmakers in the Golden State have embraced other cutting-edge probate measures, like the harmless error rule. Finally, California requires attested wills to be signed by two witnesses who were present at the same time. Thus, during the COVID-19 pandemic, estate planners “struggled to find a way for clients to execute a will without physically entering an office.”
Nevertheless, AB 1667 was introduced in 2019 and proceeded to die in slow motion. It first consisted of an ambitious array of rules that governed creating, storing, and proving an e-will. It then endued a ceaseless barrage of amendments, critiques, and proposals from various interest groups. As the California Senate Judiciary Committee put it:
This bill has undergone multiple makeovers, proposing various different schemes for recognizing electronic wills in California. Each new iteration led to multiple rounds of intensive and impassioned discussions. Although it appeared at various points that a product approximating consensus might emerge, disagreements among stakeholders, particularly with regard to the degree of formalities that should be prescribed for electronic wills, persisted and promise to remain intractable.
By the fall of 2020, AB 1667 had been gutted: rather than making digital wills enforceable, it merely deputized the California Law Revision Commission to study the issue. And somehow, even this ghost of a bill failed to pass.
So what went wrong? Torres suggests that lawmakers determined that the costs of e-wills trump the benefits. She acknowledges that digital wills might “provid[e] any easy, comfortable, and convenient method of will drafting.” However, she correctly notes that some e-will statutes—including one that California considered in 2018—were all but drafted by companies like LegalZoom and Willing.com. These do-it-yourself legal service providers have serious skin in the game: not only can they sell digital will kits over the Internet, but they can charge fees to serve as “qualified custodians” that store the completed documents. Thus, one cannot help but wonder whether these “industry statutes” truly serve the public interest.
In addition, Torres raises legitimate questions about whether e-wills facilitate fraud. As she points out, it is exceedingly easy to fake the electronic signature of a testator or witnesses. Making matters worse, a wrongdoer might be able to access an e-will that is stored on a testator’s computer and make changes that are hard to detect.
It is unclear whether California lawmakers will try again in 2021. But if they do, I hope they read Torres’s Note and take her arguments seriously.
Felix B. Chang, How Should Inheritance Law Remediate Inequality?
, 97 Wash. L. Rev.
__ (forthcoming, 2022), available at SSRN
In United States inheritance law, we typically listen to what the person with the money wants. In his provocative essay, How Should Inheritance Law Remediate Inequality?, Professor Felix Chang challenges this bedrock principle of freedom of disposition and proposes a new vision of inheritance law that centers intergenerational economic mobility instead. By linking trusts and estates to other fields, such as business and tax law, this piece raises a host of interesting questions about whether inheritance law can truly address societal wealth inequality.
Chang starts by tracing the twin histories of inheritance law scholarship and estate tax policy. He starts in the 1970s, when the estate tax was relatively expansive, and the seminal scholarship of Professor John Langbein was just taking off. Much of Langbein’s work concerns how to improve the inheritance law system by making it more faithful to testamentary intent. However, a lot has changed since the 1970s. The group Chang describes as The Repealers—a coalition of the ultra-rich, anti-tax activists, and Republican politicians—has largely been successful in significantly weakening the estate tax, as now a significant amount of intergenerational wealth escapes untaxed. At the same time, a new vein of critical legal scholarship has arisen in the legal academy. It is more concerned with questions of distribution and notably more skeptical about promoting testamentary intent, at least when it serves to promote dynastic wealth and tax evasion.
The essay’s basic descriptive thesis is that while inheritance law scholarship has changed its focus to inequality, the law of trusts and estates itself has not yet caught up. Chang’s normative thesis is that it should. In other words, the central principle of inheritance law should shift from the freedom of disposition to intergenerational economic mobility, which Chang defines as “the ability of children to move beyond the economic station of their parents.” (P. 3.) This would transform inheritance law into a “safety net” that might curb the excesses of the related fields of business and tax law, which allow the creation of great wealth but also great wealth inequalities. Chang sees these inequalities as normatively undesirable because they both constrain individuals’ life opportunities and lead to political instability.
The role of a progressive inheritance law, on Chang’s view, is to prevent these wealth inequalities from wholly being transmitted to future generations. He is careful to note that he is primarily concerned with intergenerational disparities in wealth rather than income, the latter of which he finds to be more easily defensible. As a practical matter, he believes that legal rules should both restrain the hyper-rich and boost low-income households as a way to promote “mean regression.” This theoretical framing, in turn, brings together otherwise disparate calls for reform. For example, at the higher end of the wealth spectrum, this means targeting dynasty trusts, while at the lower end, it entails facilitating estate planning and promoting the transfer of assets between generations of low-income households. The tricky part, which Chang acknowledges, is that certain legal regulations may have unintended but deleterious consequences, particularly as the wealthy engage in strategic behavior in response to more restrictive legal rules.
Working out all of the details of an inheritance law focused on intergenerational economic mobility, however, is not the goal of the essay. Instead, it is to bring together the variety of legal fields that focus on wealth generation and transmission and to suggest a theoretical alternative to the policy and scholarly status quo. On that, Professor Chang has unquestionably succeeded.
Eric A. Kades, A New Feudalism: Selfish Genes, Great Wealth and the Rise of the Dynastic Family Trust (“DFT”)
(2019), available at SSRN
In a majority of U.S. jurisdictions, at least for purposes of trust law, the Rule Against Perpetuities (“RAP”) is dead. Yes, it’s true. In recent years most states either substantially weakened or completely eliminated their Rules Against Perpetuities. This fact has major implications for the wealthy, and more so for the ultra-wealthy. Freed from the restrictions of the RAP, those with the means and inclination can now create trusts that entrench great wealth within their families forever.
Eric Kades is concerned about this. In his second article addressing the potential repercussions of RAP repeal, A New Feudalism: Selfish Genes, Great Wealth and the Rise of the Dynastic Family Trust (“DFT”), Kades proposes a reinstatement of the RAP, this time in federal form, something he wants to call “The National Anti-Feudalism Act.” This prescription comes after he engages in a kind of predictive analysis of the imagined estate planning of the ultra-wealthy, improbably informed by his reading of evolutionary biology. According to Kades, evolutionary biology should play a “significant role” in “explaining patterns of inheritance behaviors.”
If you read Kades’s last article on the implications of perpetual trusts born of RAP repeal (Of Piketty and Perpetuities: Dynastic Wealth in the Twenty-First Century (and Beyond)), his conclusions here might come as a surprise. In that article, although Kades expressed a concern about the “significant evidence of a positive correlation between inequality and undemocratic governance,” he pointedly refrained from arguing for a reinstatement of the RAP. Instead, based on his identification of two arcane economic problems that might be caused by long-term trusts, Kades offered prescriptions in the form of bespoke taxes designed to offset those problems. (Readers looking for a more thorough encapsulation can access my review of Kades’s 2019 article here.) But the current article is not technically inconsistent with the prior one—at least not in all respects.
Kades remains very concerned about the political implications of permanent concentrations of great wealth in a “small circle” of families. He makes reference to the outsized political and economic power wielded by the ultra-wealthy, wealth’s potential to undermine democracy, and its tendency to skew “life chances in favor of the fortunate few.” He further points out that today’s legal tools make it far easier to create a “feudal caste system” (he refers to it as a “New Feudalism”) than did the comparatively crude English common law traditions of primogeniture and the fee tail.
But while in the prior piece Kades set aside the political objections and suggested that we could tolerate permanent family trusts so long as their potential negative economic effects were curbed by targeted taxation schemes, here he wants them stamped out entirely. And here he dispenses with sophisticated and technical economic arguments and focuses instead on the simple facts of the imagined features of estate plans of ultra-wealthy families enabled by perpetuities repeal. After speculating on the wealth and status-entrenching features of these plans, he ticks off the potential social harms of inequality, and concludes with his federal prescription: prohibit them with a federal RAP.
As mentioned above, Kades’s professed insight into the specific features of the trusts that he is sure will result from RAP repeal is gained from general principles of evolutionary biology, applied to the presumed motivations of the ultra-wealthy. Diving into the relevant literature, he points out that evolution has selected humans to “strike a nuanced balance between the quality/status of their descendants and the number of such descendants.” Much recent research in evolutionary biology has apparently focused on “the central role that status-seeking has played in human evolution.” In modern society, high placement in the status hierarchy has a positive effect on reproductive opportunities—among humans as well as apes. This explains why those at the top economically often have fewer, not more, children. When resources are limited, it is easier to confer status on a few, and thereby give those few greater reproductive opportunities.
Importantly, status is “a relative or positional good.” One cannot achieve status without competitors; it is only obtained in relation to others. This means that one must invest in the status of offspring with a view toward surpassing the status of others—one’s offspring’s place in the hierarchy is all that counts. A kind of arms race is created, with parents in competition to confer status on their children so that they may at least keep up with, if not surpass, those of other parents. Evidence shows that this is a good evolutionary bet. Humans at higher points on the status hierarchy survive myriad disasters and crises at higher rates. And biological selective pressures are ongoing. “Either as a proxy for long-term fitness or as a maladaptive holdover from simpler times, the driving force behind fertility and inheritance decisions appears to be seeking high status for children rather than simply having a maximal number of them,” Kades writes.
How is this done in contemporary society? The raw material is wealth, of course, and while humans have massive amounts of it, its distribution among them is massively unequal. The tools that mobilize that wealth are the extraordinary cognitive abilities of humans in relation to other animals, along with complex legal and other devices enabled by “pervasive powerful legal institutions.” Armed with the requisite resources and tools, humans seeking status for their progeny will set about creating that status. But there being “essentially nothing in the inheritance literature on status maximization,” Kades is free to speculate on how this might be accomplished. And he is not concerned with wealth transfer techniques of the masses remember, but rather those of the super wealthy in a post-RAP environment.
What does Kades’s “rational dynast” do? Here is where Kades begins getting conjectural, using what he has learned of the general principles of evolutionary biology to speculate on quite concrete features of his typical dynast’s estate plan. He contends that the focus will be on family rather than individual status, with a goal to “maximize [the dynast’s] bloodline’s standing in society.” His dynast eschews short-term thinking and will implement a plan that will maintain or increase long-term family status. In an admitted departure from his earlier article mentioned above, Kades now maintains that his dynast will deemphasize generational focus in favor of individual descendants who are most likely to achieve very high status. Kades also takes some of his thinking here from his review of the English history of primogeniture and fee tail. And not all of his thinking is speculative. He conducted interviews of lawyers who exclusively represent ultra-high net worth clients in their estate planning.
The more detail Kades provides as to the various contours of the trusts he envisions (“Dynastic Family Trusts,” the “DFTS” of his title), the more he strays into a less tethered conjecture. And some of the features he envisions are based on assumptions or summaries of trust law that lack nuance. But that’s not to take away from his major points, which land quite well. “We are in the early days of a RAP-free America. Dynastic trust planning is in its infancy. We simply do not know the extent to which extremely wealthy aspiring dynasts will leave their large estates in DFTs with terms like those explored here, and we don’t know how effective such trusts would be in projecting family status and power for generation after generation,” he writes.
That claim is hard to argue with, as are his points about the potential of these trusts to further distort the political system and subvert democracy. The ever-expanding American conception of absolute freedom of disposition at bottom is, as Kades aptly puts it, “a deontological statement of faith rather than a case rooted in the social values of efficiency and fairness.” A federal RAP may not be the only or even “the surest means for preventing the rise of a New Feudalism,” as Kades maintains, but it would certainly be a step in the right direction.
Cite as: Kent D. Schenkel, The Case for a Federal RAP
(July 12, 2021) (reviewing Eric A. Kades, A New Feudalism: Selfish Genes, Great Wealth and the Rise of the Dynastic Family Trust (“DFT”)
(2019), available at SSRN), https://trustest.jotwell.com/the-case-for-a-federal-rap/
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Katheleen Guzman, Wills Speak
, 85 Brook. L. Rev.
Interim Dean (Dean) Katheleen Guzman explores the pre-death relevance of a will by determining whether or when a will speaks. She analyzes the legal consequences of a validly executed will before death and the potential property rights of devisees of the will. The focus and thesis of the article reminded me of the adage, “if the tree falls forest and no one hears, does it make a sound?” In translation, I thought, “Does a will make a sound (have a legal effect) if it is never probated?”
As professors, we typically teach that wills are testamentary documents that have no effect until after the death of a testator and probate by the court. Dean Guzman challenges this perspective of the law by exploring the pre-death effect of a will. First, she makes a distinction between property rights and expectancies by comparing deeds to wills. While adding a name to a deed makes a present transfer of property, adding a name to a will may transfer property in the future. Because the will does not currently transfer property, the named devisee has an expectancy, which is not the equivalent of a present or future property interest.
Dean Guzman acknowledges the efficiency and wisdom in the current law that leaves property rights undisturbed for the testator who names a beneficiary in a will. Thus, transforming a will to make it operate like a deed would render the will irrevocable. This likely would have unintended consequences because testators would not have the opportunity to change their minds. Testator intent is foundational in wills law, and efforts to negate that intent would likely fail. Dean Guzman also posits such changes would lead to an even lower incidence of will executions and may pauperize the testator, thereby shifting the cost of care of the testator to the public. Even so, she challenges the notion that wills have no “voice” until after death; instead, she indicates, a will may speak upon execution.
Dean Guzman explains that testation is a form of speech by communicating with oneself through an expression in the document. The will execution heightens this expression when the testator “publishes” the will (a requirement in some states) because publication is a clear statement of testamentary intent. As Dean Guzman explains, a will has pre-death significance insofar as post mortem questions about interpretation or even incorporation by reference can make the date of execution significant. As such, the will execution represents a time when the will “speaks.” It has pre-death significance because it may have a legal effect on post-death title transfers.
Dean Guzman also explains how the execution date may affect standing to challenge a will. She briefly describes issues associated with standing and how often will challenges occur. She then explains the multiple ways the execution date may impact standing which identifies another time when wills communicate pre-death. In this way, wills also “speak” pre-death by changing beneficiaries or property bequests in a subsequent will. The revocatory effect occurs on the execution date of a subsequent will. The new will evidences the testator’s intent and “silences” the prior will. Thus wills do have an under-appreciated legal effect before probate.
In this article, Dean Guzman raises important policy questions. She does not suggest changes in the law as much as she expands the way we read and perceive the law. Her insight encourages a more nuanced appreciation of how wills operate. She encourages me both to think differently about how I teach the importance and impact of wills pre-death and also to question antiquated laws that have precedential value, but may need further explanation or expanded application based on Dean Guzman’s insight.
This article is also interesting because it offers various perspectives on how a will communicates, or has legal effect, before probate. By analyzing the many ways in which will executions impact post-death transfers, Dean Guzman correctly states how we should expand the ways we view and teach the legal pre-death significance of wills to our students. A will is an instrument that transfers property after death through the probate process, and the probate process is necessary to consummate the change. The more significant issues arise when we gloss over steps between the date of execution and ultimate title transference. By focusing on the will’s legal significance in the time period between writing and execution on the one hand, and death on the other, we may facilitate understanding of the critical role a pre-probate will plays in title transfers.
I have long been perplexed by the inconsistency between the rights of divorcing spouses which are governed by family law rules and the rights of surviving spouses which are governed by trusts and estates law. While the rules governing the distribution of property at divorce and the elective share right both claim to reflect a partnership theory of marriage, Naomi Cahn’s article, What’s Wrong About the Elective Share “Right”?, demonstrates that the elective share does not further a partnership theory, at least not in cases involving subsequent marriages, and further fails to recognize and adequately balance the interests of multiple families.
Cahn analyzed all of the elective share cases from January 2014 though January 2019 available on Westlaw and Lexis. Although the number of cases was relatively small (71 cases), the results are illuminating. First, they suggest that the overwhelming majority of surviving spouses who seek an elective share are women. Seventy-eight percent (56/71) of the claimants in Cahn’s study were women. This is not surprising because, as Cahn explains, women tend to live longer than men and to marry men who are older than they, especially in subsequent marriages (marriages other than first marriages). I was, however, intrigued by Cahn’s findings that the typical elective share case pits a stepmother against her stepchildren, or, more precisely, against her former stepchildren. Eighty percent of the cases in Cahn’s study involve subsequent spouses who challenged a will that left most of the property to the decedent’s children from a prior relationship.
In addition to its empirical findings, the article reveals the problems with including non-marital property—which is not available for distribution at divorce in the majority of states—is the augmented estate used to calculate to the elective share. Cahn demonstrates that by including non-marital property in the augmented estate, trusts and estates law strays from the conception of marriage as a partnership. After all, if decedent acquired particular property before the marriage and the surviving spouse never had the opportunity to make any contributions to its acquisition or maintenance, then the property is not the result of marital efforts—it is not the result of a partnership. Thus, the rationale for the elective share would appear to depend on its original purpose—to provide support for needy wives—rather than the partnership rationale.
Cahn’s conclusions are nuanced. She acknowledges that in first marriages, especially those of long duration, the elective share likely reflects and furthers the notion of marriage as a partnership. She explains that in those marriages, especially if the couple raised children together, each spouse might have assumed a different role in the marriage which impacted their earnings during the marriage as well as their earning capacity. The surviving spouse in those cases, who is typically a woman and has fewer assets for retirement, is the traditional claimant that many, if not most, would agree should benefit from the elective share.
In contrast, Cahn demonstrates, these justifications for the elective share are less likely to be present in subsequent marriages, especially in later-in-life marriages where there are no young children that need caretaking, and where the spouses bring with them economic and human capital that they may have built in an earlier marriage with another partner. Although Cahn does not put it quite so bluntly, I quickly came to the conclusion that the subsequent spouse who is seeking an elective share may stand to benefit from the investments and sacrifices made by the decedent’s prior spouse(s) to the detriment of decedent’s children from a prior family. Thus, the elective share may result in a windfall to the subsequent spouse.
Cahn further reminds us that the way a marriage ends—either through death or divorce—affects the way property is distributed even though there is no justification for this distinction. She points out that in some states, a spouse who stays in the marriage until death may receive more property than one who divorced, but in other states she may receive less depending on the state’s approach to division of property at divorce and what property is included in the augmented estate. Despite these inconsistent approaches, all claim to honor a partnership theory of marriage.
In Cahn’s view, we need an elective share that “explicitly accounts for multifamily partners and changes the focus from the surviving spouse alone to the family more generally.” (P. 2119.). Family law scholars and practitioners would agree and note that family law takes into account the complexity of families and obligations to multiple members. For example, child support guidelines in some states expressly consider a parent’s financial obligations—alimony and child support obligations to a prior family—when calculating a child support award for a subsequent child. In addition, at divorce, most states consider the contributions that each spouse made to the acquisition and maintenance of property, thereby recognizing a partnership theory of marriage and limiting the likelihood that a subsequent spouse will unfairly benefit from the contributions of a prior spouse.
Cahn proposes several reforms to account for the interests of both first and subsequent families. I will focus on two. First, similar to the approach followed by the majority of states at divorce, she proposes excluding non-marital property and including only property acquired during the marriage in the augmented estate. She explains that this approach is in line with a partnership theory of marriage and will allow spouses in longer marriages to receive more property than spouses in shorter marriages. Cahn acknowledges the administrative costs and disputes that will likely result when property must be classified as marital and non-marital. I was persuaded, however, by her argument that these challenges are outweighed by the benefits of having the elective share reflect the partnership theory and mirror the approach that most jurisdictions follow when dividing property at divorce. Moreover, given the small number of cases involving a claim for an elective share, as shown by Cahn’s study, these costs and disputes would arise in a relatively low number of cases.
Second, Cahn grapples with the challenges raised when the decedent has more than one family such as a subsequent spouse and children from a prior relationship. In these cases, the will may have left most of the property to the children from the prior relationship but if the subsequent spouse seeks an elective share, the children receive less than the decedent intended. Cahn suggests that one way to protect the children’s interest is to exclude from the elective share pot any property that the decedent left to the children. While this is the approach followed by the Uniform Probate when calculating a share for an omitted spouse, I fear that in cases in which the decedent leaves most of the property to the children from a prior relationship, this approach would completely disinherit a subsequent spouse, including one in a long marriage that resulted in the accumulation of substantial marital property, thereby depriving the spouse of the fruits of the marital partnership. Cahn acknowledges this inequitable result, noting that is the result in cases involving an omitted spouse. She does not provide a solution, however.
This tension between the interests of multiple families brings me back to the reasons this short piece is so valuable. Cahn does not pretend to have all the answers; rather, she is challenging us to consider the inconsistencies, inequities, and justifications for rules that do not reflect the realities and complexities of families in the 21st century. I hope some of us will take on these intractable questions.
For those who pay attention to trust law developments, it’s clear that a vast transformation in trust law is taking place. American states like Wyoming, Alaska, Nevada, Delaware, and South Dakota are rewriting their laws to permit trusts that promise perpetual duration, maximum asset protection, and continued settlor control in order to compete with offshore jurisdictions for billions of dollars in trust business. Even for those who don’t usually take notice of trusts, trust law and the uses of the trust as a mechanism to create and perpetuate wealth inequality is becoming better understood. Katarina Pistor, for example, has aptly explained how trusts are “one of [the] most ingenious modules for coding capital” in Anglo-American law. Moreover, economists like as Emmanuel Saez and Gabriel Zucman, have increasingly started to look at the roles of trusts in building a landscape of wealth inequality.
Into this conversation step Mark Bennett and Adam Hofri-Winogradow with their new article entitled, The Use of Trusts to Subvert the Law: An Analysis and Critique. Their aim is to widen the scope of the debate and inquire into what constitutes a proper normative theory of the trust. This type of inquiry has been fraught, the authors remark, in part because the normative nature of the trust is law-subverting – a poorly kept secret but one that nobody wants to discuss in polite company.
The trust – to clarify, the authors are discussing private, family trusts that use discretionary distribution terms to preserve family wealth – has, as the authors point out, been law-subverting since medieval “uses” enabled English feudal lords to avoid “liabilities consequent on holding land” (otherwise known as taxes). Nevertheless, the authors comment, the trust’s law-subverting powers have routinely been either ignored or minimized. Consequently, as they state, it is “high time to focus scholarly attention on the more problematic uses of the trust rather than on those which are obviously benign.” Any complete theory of the trust, they suggest, should grapple with the fact that the trust has – both historically and presently – allowed individuals to avoid certain legal obligations, like debts to creditors (including the tax authorities).
Scholars have in the past theorized the trust in a number of ways without mentioning its law-subverting capacities. Some scholars have pointed to the protective nature and function of the trust. As Avihay Dorfman says, trusts are a way of “providing for people who cannot themselves directly hold private ownership rights to assets, whether because they are legally unable to manage such rights, as in the cases of infants or mentally disabled adults, or because owning property would subject them to some prohibitive cost that far exceeds the ordinary costs of private ownership, as where the pursuit of some vocations requires not owning property that would lead to conflicts of interest.” Alternately, scholars have proposed economic explanations for trust law and have promulgated the facilitative nature of trusts.
Scholars have, in these normative discussions, justified the law-subverting uses of the trust in two main ways. The first justification is the “property autonomy” argument, which states that “people should have as much autonomy in using and enjoying their property as possible.” The second justification is that using a trust to subvert other (primarily tax) rules is a valid response to a confiscatory and overreaching government. That is to say, subversion is “a bulwark against unjust state demands.” The authors contend that “such justifications are not valid in liberal democratic jurisdictions and cannot justify the characteristic use of the trust for subversion of the law.” The outcome of this analysis – which should give trust scholars (as well as state legislatures) much food for thought and fodder for future work – is that “a legitimate law of trusts will require anti-subversion measures to be constantly improved to deal with the potential for subversion resulting from the flexibility of the trust device.” And, if anti-subversion measures don’t work, the authors warn that a last resort might be “a closed list of permitted trust types.”
The authors, in this timely intervention, do an excellent job of revealing the secrets of trust law that have been hiding in plain sight for quite some time. In this respect, they build on the original insights of Roger Cotterrell, who pointed out some thirty years ago that “[t]he trust provides a way of freeing the property owner from constraints which the ideology of property otherwise imposes on her or him through its logic.”
What the authors do not focus on, but what lies just below the surface, is the role or place of equality in law. The authors point out that a primary justification for trust law’s subversive capacities is autonomy; what they leave unsaid is that this focus on autonomy all but erases equality concerns and values. In the theoretical domain, the erasure of equality values has created a normative vision of trust law that prioritizes individual freedom and benefit over collective good; and, in practice, this erasure of equality values is directly linked to staggering wealth gaps – all inflected with questions about race, gender, and class.
Ultimately, the erasure – or at least the suppression – of equality values in trust law begs two questions. We might first ask whether law has the capacity to incorporate and instantiate robust equality values. It may be argued that penetrating the inherent conservatism of trust law as a regime designed to uphold elite capitalism and historical privilege is an uphill battle. That is to say, the system is working this way by design and high-wealth parties will fight vigorously to maintain their interests. Nevertheless, if we embrace the idea of making change to the landscape of wealth inequality through the reform of trust law, the question becomes what can and must be done in order to recalibrate legal tolerance for law-subverting rules like trust law’s support for asset protection trusts.
The authors of this excellent article give us a launching point for discussing all of these questions. They bring to light the open secret that trust law is law-subverting and, in so doing, gesture to the idea that trust law both suppresses equality values and promotes the economic welfare of elites. And, to be clear, the secret is a scandalous one that none of us should let pass unnoticed.
Cite as: Allison Anna Tait, Trust Law Secrets, Revealed
(April 15, 2021) (reviewing Mark J. Bennett & Adam S. Hofri-Winogradow, The Use of Trusts to Subvert the Law: An Analysis and Critique
, Oxford J. of Legal Stud.
(2021), available for free on SSRN as Against Subversion, a Contribution to the Normative Theory of Trust Law