Robert H. Sitkoff

John L. Gray Professor of Law

Biography

An expert in wills, trusts, estates, and fiduciary administration, Robert H. Sitkoff is the John L. Gray Professor of Law at Harvard Law School, where he was the youngest professor with tenure to receive a chair in the history of the school. Sitkoff previously taught at New York University School of Law and at Northwestern University School of Law. He has won three distinguished teaching awards.

Sitkoff’s research focuses on economic and empirical analysis of trusts, estates, and fiduciary administration. His work has been published in leading scholarly journals such as the Yale Law Journal, the Stanford Law Review, the Columbia Law Review, the Journal of Law and Economics, and the Journal of Empirical Legal Studies. Sitkoff is the lead coauthor of Wills, Trusts, and Estates (Aspen 10th ed. 2017), the most popular American coursebook on trusts and estates, and he is an editor of the forthcoming Oxford Handbook of Fiduciary Law, to be published by Oxford University Press. Sitkoff’s research has been featured in the New York Times, Wall Street Journal, and Financial Times, among other media.

Sitkoff is an active participant in trusts and estates law reform. He serves under Massachusetts gubernatorial appointment on the Uniform Law Commission (ULC). Within the ULC, he was Chair of the Drafting Committee for the Uniform Directed Trust Act and he is a liaison member of the Joint Editorial Board for Uniform Trusts and Estates Acts. He previously served as a member of several other drafting committees for uniform trusts and estates acts and as the Reporter for the Uniform Statutory Trust Entity Act (last revised 2013). Within the American Law Institute, Sitkoff is a member of the Council, the Institute’s Board of Directors, and he is a member of the Council’s Projects Committee. He is currently an Adviser for the Restatement of Charitable Nonprofits and for the Restatement (Third) of Conflict of Laws. He previously served on the consultative groups for the Restatement (Third) of Trusts and the Restatement (Third) of Property: Wills and Other Donative Transfers.

Sitkoff serves as an advisory consultant and expert witness in litigation and regulatory matters involving wills, trusts, estates, and fiduciary administration. He has also led training workshops for trust officers and other professional fiduciaries. Sitkoff edits the Wills, Trusts, and Estates abstracting journal in the Social Science Research Network, is a past chair of the Section on Trusts and Estates of the Association of American Law Schools, and is an academic fellow of the American College of Trust and Estate Counsel.

Prior to joining the legal academy, Sitkoff was a law clerk to then Chief Judge Richard A. Posner of the United States Court of Appeals for the Seventh Circuit. At the University of Chicago Law School, from which he graduated with High Honors, Sitkoff was the Managing Editor of the Law Review, was selected for the Order of the Coif, and was awarded the Olin Prize as the outstanding graduate of his class in law and economics.

Areas of Interest

Robert H. Sitkoff & Jesse Dukeminier, Wills, Trusts, and Estates (Wolters Kluwer Law & Bus. 10th ed. 2017).
Categories:
Property Law
,
Taxation
,
Legal Profession
Sub-Categories:
Legal Ethics
,
Trusts
,
Property Rights
,
Probate
,
Estate Planning
,
Estates
,
Personal Property
,
Taxation - Federal Estate & Gift
Type: Book
Abstract
Wills, Trusts, and Estates
Robert H. Sitkoff & Jonathan Klick, Agency Costs, Charitable Trusts, and Corporate Control: Evidence from Hershey's Kiss-Off, 108 Colum. L. Rev. 749 (2008).
Categories:
Corporate Law & Securities
,
Property Law
Sub-Categories:
Corporate Governance
,
Shareholders
,
Trusts
Type: Article
Abstract
In July 2002 the trustees of the Milton Hershey School Trust announced a plan to diversify the Trust's investment portfolio by selling the Trust's controlling interest in the Hershey Company. The Company's stock jumped from $62.50 to $78.30 on news of the proposed sale. But the Pennsylvania Attorney General, who was then running for governor, opposed the sale on the ground that it would harm the local community. Shortly after the Attorney General obtained a preliminary injunction, the trustees abandoned the sale and the Company's stock dropped to $65.00. Using standard event study methodology, we find that the sale announcement was associated with a positive abnormal return of over 25% and that canceling the sale was followed by a negative abnormal return of nearly 12%. Our findings imply that instead of improving the welfare of the needy children who are the Trust's main beneficiaries, the Attorney General's intervention preserved charitable trust agency costs of roughly $850 million and foreclosed salutary portfolio diversification. Furthermore, blocking the sale destroyed roughly $2.7 billion in shareholder wealth, reducing aggregate social welfare by preserving a suboptimal ownership structure of the Company. Our analysis contributes to the literature of trust law by supplying the first empirical analysis of agency costs in the charitable trust form and by highlighting shortcomings in supervision of charities by the state attorneys general. We also contribute to the literature of corporate governance by measuring the change in the Company's market value when the Trust exposed the Company to the market for corporate control.
Robert H. Sitkoff & Max Schanzenbach, Did Reform of Prudent Trust Investment Laws Change Trust Portfolio Allocation?, 50 J.L. & Econ. 681 (2007).
Categories:
Property Law
,
Banking & Finance
,
Disciplinary Perspectives & Law
Sub-Categories:
Investment Products
,
Law & Economics
,
Trusts
Type: Article
Max M. Schanzenbach & Robert H. Sitkoff, The Prudent Investor Rule and Market Risk: An Empirical Analysis, 14 J. Empirical Legal Stud. 129 (2017).
Categories:
Banking & Finance
Sub-Categories:
Fiduciary Law
,
Financial Markets & Institutions
Type: Article
Abstract
The prudent investor rule, enacted in every state over the last 30 years, is the centerpiece of trust investment law. Repudiating the prior law's emphasis on avoiding risk, the rule reorients trust investment toward risk management in accordance with modern portfolio theory. The rule directs a trustee to implement an overall investment strategy having risk and return objectives reasonably suited to the trust. Using data from reports of bank trust holdings and fiduciary income tax returns, we examine asset allocation and management of market risk before and after the reform. First, we find that the reform increased stockholdings, but not among banks with average trust account sizes below the 25th percentile. This result is consistent with sensitivity in asset allocation to trust risk tolerance. Second, we present evidence consistent with increased portfolio rebalancing after the reform. We conclude that the move toward additional stockholdings was correlated with trust risk tolerance, and that the increased market risk exposure from additional stockholdings was more actively managed.
Max M. Schanzenbach & Robert H. Sitkoff, The Prudent Investor Rule and Market Risk: An Empirical Analysis, 14 J. Empirical Legal Stud. 129 (2017).
Categories:
Banking & Finance
,
Disciplinary Perspectives & Law
,
Property Law
Sub-Categories:
Fiduciary Law
,
Financial Markets & Institutions
,
Risk Regulation
,
Empirical Legal Studies
,
Trusts
Type: Article
Abstract
The prudent investor rule, enacted in every state over the last 30 years, is the centerpiece of trust investment law. Repudiating the prior law's emphasis on avoiding risk, the rule reorients trust investment toward risk management in accordance with modern portfolio theory. The rule directs a trustee to implement an overall investment strategy having risk and return objectives reasonably suited to the trust. Using data from reports of bank trust holdings and fiduciary income tax returns, we examine asset allocation and management of market risk before and after the reform. First, we find that the reform increased stockholdings, but not among banks with average trust account sizes below the 25th percentile. This result is consistent with sensitivity in asset allocation to trust risk tolerance. Second, we present evidence consistent with increased portfolio rebalancing after the reform. We conclude that the move toward additional stockholdings was correlated with trust risk tolerance, and that the increased market risk exposure from additional stockholdings was more actively managed.
Robert H. Sitkoff, Book Review, 76 Cambridge L.J. (forthcoming 2017)(reviewing Birke Häcker & Charles Mitchell, Current Issues in Succession Law (2016) & Alexandra Braun & Anne Röthel, Passing Wealth on Death: Will-Substitutes in Comparative Perspective (2016)).
Categories:
Property Law
Sub-Categories:
Estate Planning
Type: Article
Robert H. Sitkoff & Max M. Schanzenbach, Financial Advisers Can't Overlook the Prudent Investor Rule, 29 J. Fin. Plan. 28 (Aug. 2016).
Categories:
Taxation
,
Property Law
Sub-Categories:
Retirement Security
,
Taxation - Personal Income
Type: Article
Abstract
The article reports on the rule imposed by the U.S. Department of Labor (DOL) which imposes the trust law duty of care or the prudent investor rule under the Employee Retirement Income Security Act (ERISA) on investment advisors of individual retirement account (IRA) owners or to retirement plan beneficiaries. Topics discussed include duties of trustees under the trust law duty of loyalty, and the role of an investment policy statement in sound fiduciary investment practice.
Robert H. Sitkoff & David Feder, Revocable Trusts and Incapacity Planning: More than Just a Will Substitute, 24 Elder L.J. 1 (2016).
Categories:
Property Law
Sub-Categories:
Estates
,
Trusts
,
Estate Planning
Type: Article
Abstract
From its origins as a conveyancing device used to avoid feudal incidents, the donative trust has evolved into a device for fiduciary management of wealth down the generations (a management trust), for avoiding probate (a will substitute trust), and for avoiding conservatorship (a common secondary use of a will substitute trust). These contemporary uses of donative trusts have been facilitated by a variety of law reforms that, taken together, have effected a functional branching of American donative trust law. The law governing irrevocable and revocable trusts respectively has evolved to accommodate their different predominant uses as management trusts and will substitute trusts. At the same time, however, the law governing revocable trusts has come to deny their additional conservatorship substitute function. We argue that this development was a doctrinal wrong turn. The central descriptive aim of this Article is to draw attention to the common use of a funded revocable trust not only as a will substitute but also as a conservatorship substitute. The central normative claim follows from the descriptive claim. To implement the actual or probable intent of the typical settlor, a funded revocable trust should be treated presumptively as both a will substitute and a conservatorship substitute. The most significant doctrinal implication is that the beneficiaries of a funded revocable trust should have presumptive standing to enforce the trust in the event of the settlor’s incapacity.
Max M. Schanzenbach & Robert H. Sitkoff, Fiduciary Financial Advisers and the Incoherence of a 'High-Quality Low-Fee' Safe Harbor (Nw. L. & Econ. Res. Paper No. 15-18. Sep. 16, 2015).
Categories:
Banking & Finance
,
Property Law
Sub-Categories:
Fiduciary Law
,
Investment Products
,
Trusts
,
Retirement Security
Type: Article
Abstract
Americans now hold trillions of dollars in individual retirement savings accounts. Concerned about conflicts of interest among financial advisers who provide advice to retirement savers, the Department of Labor has proposed imposing fiduciary status and a "best interest" standard on such advisers. To ameliorate the resulting compliance costs, the DOL has also raised the possibility of a safe harbor for certain "high-quality low-fee investments." However, the notion of a "high-quality" investment is in irreconcilable tension with the highly individualized assessment of risk and return that is required by modern portfolio theory, the well-accepted concept from financial economics that has been codified in the "prudent investor rule" as the standard of care for fiduciary investment. This policy incoherence is worrisome because of the potential for the safe harbor to swallow the best interest standard.
Max M. Schanzenbach & Robert H. Sitkoff, Fiduciary Financial Advisors and the Incoherence of a 'High-Quality Low-Fee Safe Harbor" (Sept. 16, 2015).
Categories:
Labor & Employment
,
Banking & Finance
Sub-Categories:
Fiduciary Law
,
Investment Products
,
Retirement Benefits & Social Security
Type: Other
Abstract
Americans now hold trillions of dollars in individual retirement savings accounts. Concerned about conflicts of interest among financial advisers who provide advice to retirement savers, the Department of Labor has proposed imposing fiduciary status and a "best interest" standard on such advisers. To ameliorate the resulting compliance costs, the DOL has also raised the possibility of a safe harbor for certain "high-quality low-fee investments." However, the notion of a "high-quality" investment is in irreconcilable tension with the highly individualized assessment of risk and return that is required by modern portfolio theory, the well-accepted concept from financial economics that has been codified in the "prudent investor rule" as the standard of care for fiduciary investment. This policy incoherence is worrisome because of the potential for the safe harbor to swallow the best interest standard.
Steven J. Horowitz & Robert H. Sitkoff, Unconstitutional Perpetual Trusts, 67 Vand. L. Rev. 1769 (2014).
Categories:
Property Law
Sub-Categories:
Trusts
Type: Article
Abstract
Perpetual trusts are an established feature of today’s estate planning firmament. Yet little-noticed provisions in the constitutions of nine states, including in five states that purport to allow perpetual trusts by statute, proscribe “perpetuities.” This Article examines those provisions in light of the meaning of “perpetuity” as a legal term of art across history. We consider the constitutionality of perpetual trust statutes in states that have a constitutional ban on perpetuities and whether courts in states with such a ban may give effect to a perpetual trust settled in another state. Because text, purpose, and history all suggest that the constitutional perpetuities bans were meant to proscribe entails, whether in form or in function, and because a perpetual trust is in purpose and in function an entail, we conclude that recognition of perpetual trusts is prohibited in states with a constitutional perpetuities ban.
Robert H. Sitkoff, An Economic Theory of Fiduciary Law, in Philosophical Foundations of Fiduciary Law 197 (Andrew S. Gold & Paul B. Miller eds., Oxford Univ. Press, 2014).
Categories:
Banking & Finance
Sub-Categories:
Fiduciary Law
Type: Book
Abstract
Indeed, this book not only offers a much-needed theoretical assessment of fiduciary topics, it defines the field going forward, setting an agenda for future philosophical study of fiduciary law.
Robert H. Sitkoff, Trusts and Estates: Implementing Freedom of Disposition, 58 St. Louis U. L.J. 643 (2014).
Categories:
Property Law
Sub-Categories:
Estates
,
Trusts
,
Probate
Type: Article
Abstract
The Trusts and Estates course is about the law of gratuitous transfers at death, that is, the law of succession. Lately such courses have come to cover both probate succession by will and intestacy, and non-probate succession by inter vivos trust, pay-on-death contract, and other such will substitutes. The organizing principle of the American law of succession, both probate and non-probate, is freedom of disposition. My suggestion in this essay, which I have implemented in my Trusts and Estates class and in the casebook for which I am the surviving co-author, is that the Trusts and Estates course can likewise be organized around this principle. The Trusts and Estates course is perhaps best conceptualized as a survey of the law and policy of implementing freedom of disposition. (This essay was prepared for the Teaching Trusts and Estates special issue of the St. Louis University Law Journal.)
Robert H. Sitkoff, The Fiduciary Obligations of Financial Advisors Under the Law of Agency, 27 J. Fin. Planning, Feb. 2014, at 42.
Categories:
Banking & Finance
Sub-Categories:
Fiduciary Law
,
Financial Markets & Institutions
,
Investment Products
Type: Article
Abstract
This paper considers how agency fiduciary law might be applied to a financial advisor with discretionary trading authority over a client's account. It (i) surveys the agency problem to which the fiduciary obligation is directed; (ii) examines the legal context by considering how the fiduciary obligation undertakes to mitigate this problem; and (iii) examines several potential applications of agency fiduciary law to financial advisors, including principal trades and the role of informed consent by the client, organizing the discussion under the great fiduciary rubrics of loyalty and care. This paper was sponsored by Federated Investors, Inc. (Winner of the 2014 Richard J. Davis Legal/Regulatory/Ethics Award from the Investment Management Consultants Association)
John C.P. Goldberg & Robert H. Sitkoff, Torts and Estates: Remedying Wrongful Interference with Inheritance, 65 Stan. L. Rev. 335 (2013).
Categories:
Civil Practice & Procedure
,
Property Law
Sub-Categories:
Torts
,
Estates
Type: Article
Abstract
This Article examines the nature, origin, and policy soundness of the tort of interference with inheritance. We argue that the tort should be repudiated because it is conceptually and practically unsound. Endorsed by the Second Restatement of Torts and recognized by the U.S. Supreme Court in a recent decision, the tort has been adopted by courts in nearly half the states. But it is deeply problematic from the perspectives of both inheritance law and tort law. It undermines the core principle of freedom of disposition that undergirds American inheritance law. It invites circumvention of principled policies encoded in the specialized rules of procedure applicable in inheritance disputes. In many cases, it has displaced venerable and better-fitting causes of action for equitable relief. It has a derivative structure that violates the settled principle that torts identify and vindicate rights personal to the plaintiff. We conclude that the emergence of the interference-with-inheritance tort is symptomatic of two related and unhealthy tendencies in modern legal thought: the forgetting of restitution and equitable remedies, and the treatment of tort as an unstructured delegation of power to courts to impose liability whenever doing so promises to deter antisocial conduct or compensate victims of such conduct.
Robert H. Sitkoff, Trust Law as Fiduciary Governance Plus Asset Partitioning, in The Worlds of the Trust 428 (Lionel Smith ed., Cambridge Univ. Press 2013).
Categories:
Banking & Finance
,
Property Law
Sub-Categories:
Fiduciary Law
,
Property Rights
,
Trusts
Type: Book
Abstract
The theme of this essay, a commentary on two papers forthcoming in the same volume on “The Worlds of the Trust,” is that trust law is not a species of property law or contract law, but rather is a species of organizational law. Organizational law supplies a set of contractarian rules, some of a fiduciary character, that provide for the governance of the organization. These are the rules that provide for the powers and duties of the managers and the rights of the beneficial owners. Organizational law also supplies a set of proprietary rules that provide for asset partitioning. These are the rules that provide for the separation of the property of the organization from the property of the organization’s managers, beneficial owners, and other insiders. Classifying trust law as organizational law removes the tension between the contractarian governance and the proprietary asset partitioning features of trust law.
Robert H. Sitkoff & Jesse Dukeminier, Wills, Trusts, and Estates (Wolters Kluwer Law & Bus. 9th ed. 2013).
Categories:
Property Law
,
Taxation
,
Legal Profession
Sub-Categories:
Legal Ethics
,
Trusts
,
Probate
,
Personal Property
,
Property Rights
,
Estates
,
Estate Planning
,
Taxation - Federal Estate & Gift
Type: Book
Robert H. Sitkoff, The Economic Structure of Fiduciary Law, 91 B.U. L. Rev. 1039 (2011).
Categories:
Banking & Finance
,
Property Law
,
Disciplinary Perspectives & Law
Sub-Categories:
Fiduciary Law
,
Law & Economics
,
Property Rights
,
Trusts
Type: Article
Robert H. Sitkoff, Top-Down versus Bottom-Up Law Reform in Trusts and Estates: Future Interests and Perpetuities, JOTWELL (Nov. 22, 2010).
Categories:
Property Law
Sub-Categories:
Trusts
,
Estates
Type: Other
Robert H. Sitkoff & Max M. Schanzenbach, The Prudent Investor Rule and Market Risk: An Empirical Analysis, 35 ACTEC J. 314 (2010).
Categories:
Banking & Finance
,
Disciplinary Perspectives & Law
,
Property Law
Sub-Categories:
Fiduciary Law
,
Investment Products
,
Empirical Legal Studies
,
Trusts
Type: Article
Abstract
This article reports the results of an empirical study of the effect of the new prudent investor rule on asset allocation by institutional trustees. Using federal banking data spanning 1986 through 1997, the authors find that, after adoption of the new prudent investor rule, institutional trustees held about 1.5 to 4.5 percentage points more stock at the expense of "safe" investments. This shift to stock amounts to a 3 to 10 percent increase in stock holdings and accounts for roughly 10 to 30 percent of the over-all increase in stock holdings in the period under study. The authors conclude that the adoption of the new prudent investor rule had a significant effect on trust asset allocation.
Jesse Dukeminier, Robert H. Sitkoff & James Lindgren, Wills, Trusts, and Estates (Aspen Publishers 8th ed. 2009).
Categories:
Property Law
,
Legal Profession
,
Taxation
Sub-Categories:
Legal Ethics
,
Estate Planning
,
Estates
,
Personal Property
,
Probate
,
Property Rights
,
Trusts
,
Taxation - Federal Estate & Gift
Type: Book
Robert H. Sitkoff & Max Schanzenbach, Perpetuities, Taxes, and Asset Protection: An Empirical Assessment of the Jurisdictional Competition for Trust Funds, in 42 Annual Heckerling Institute on Estate Planning ch. 12 (Tina Portando ed., Lexis-Nexis 2008).
Categories:
Property Law
,
Taxation
Sub-Categories:
Estate Planning
,
Trusts
,
Taxation - Federal Estate & Gift
Type: Book
Abstract
This chapter provides an accessible overview of our previous work on the impact of the abolition of the Rule Against Perpetuities (RAP) on trust fund situs. The implementation of the Generation Skipping Transfer (GST) Tax by the Tax Reform Act of 1986 sparked a movement to repeal the RAP. Since 1986, nearly half the states have abolished or effectively abolished the RAP as applied to interests in trust. Prior to 1986, only three states had abolished the RAP. We find no evidence that abolishing the RAP prior to the 1986 GST tax attracted trust business. By contrast, between 1986 and 2003, abolishing states reported an average increase in trust assets of $6 billion (a 20 percent increase). In addition, average account size in abolishing states increased by $200,000, implying that abolishing the rule attracted relatively larger trusts. Our findings imply that roughly $100 billion in trust funds have moved to take advantage of the abolition of the RAP. Further, we can trace these results to the subset of abolishing states that did not levy a tax on income accumulated in trusts attracted from out of state. This finding, which implies that abolishing the RAP does not directly increase state tax revenue, bears on the scholarly debate over the mechanisms of jurisdictional competition. Our analysis also controls for whether a state validated the so-called self-settled asset protection trust (APT). We did not find consistent evidence that validating APTs increases a state's reported trust business, but in the period studied few states had validated APTs, so we draw no firm conclusions. We conclude that the jurisdictional competition for trust funds is real and intense, with the primary margin of competition being the rules that bear on trust duration, and that the enactment of the GST tax sparked the rise of the perpetual trust. In future work using more refined data, we intend to revisit the jurisdictional competition for trust funds and to expand our inquiry to include directed trustee statutes and the recent reforms to trust-investment laws.
Robert H. Sitkoff & Max Schanzenbach, Perpetuities, Taxes, and Asset Protection: An Empirical Assessment of the Jurisdictional Competition for Trust Funds, in 42 Annual Heckerling Institute on Estate Planning ch. 12 (Tina Portando ed., Lexis-Nexis 2008).
Categories:
Property Law
,
Taxation
Sub-Categories:
Estate Planning
,
Trusts
,
Taxation - Federal Estate & Gift
Type: Article
Abstract
This chapter provides an accessible overview of our previous work on the impact of the abolition of the Rule Against Perpetuities (RAP) on trust fund situs. The implementation of the Generation Skipping Transfer (GST) Tax by the Tax Reform Act of 1986 sparked a movement to repeal the RAP. Since 1986, nearly half the states have abolished or effectively abolished the RAP as applied to interests in trust. Prior to 1986, only three states had abolished the RAP. We find no evidence that abolishing the RAP prior to the 1986 GST tax attracted trust business. By contrast, between 1986 and 2003, abolishing states reported an average increase in trust assets of $6 billion (a 20 percent increase). In addition, average account size in abolishing states increased by $200,000, implying that abolishing the rule attracted relatively larger trusts. Our findings imply that roughly $100 billion in trust funds have moved to take advantage of the abolition of the RAP. Further, we can trace these results to the subset of abolishing states that did not levy a tax on income accumulated in trusts attracted from out of state. This finding, which implies that abolishing the RAP does not directly increase state tax revenue, bears on the scholarly debate over the mechanisms of jurisdictional competition. Our analysis also controls for whether a state validated the so-called self-settled asset protection trust (APT). We did not find consistent evidence that validating APTs increases a state's reported trust business, but in the period studied few states had validated APTs, so we draw no firm conclusions. We conclude that the jurisdictional competition for trust funds is real and intense, with the primary margin of competition being the rules that bear on trust duration, and that the enactment of the GST tax sparked the rise of the perpetual trust. In future work using more refined data, we intend to revisit the jurisdictional competition for trust funds and to expand our inquiry to include directed trustee statutes and the recent reforms to trust-investment laws.
Robert H. Sitkoff, The American Statutory Business Trust: A Research Agenda, in Regulation of Wealth Management 17 (Hans Tijo ed., National University of Singapore 2008).
Categories:
Property Law
,
Corporate Law & Securities
Sub-Categories:
Business Organizations
,
Trusts
Type: Book
Abstract
The trust has long competed with the corporation as a form of business organization. Although today the corporate form dominates the trust for the organization of operating enterprises, the trust dominates the corporation in a handful of specialized niches. The market value of these niches measures in the trillions of dollars. Yet the modern business trust has only recently begun to be subjected to scholarly inquiry. Accordingly, this essay outlines a research agenda for the study of the trust -- in particular, the modern statutory business trust -- as a form of business organization.
Robert H. Sitkoff, The Lurking Rule Against Accumulations of Income, 100 Nw. U. L. Rev. 501 (2006).
Categories:
Property Law
Sub-Categories:
Estate Planning
,
Estates
,
Trusts
Type: Article
Abstract
For 200 years the rule against accumulations of income, which limits the time during which a settlor may direct the trustee to accumulate and retain income in trust, has lurked in the shadow of its older and more distinguished cousin, the Rule Against Perpetuities. With the erosion of the Rule Against Perpetuities, however, the rule against accumulations may have newfound relevance. Perpetual trusts are more likely than ordinary trusts to involve accumulations of income, and such trusts are designed to endure beyond the permissible common law accumulations period. This essay examines the relevance of the rule against accumulations for the rise of the perpetual trust. The essay also assesses the contemporary policy soundness of the accumulations rule.
Robert H. Sitkoff & Max Schanzenbach, Perpetuities or Taxes? Explaining the Rise of the Perpetual Trust, 27 Cardozo L. Rev. 2465 (2006).
Categories:
Property Law
,
Taxation
Sub-Categories:
Trusts
,
Taxation - Federal Estate & Gift
Type: Article
Abstract
By abolishing the Rule Against Perpetuities, twenty-one states have validated perpetual trusts. The prevailing view among scholars is that enactment of the generation skipping transfer (GST) tax in 1986 prompted the movement to abolish the Rule by conferring a salient tax advantage on long-term trusts. However, an alternate view holds that demand for perpetual trusts stems from donors preference for control independent of tax considerations. Proponents of both views have adduced supporting anecdotal evidence. Using state-level panel data on trust assets prior to the adoption of the GST tax, we examine whether a state's abolition of the Rule gave the state an advantage in the jurisdictional competition for trust funds. We find that, prior to the GST tax, a state s abolition of the Rule did not increase the state s trust business. By contrast, in a prior study we found that, between the enactment of the GST tax and 2003, states that abolished the Rule experienced a substantial increase in trust business. Accordingly, we conclude that theenactment of the GST tax prompted the rise of the perpetual trust. These findings bear on the debate over proposals to liberalize the law of trust termination and modification and to amend the GST tax. Our findings also contribute to the literature on the bequest motive.
Robert H. Sitkoff & Max Schanzenbach, Jurisdictional Competition for Trust Funds: An Empirical Analysis of Perpetuities and Taxes, 115 Yale L.J. 356 (2005).
Categories:
Property Law
,
Taxation
Sub-Categories:
Trusts
,
Taxation - Federal Estate & Gift
Type: Article
Abstract
This Article presents the first empirical study of the domestic jurisdictional competition for trust funds. To allow donors to exploit a loophole in the federal estate tax, since 1986 a host of states have abolished the Rule Against Perpetuities as applied to interests in trust. To allow individuals to shield assets from creditors, since 1997 a handful of states have validated self-settled asset protection trusts. Based on reports to federal banking authorities, we find that, on average, through 2003 a state's abolition of the Rule increased its reported trust assets by $6 billion (a 20% increase) and increased its average trust account size by $200,000. By contrast, our assessment of validating self-settled asset protection trusts yielded indeterminate results. Our perpetuities findings imply that roughly $100 billion in trust funds have moved to take advantage of the abolition of the Rule. Interestingly, states that levied an income tax on trust funds attracted from out of state experienced no observable increase in trust business after abolishing the Rule. Because this finding implies that abolishing the Rule does not directly increase a state's tax revenue, it bears on the study of jurisdictional competition. In spite of the lack of direct tax revenue from attracting trust business, the jurisdictional competition for trust funds is patently real and intense. Our findings also speak to unresolved issues of policy concerning state property law and federal tax law.
Robert H. Sitkoff, The Trust as "Uncorporation": A Research Agenda, 2005 U. Ill. L. Rev. 31 (2005).
Categories:
Property Law
Sub-Categories:
Trusts
Type: Article
Abstract
Trust has long been a competitor of corporation as a form of business organization. Though corporation today dominates trust for operating enterprises, trust dominates corporation in certain special- ized niches. The market value of these niches measures in the trillions of dollars. Yet the modern business trust has only recently begun to be subjected to scholarly inquiry. Accordingly, this essay outlines a research agenda for the study of the trust—in particular, the modern statutory business trust—as a form of business organization. Put into the parlance of the conference on which this symposium issue is based, this essay is a call for research on the business trust as “uncorporation.”
Jesse Dukeminier, Stanley M. Johanson, James Lindgren & Robert H. Sitkoff, Wills, Trusts, and Estates (Aspen Publishers 7th ed. 2005).
Categories:
Property Law
,
Taxation
,
Legal Profession
Sub-Categories:
Legal Ethics
,
Estate Planning
,
Estates
,
Trusts
,
Property Rights
,
Probate
,
Taxation - Federal Estate & Gift
Type: Book
Robert H. Sitkoff, An Agency Costs Theory of Trust Law, 89 Cornell L. Rev. 621 (2004).
Categories:
Property Law
,
Disciplinary Perspectives & Law
Sub-Categories:
Law & Economics
,
Trusts
Type: Article
Abstract
This article develops an agency costs theory of the law of private trusts, focusing chiefly on donative trusts. The agency costs approach offers fresh insights into recurring problems in trust law including, among others, modification and termination, settlor standing, fiduciary litigation, trust-investment law and the duty of impartiality, trustee removal, the role of so-called trust protectors, and spendthrift trusts. The normative claim is that the law should minimize the agency costs inherent in locating managerial authority with the trustee and the residual claim with the beneficiaries, but only to the extent that doing so is consistent with the ex ante instructions of the settlor. Accordingly, the use of the private trust triggers a temporal agency problem (whether the trustee will remain loyal to the settlor's original wishes) in addition to the usual agency problem that arises when risk-bearing and management are separated (whether the trustee/manager will act in the best interests of the beneficiaries/residual claimants). The positive claim is that, at least with respect to traditional doctrines, the law conforms to the suggested normative approach. This Article draws on the economics of the principal-agent problem and the theory of the firm, and it engages the ongoing debate about whether trust law is closer to property law or contract law. Although the analysis focuses on donative trusts, it should be amenable to extension in future work to commercial and charitable trusts.
Robert H. Sitkoff, Politics and the Business Corporation, 26 Reg. Winter 2003-2004, at 30.
Categories:
Corporate Law & Securities
,
Government & Politics
Sub-Categories:
Corporate Law
,
Shareholders
,
Politics & Political Theory
,
Elections & Voting
Type: Article
Abstract
This essay explores the policy bases for, and the political economy of, the law's long-standing regulation of corporate political speech. The essay has three parts. First, it contends that the conventional justifications for regulating corporate interventions in politics -- that corporate donations unnaturally skew the political discourse (bad politics) and that corporate political donations harm shareholders (agency costs) -- assume irrational investors and substantial capital market inefficiency. Drawing on public choice theory, the essay also explores the aim of retarding rent-seeking as an alternative justification for regulating corporate interventions in politics. Second, the essay reexamines the history of the regulation of corporate political speech and suggests a political economy analysis whereby corporations favored limitations on corporate donations in order to obtain protection from rent extraction by politicians. Finally, the essay explores the implications of this analysis for the modern regulation of corporate political donations.
Robert H. Sitkoff, Trust Law, Corporate Law, and Capital Market Efficiency, 28 J. Corp. L. 565 (2003).
Categories:
Corporate Law & Securities
,
Property Law
Sub-Categories:
Corporate Law
,
Fiduciaries
,
Corporate Governance
,
Trusts
Type: Article
Abstract
In both the publicly-traded corporation and the private donative trust a crucial task is to minimize the agency costs that arise from the separation of risk-bearing and management. But where the law of corporate governance evolved in the shadow of capital-market checks on agency costs, trust governance did not. Thus, even more than that of close corporations, the law and study of private trusts offers an illuminating counterfactual - a control, as it were - for a playful thought experiment about the importance of capital market efficiency to the law and study of public corporations. The animating idea for this essay is that many of the differences on the agency costs frontier between the public corporation and the private donative trust can be roughly attributed to their relative positions in modern capital markets and the related disparity in their residual claimants' ease of exit. Among other things, this approach reveals a correlation between the trust law model and the views of corporate law scholars who doubt the ECMH and its implications for corporate governance. The essay also discusses the use of market data for assessing breach and damages in corporate and trust litigation and for empirical evaluation of theoretical scholarly analysis in both fields. More generally, comparison of the governance of the public corporation and the private donative trust brings into view the importance of relative price efficiency for the modern approach to corporate governance.
Robert H. Sitkoff, Corporate Political Speech, Political Extortion, and the Competition for Corporate Charters, 69 U. Chi. L. Rev. 1103 (2002).
Categories:
Corporate Law & Securities
,
Disciplinary Perspectives & Law
,
Government & Politics
Sub-Categories:
Securities Law & Regulation
,
Law & Economics
,
Politics & Political Theory
,
Elections & Voting
Type: Article
Abstract
This article explores the policy bases for, and the political economy of, the law's long-standing discrimination against corporate political speech. This Article also explores the relevance of state law regulation of corporate political speech to the competition between the states for corporate charters. In the process, implications for the current political debate over soft money and the current academic debates over enacting an optional federal corporate takeover law regime and creating a securities law regulatory competition are noted. The underlying aim of this Article is to bring to bear on the relevant policy debates a shift in focus from the shareholder/manager agency relationship to the agency relationship between lawmakers and society. The Article draws on the contractarian view of the firm, the economic theory of regulation, and the study of public choice.
William J. Carney, Jack B. Jacobs, Richard W. Painter, Robert Pritzker & Robert H. Sitkoff, Roundtable Discussion: Corporate Goverance, 77 Chi.-Kent L. Rev. 235 (2001).
Categories:
Corporate Law & Securities
Sub-Categories:
Corporate Governance
Type: Article
Abstract
This is a transcript of a roundtable discussion between Robert Pritzker of The Marmon Group, Inc., Vice-Chancellor Jack Jacobs of the Delaware Court of Chancery, and Law Professors William Carney, Richard Painter, and Robert Sitkoff, with Professor Carney serving as moderator. The general topic was corporate governance. Among other things the participants discussed the implications of information provided by Mr. Pritzker regarding Smith v. Van Gorkom. Mr. Pritzker stated that the $55 price and the one-week deadline were established by Jerry Van Gorkom, not the Pritzkers. Mr. Pritzker also described the terms and the motivations for the Pritzkers' contribution to the settlement. Finally, in addition to analysis of the Van Gorkom decision, the panel also discussed public and private boards of directors, the Caremark decision, and corporate charitable and political contributions. The roundtable was held under the auspices of the Theory Informs Business Practices Symposium at the Chicago-Kent College of Law on April 6, 2001.
William J. Carney, Jack B. Jacobs, Richard Painter, Robert Pritzker & Robert H. Sitkoff, Roundtable Discussion: Corporate Governance, 77 Chi.-Kent L. Rev. 235 (2001)(Symposium: Theory Informs Business Practice).
Categories:
Corporate Law & Securities
Sub-Categories:
Corporate Law
,
Corporate Governance
,
Mergers & Acquisitions
Type: Article
Robert H. Sitkoff, "Mend the Hold" and Erie: Why an Obscure Contracts Doctrine Should Control in Federal Diversity Cases, 65 U. Chi. L. Rev. 1059 (1998) (student note).
Categories:
Banking & Finance
Sub-Categories:
Contracts
Type: Article

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