Revocable Trusts and Incapacity Planning: More than Just a Will Substitute

47 Pages Posted: 11 Feb 2016 Last revised: 2 Jul 2016

See all articles by David Feder

David Feder

Munger, Tolles & Olson, LLP

Robert H. Sitkoff

Harvard University - Harvard Law School; European Corporate Governance Institute (ECGI)

Date Written: May 2, 2016

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.

Keywords: trust, revocable trust, donative trusts, fiduciary, management trust, will substitute, conservator, guardian, conservatorship, guardianship, incapacity, estate planning

JEL Classification: K11

Suggested Citation

Feder, David and Sitkoff, Robert H., Revocable Trusts and Incapacity Planning: More than Just a Will Substitute (May 2, 2016). 24 Elder Law Journal 1 (2016), Harvard Public Law Working Paper No. 16-24, Available at SSRN: https://ssrn.com/abstract=2730002

David Feder

Munger, Tolles & Olson, LLP ( email )

CA
United States

Robert H. Sitkoff (Contact Author)

Harvard University - Harvard Law School ( email )

1563 Massachusetts Avenue
Cambridge, MA 02138
United States

HOME PAGE: http://https://hls.harvard.edu/faculty/directory/10813/Sitkoff

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

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