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45 ACTEC L.J. 37 (2019-2020)
The Need for a New Type of Purpose Trust, the Stewardship Trust

handle is hein.journals/acteclj45 and id is 41 raw text is: The Need for a New Type of Purpose Trust, the Stewardship Trust Susan N. Gary* I. HISTORY OF PURPOSE TRUSTS The Uniform Trust Code (UTC) authorizes trusts for noncharitable purposes that lack an identifiable beneficiary. UTC Section 408 autho- rizes a trust for the care of an animal, and UTC Section 409 authorizes a trust for a noncharitable purpose without an ascertainable beneficiary. This latter type of trust is often called a purpose trust and that identifier will be used in this essay. Sections 408 and 409 built on the use of honor- ary trusts for noncharitable purposes, but create an actual trust struc- ture, with certain constraints. A trust that meets the requirements of either section will be valid and enforceable. A few creative lawyers are now using purpose trusts for business planning,' and Section 409 certainly permits doing so, but the structure and constraints of Section 409 are not well suited for trusts holding the assets of a business. Given the history of Sections 408 and 409, it seems likely that business trusts were not on the minds of the UTC Drafting Committee. The constraints built into these sections reflect concerns about the types of purpose trusts that had surfaced in cases and there- fore were envisioned by the drafters. A trust used for business purposes has different needs, and the concerns related to such a trust are differ- ent. The addition of a new section to the UTC, authorizing a steward- ship trust, will address the needs and concerns of a trust holding the assets of business. Under the common law a trust must have a beneficiary, but an ex- ception has long existed for charitable trusts. Trusts that had neither an identifiable beneficiary nor a charitable purpose were invalid and unen- forceable.2 In some cases, courts refused to permit an intended trustee * Orlando J. and Marian H. Hollis Professor of Law, University of Oregon. A more thorough examination of steward-ownership, the history of purpose trusts, and the new Oregon stewardship trust statute can be found in The Oregon Stewardship Trust: A New Type of Purpose Trust that Enables Steward-Ownership of a Business, posted on SSRN at https://papers.ssrn.com/sol3/papers.cfm?abstractjid=3426845. 1 See Alexander A. Bove, Jr., The Purpose of Purpose Trusts, 18 PROB. & PROP., May/June 2004, at 34, 37. 2 RESTATEMENT (SECOND) OF TRUSTS § 123 (AM. LAW INST. 1959); RESTATEMENT (THIu) OF TRUST s§ 47 cmt. d (AM. LAW INST. 2003). 37

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