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28 Va. Tax Rev. 779 (2008-2009)
A Malthusian Analysis of the So-Called Dynasty Trust

handle is hein.journals/vrgtr28 and id is 787 raw text is: A MALTHUSIAN ANALYSIS OF THE SO- CALLED DYNASTY TRUST William J. Turnier* and Jeffery L. Harrison* ABSTRACT Select financial institutions and members of the Bar have seized upon the presence of the limited exemption from the generation- skipping transfer tax provided under the Internal Revenue Code to promote so-called dynasty trusts as a means whereby individuals can build dynastic wealth for a family forever free from transfer taxes. To realize such benefits, state law that does not impose the Rule Against Perpetuities must govern the trust. The promise of dynastic wealth is unlikely to be realized due to several factors. Administrative and tax costs are likely to reduce the yield on such trusts to a level where inflation, rising expectations, and an ever growing band of beneficiaries are typically assured to outpace the ability of the trust to deliver the benefits anticipated by trust settlors. Whether required under current standards of professional responsibility or not, an understanding of these factors can elevate the quality of service provided by estate planners. W. P Mangum Professor of Law, University of North Carolina; B.S., Fordham University, 1963; M.A., Pennsylvania State University, 1967; J.D., University of Virginia, 1968. The authors wish to thank Grayson McCouch, George Mundstock, Patrick Olgesby, John Orth, Joel Pineles, and Dick Yeomans, who each read prior versions of the article and generously shared their views. They are especially indebted to Joel Pineles who initially pointed out some of the practical difficulties identified as part of the Malthusian analysis. The authors also wish to thank participants at faculty seminars at the University of North Carolina Law School and at the University of Kansas School of Law for helpful comments that made their way into this article. Needless to say, all errors contained herein are the sole responsibility of the authors. .. Stephen C. O'Connell Professor of Law, University of Florida, B.S., M.B.A, Ph.D. University of Florida, 1967, 1968, 1970; J.D., University of North Carolina, 1978. 779

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