Trusts - SSRN papers

Trusts

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similarity between the sex change statutes in Arizona and Hawai‘i. They noted that, because sterilization is not a requirement of either state’s statute, Thomas was legally male at the time of his marriage under both Arizona’s and Hawai‘i’s laws. Surgeon Dr. Michael Brownstein, who performed Thomas’s male chest reconstruction surgery, provided written testimony as an expert witness that male chest reconstruction constitutes sex reassignment surgery. Despite unresolved questions regarding the validity of Thomas and Nancy’s marriage, an early 2013 trial determined custody, child support, and division of assets and debts. Later in 2013, the request to grant a divorce was denied. Appeals by Beatie’s legal team are ongoing (2014). In addition to the denial of the divorce, the court also granted Nancy joint custody, decision making, and equal parenting time. Although Thomas bore the children and had equal rights and responsibilities, he was ordered to pay child support and Nancy was not. However, alimony was not enforced because the divorce was denied. Marriage and Immigration In previous decades, the U.S. Passport Service has required gender independent people to provide evidence of surgical intervention to obtain a passport in their self-designated gender. This requirement affected couples in which a noncitizen was applying for marriage-based residency in the United States. In 2012, the U.S. Passport Service changed its policy so that same-gender couples in which one spouse is a U.S. citizen and the other is not can apply to reside permanently in the United States. This obviates the need for couples in which one partner is gender independent to prove they are in a mixed-gender marriage based on genital configuration when the noncitizen applies for marriage-based residency. As a result, unlike in individual states without equal marriage, special guidelines with regard to people who have affirmed their gender may be unnecessary. Y. Gavriel Ansara University of Surrey Israel Berger University of Sydney See Also: Civil Unions; Gay and Lesbian Marriage Laws; Intersex Marriage; Same-Sex Marriage.

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Further Readings Ballard, Amy. “Sex Change: Changing the Face of Transgender Policy in the United States.” Cardozo Journal of Law & Gender, v.18 (2012). Blumer, Markie L. C., Mary S. Green, Sarah J. Knowles, and April Williams. “Shedding Light on Thirteen Years of Darkness: Content Analysis of Articles Pertaining to Transgender Issues in Marriage/Couple and Family Therapy Journals.” Journal of Marital and Family Therapy, v.38/1 (2012). Cintron, Elaine J. “Transformation: The Progression of Immigration Petitions for Transgender Spouses.” Family Court Review, v.50/4 (2012). Gebhardt, Shawn. “Full Faith and Credit for Status Records: A Reconsideration of Gardiner.” California Law Review, v.97/5 (2009). Winer, Anthony S. “Assimilation, Resistance, and Recent Transsexual Marriage Cases.” Seattle Journal for Social Justice, v.1/3 (2012).

Trusts A trust is a popular estate planning tool in common law jurisdictions, whereby property is legally held by one party, the trustee, for the benefit of another, the beneficiary. The beneficiary holds equitable title and is entitled to payments from the trust. The person who creates the trust through a trust instrument is known as the settlor. Trust law is within the domain of the states and therefore trust law differs by state. However, to be valid, a trust must generally be in writing and contain property for ascertainable beneficiaries. There must also be intent on the part of the settlor to create a trust. Trusts may be either revocable or irrevocable. Revocable trusts allow the flexibility of changeable trust terms but have no tax advantages. These are popular trusts given the flexibility that they offer. Meanwhile, irrevocable trusts are far less flexible but may have tax advantages. There are several ways to create a trust. A testamentary trust is a trust created by will, while an inter vivos trust is created during the settlor’s lifetime by either a declaration of trust in which the settlor declares himself or herself to hold property in trust or a deed of trust by which the settlor transfers property to another person as trustee. The trust

EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 2/1/2016 8:34 AM via INDIANA UNIV - PURDUE UNIV AT INDIANAPOLIS AN: 915864 ; Ganong, Lawrence H., Coleman, Marilyn.; The Social History of the American Family : An Encyclopedia Account: iupui


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instrument is a flexible document that can contain any provision that the settlor would like to effect the property transfer. The terms of the trust instrument define the powers and duties of a trustee. Generally, a trustee invests, administers, and distributes the trust property to the beneficiaries. The trustee collects a reasonable fee and may be a friend of the settlor or a corporate trustee. To prevent abuses by the trustees in their duties, either state laws or the terms of the trust instrument impose fiduciary duties on the trustees. Fiduciary duties legally require the trustee to act in the best interests of the beneficiaries. Groups and Types of Trusts There are two main groups of fiduciary duties: loyalty and prudence. The duty of loyalty requires that the trustee administer the trust solely in the interests of the beneficiary. Meanwhile, the duty of prudence imposes on the trustee an objective standard of care. To provide guidance regarding the duty of prudence, many states have adopted the Uniform Prudent Investor Act, which aims to define prudent investment. The act requires that a trustee invest and manage trust assets as a prudent investor would upon considering the purposes, terms, and distribution requirements of the trust. In satisfying this standard, the trustee should exercise reasonable care, skill, and caution. There are additional fiduciary duties such as impartiality and a duty to provide an accounting of the trust. There are three types of trusts: business trusts, charitable trusts, and private trusts. Before the rise of corporate law, many businesses were run out of trusts. Today, many sectors continue to be run out of trusts, including mutual funds, asset securitization, and pension funds. Business trusts are perceived as flexible and having tax benefits. On the other hand, charitable trusts offer tax benefits and are enforced by the state attorney general. They are run for the benefit of a charitable purpose, which includes the relief of poverty, the advancement of education or religion, the promotion of health, a governmental or municipal purpose, or another purpose that is beneficial to the community. The doctrine of cy pres is unique to charitable trusts, which allows a court to direct a charitable trust property to be applied to another charitable purpose that approximates the settlor’s

intention if the settlor’s exact charitable purpose cannot be carried out because it has become illegal, impossible, or impracticable, but the settlor had a general charitable intent. In other words, courts can save charitable trusts despite their long duration and apply their proceeds to similar charitable purposes if the original purposes become illegal, impossible, or impracticable. Finally, private trusts are for the benefit of private beneficiaries. For example, the settlor may create a support trust for a family member, whereby the trustee is obligated to make distributions as necessary for the beneficiary’s needs. It is also possible for a settlor to establish a trust that protects the beneficiary against creditors. A spendthrift trust is created by imposing a disabling restraint upon the beneficiary and creditors, preventing the beneficiary from transferring interest in the trust. The justification for spendthrift trusts is that they are conditional gifts, but some commentators argue that they give rise to a privileged class, make people immune from claims, and drive up the cost of credit. Some foreign countries and a minority of states have enacted statutes that allow self-settled asset protection trusts to be created by settlors for their own benefit. The settlor’s creditors have no recourse against such trusts, even though the settlor of the trust is also the beneficiary. The Rule Against Perpetuities prevents noncharitable trusts from existing indefinitely, although some states have modified or entirely abolished the Rule Against Perpetuities by statute. However, a well-drafted trust instrument often contains a provision explaining how the trust can be terminated. Commonly, a trust terminates when the principal is distributed to the beneficiaries at the time scheduled in the trust instrument. Examples of Trusts The use of a trust is a flexible way to manage family property or property on behalf of minors. Common examples of the use of trusts include a trust to pay for the college education of a child and a trust for the support of a special needs child. A common alternative to a trust in estate planning is a will or will substitute. A will is a document that requires high levels of formalities but allows a person, the testator, to transfer property upon death. Examples of will substitutes that transfer


Truth in Lending Act of 1968


assets upon death by contract to specified beneficiaries include life insurance; pension accounts; and bank, brokerage, and mutual fund accounts. Nonetheless, the most popular will substitute for estate planning in the last 20 years remains the revocable trust due to its flexibility and the fact that it avoids probate, which is perceived as slow and expensive because it involves the court system. In the absence of a valid will, will substitute, or trust, a person who dies has property distributed by default under the state’s intestacy statute. Such statutes distribute the estate to relatives according to their degree of relation to the decedent, such as the decedent’s children and surviving spouse. If there are no surviving spouse and children, the decedent’s surviving parents, brothers, sisters, nephews, and nieces may be eligible. To avoid this type of default division under the state’s intestacy statute and retain flexibility, many people decide to create trusts as a method of transferring and managing property. As a result, trusts continue to be a highly popular tool in estate planning. Margaret Ryznar Indiana University Robert H. McKinney School of Law See Also: Estate Planning; Estate Taxes; Wills. Further Readings Dukeminier, Jesse. Wills, Trusts, and Estates. New York: Aspen, 2013. Hubbard, Mark. Protectors of Trusts. New York: Oxford University Press, 2013. Moffat, Graham and Gerry Bean. Trusts Law: Text and Materials. Cambridge, MA: Cambridge University Press, 2009.

Truth in Lending Act of 1968 The Truth in Lending Act (TILA) of 1968 was an act to safeguard consumers in their attempts to obtain credit by requiring full disclosure of the terms and conditions of finance charges and other related terms of the credit proposal. Prior to the enactment of TILA, finance companies and banks

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often extended credit without the benefit of uniform and/or standardized disclosure of costs and charges. TILA has been amended multiple times, including by the 2009 Helping Families Save Their Homes Act notification when a mortgage was sold or transferred. In the 1950s and early 1960s, many individuals enjoyed a new standard of living that had only been romanticized by prior generations. The overall economy grew 37 percent during the 1950s and, by the end of the decade, the average American family had 30 percent more purchasing/borrowing power. Numerous factors contributed to this boom, such as the introduction of the G.I. Bill, which made possible a college education for many who, prior to this period, would not have been able to afford it. Other factors that contributed to the economic boom and increased individual prosperity within the United States included cheap oil from domestic wells and advances in science and technology. At the same time, those in Europe and Asia were still trying to recover from the devastation of World War II, both physically and economically. President Dwight Eisenhower expanded Social Security to cover 10 million people who had not been covered by the original program. Additionally, President Eisenhower took action on a few other domestic issues that had an influence on individual prosperity. These areas included an investment of federal money in the Interstate Highway System, which was one of the largest public spending projects in the country’s history; he fought tax cuts and increased military spending. Through his actions and because of the postwar economic boom, a consumption society had been created rather than a production society. Following the sugar and gasoline rationing of the World War II era and the availability of these products once again, individuals had a desire to spend. This desire is noticeable in certain aspects of the economy. For example, in the mid-1950s, there were 60 million cars on the road in the United States. Advertising became big business and consumers were all too willing to buy into the “buy now—pay later” mentality. However, not all enjoyed this prosperity as much as the group known as the middle class. An estimated 25 percent of the population, referred to as “invisible citizens,” lived in poverty. Poverty at this
