Benefits of the Trust’s Title-Split

Kent D. Schenkel (associate professor of law, New England Law, Boston) recently published his article entitled Trust Law and the Title-Split: A Beneficial Perspective, 78 UMKC L. Rev. 181 (2009).

This Article first finds that the trust, analyzed from the perspective of the beneficiary, is neither purely contractual nor solely a property form. . . .

From a legal-economic perspective, this Article maintains that the trust achieves its extraordinary results for beneficiaries in part because it externalizes certain costs of property ownership. Trust beneficiaries gain from these externalizations because the benefits of externalization currently exceed their costs. This creates an unacknowledged common-pool problem. Lack of universal access to trusts prevents a critical mass of persons from taking advantage of the benefits of externalization it provides, perpetuating the problem and raising egalitarian concerns.

The Article concludes that, from a beneficial perspective, the magic of a trust lies in its proprietary characteristics. More specifically, the trust enhances the beneficial trust interest by curbing legal interests of third parties. It recommends that new approaches to beneficial interest analysis be pursued, with a view towards mitigating negative effects on parties not specifically included in the trust deal.