Article on Trust Ownership

Avihay Dorfman (TelAviv University Faculty of Law) recently published an articleentitled, On Trust andTransubstantiation: Mitigating the Excesses of Ownership, Wills, Trusts,& Estates Law eJournal, Vol. 9, No. 25 (Sept. 18, 2013).  Providedbelow is the abstract from SSRN:

The legal institution of trust gives rise to twobasic sets of question. The first set concerns the respective rights held bythe trustee and the beneficiary with respect to the trust property — do theserights feature a structure characteristic of property, contract, or somethingin between. The second concerns the normative relationship between the trusteeand the beneficiary themselves — what explains the existence and content of theobligations owed by the trustee to the beneficiary, especially the fiduciaryduty of loyalty, according to which the trustee is expected to act in the sole,rather than merely the best, interest of the beneficiary. A successful account,moreover, must be able not only to address both sets of question, takenseparately, but rather to explain the nature of the connection between them.

I devote these pages to the second basic question.My argument develops two main clusters of claim. Negatively, I seek to showthat accounts of the trustee’s fiduciary obligations grounded in and around thesettlor’s intention; the virtue of loyalty; or contract fall short of capturingthe idea of the trust (whatever it is). Affirmatively, I argue that the groundsand content of the trustee’s fiduciary obligations are, at least in part, theupshot of the special difficulty that the trust institution picks out, namely,what I shall call the excesses of ownership. On this argument, the institutionof trust arises in connection with the difficulty of acquiring the standing ofownership, which is a status authority over anyone else with respect to anexternal object. A Trustee makes possible — that is, creates the legal spacefor — a derivative status of ownership: That which allows patients (by choiceor by chance) to enjoy access to the institution of ownership but, at the sametime, to do without the agential powers characteristic of the standing thatownership involves. The duty of loyalty, I shall argue, arises against thisbackdrop, tracking the role of the trustee in possessing, and sometimes evenconstituting, the personhood of the beneficiary and thus acting as his alterego, as it were, in relation to the trust property. In that, the duty ofloyalty is consequential to the transubstantiation of the trustee into thebearer of what I shall call the ownership personality of the beneficiary.