The Statutory Liberalization of Trust Law Across 152 Jurisdictions: Leaders, Laggards and the Demand for Fiduciary Services
Abstract: This article reports the findings of the first systematic overview of the statutory liberalization of trust law worldwide. Using a groundbreaking, manually collected, database of the trust legislation of every jurisdiction which has a trust regime respecting twenty-two trust law variables, I hand coded each jurisdiction’s treatments of each variable since 1925 for their relative liberality. Aggregating all jurisdictions’ scores regarding all variables, I produced a “trust liberality score” for each jurisdiction/year, expressing the extent to which trust law has been liberalized by each jurisdiction by each year. Results show the United States to be the global leader in trust law liberality: seventeen of the twenty jurisdictions which have the most liberal trust laws are American states. Much of the recent global increase in trust law liberality occurred between 1988-2016. Multivariate regression analysis of U.S. data shows that the statutory liberalization of trust law has had no effect on several indicia for the success of service provision to trusts as a commercial enterprise. It is especially clear that reforms seen as pandering, at great social cost, to trust users’ interests in order to create or sustain demand for professional services in the trust context, such as self-settled spendthrift trusts and perpetual trusts, have had no impact on any of these indicia. As an exception to the general finding of a null result, some findings with marginal statistical significance show that law reforms which reduced trustees’ exposure to liability and entrenched their entitlement to remuneration led to a decline in their earnings per trust. Those reforms are also weakly associated with an increase in trust income. It is therefore possible that reforms widely seen as preferring trustees over their clients have resulted in trustees providing a better service at lower cost.
