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Leaders, Laggards and the Market for Fiduciary Services by Adam S. Hofri-Winogradow (Nov. 17, 2019) – Wealth Strategies Journal

Dec 26, 2019

Paul S. Labiner

Paul Labiner



Adam Hofri-Winogradow has made his paper, The Statutory Liberalization of Trust Law across 152 Jurisdictions: Leaders, Laggards and the Market for Fiduciary Services, available for download. This article was published as a part of the UC Davis Law Review. The abstract of this article, available on SSRN, reads as follows:

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 22 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: 17 of the 20 jurisdictions which have the most liberal trust laws are American states. Trust law liberalization in the U.S. is a result of the widespread adoption of the Uniform Trust Code, which includes many highly liberal positions, among the states, as well as of many states having followed an offshore dynamic in adopting highly permissive positions in order to draw users from out of state to resident service providers. The trust laws of many American states are more liberal than those of small offshore island jurisdictions. Even the laws of such relatively conservative American states, on trust matters, as New York and California are quite liberal by global standards. 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 to trust users’ interests at great social cost, such as self-settled spendthrift trusts and perpetual trusts, all in order to create or sustain demand for professional services in the trust context, 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 may 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.

Download the full article at this link with a free SSRN account.

Posted by Katie Thompson, Assistant Editor of the Wealth Strategies Journal.


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