Review of Reviews: “How Should Inheritance Law Remediate Inequality?” 97 Wash. L. Rev. __ (forthcoming 2022)
By Patricia M. Angus – Originally published in Trusts & Estates, November 2022
Inequality—or rather, disparity—of wealth is perhaps the most complex and vexing issue of our time.1 The law review article, “How Should Inheritance Law Remediate Inequality?” focuses on the challenges of wealth inequality, especially its causes and consequences, and reviews some of the proscriptions presented by trusts and estates (T&E) scholars to remedy the problem going forward. Most importantly for T&E practitioners and readers of this publication, it proposes a purported “comprehensive framework for progressive inheritance law that redresses long-term inequality.” Is this an interesting proposition? Certainly. However, in several ways, the framework falls short of its task—not only because of the magnitude of its aspirations but also due to the piecemeal nature of the specific recommendations. At best, the article serves as a catalyst for further thought and prompt for future research that can support these and comparable recommendations.
The article leads with the clever statement that “[e]very generation gets the trusts and estates (‘T&E’) scholarship it deserves.”2 It elaborates on this claim with a brief history of T&E scholarship that many practitioners will find interesting. It traces the primacy of freedom of disposition back to John Langbein in 1975, who locates the origin of the concept nearly 300 years earlier in the Wills Act of 1677. This focus on freedom gave ballast to the “Repealers” (as the term is used in the article) who have been pushing to repeal the estate tax for several decades. As any T&E practitioner knows, the Repealers have been successful both in terminology (notably by coining the phrase “death tax”) and legislative successes (including the extraordinary increase in the estate tax exemption and the decrease in the top transfer-tax rates in recent decades). The author contrasts these developments with a growing area of T&E scholarship focused on researching and analyzing wealth inequality and examining the role of the law (including business, tax and trust, to name the top three) in perpetuating this increasing disparity.
The article asserts that “T&E should prioritize the long-term goal of fostering intergenerational economic mobility (‘IEM’)” and looks at the top and bottom wealth segments in its recommendations. In particular it states that “T&E should promote mean regression of the wealth distribution curve over time.” The author notes the reduced mobility across American socioeconomic classes, in contrast to the decreased disparity globally (with specific reference to the rising middle class in China). How will the United States get out of this situation? In the author’s view, a shift from supporting freedom of disposition to promoting IEM is necessary.
For a T&E practitioner, this is a somewhat heretical statement. The role of the practitioner is to help a client achieve the client’s goals—not support a more equal wealth distribution. The author’s use of the term “T&E” to describe the whole field makes this a confusing argument. Presumably, one must acknowledge the difference between policy making and, for example, legal practice. But the distinction isn’t made as clearly as it should be. Further, the article skims over past proposals without giving enough context for the reader, while at the same time making broad brush statements without supporting evidence or attention to application. Which laws, specifically, need to be changed? How?
The article takes aim at dynasty trusts—which can tie up family wealth for time immemorial—as well as the tax benefits that can accrue in this relatively new legal vehicle. Proposals to tax the assets in dynasty trusts have been made in the past, with little progress to show for those efforts. The article could be more detailed in this analysis. The author predicts that assets that aren’t held in trust by families will be “spent,” therefore flowing back into the economy. But as he notes, the level of wealth of some families today (he mentions Bezos and Gates, among others) is at such a level that—as he briefly acknowledges—would be very difficult to spend in their lifetimes. So perhaps trusts aren’t the problem; rather the accumulation in the first place must be addressed. It would help to have detailed research and data analysis to support the author’s arguments. Or to identify the specific research needed to test out the proposition. Naturally, a law review article isn’t intended to be a policy paper to help draft new laws. But it could go further along those lines.
The corollary proposals for lower income families also seem to fall short. There’s a vague reference to a recommendation of “appending a will as a testamentary schedule to tax filings,” as well as other ways to help families avoid probate. Certainly, avoiding the potential costs, delays and complexities of probate is a worthy endeavor. However, it’s not clear what this would entail and, again, there’s little research or data to support the assertion that poorer families would be able to maintain their resources across generations as a result of the recommendations.
The greatest strength of this article is in its provocative assertion that promoting IEM should replace freedom of disposition as the first principle of T&E. Unfortunately, the confusion about what areas of the law should be changed, with evidence that those changes would help achieve the goal sought, will leave the reader wondering what more can be done and how.
Endnotes
1. Of course, climate change is an existential challenge to the planet and its people. However, inequality drives the corporate and governing entities that hold the power to accelerate or address its consequences.
2. Felix B. Chang, “How Should Inheritance Law Remediate Inequality?” 97 Wash. L. Rev. __ (forthcoming 2022), at p. 2.