# Inheritance and the Dead Hand -- How Much Control?
**URL:** https://boards.straightdope.com/t/inheritance-and-the-dead-hand-how-much-control/144036
**Category:** Great Debates
**Created:** [December 20, 2002, 3:56pm UTC](https://boards.straightdope.com/t/inheritance-and-the-dead-hand-how-much-control/144036 "2002-12-20T15:56:34Z")
**Posts on this page:** 20
**Page:** 1
### Author:  [@Mighty\_Maximino](https://boards.straightdope.com/u/Mighty_Maximino)
#### Post date: [December 20, 2002, 3:56pm UTC](https://boards.straightdope.com/t/inheritance-and-the-dead-hand-how-much-control/144036/1 "2002-12-20T15:56:34Z")
This idea is kind of inspired by **kabbes’** thread on [meritocracy](http://boards.straightdope.com/sdmb/showthread.php?threadid=150943). I don’t really propose to hash out all the issues again here, but to examine another question; namely, how much right a dead person should have to control their property. I’m not even really interested in estate taxes, either – we can just take those as a given, at whatever the prevailing rate is (even zero, if that’s your preference.)
I just got through with a wills and estate planning course in school where our professor mentioned that many states are extending the rule against perpetuites or (like South Dakota) never had it, because they’re basically competing to get trusts set up in their states.
My personal opinion is that this is a bad thing. I think that law, and property, is for the living, and upon your death you should have the ability to do what you want with your property, but that you should have to give it up to someone else’s _control_. You’re dead. I think it’s silly to set up a trust that pays out to your descendants who you’ve never even met for hundreds of years. I further think that locking property into these trusts ossifies society.
I think those descendants, if they’re not legally incompetent, should have the ability to either blow it all on Mad Dog 20/20, pile it all up and dance naked around it as it burns, or multiply it tenfold by starting a successful business. Depriving them of any of these chances puts your interests above theirs, I think.
So, am I totally off base? Let’s try not to hijack this into an “evil government” thread, if possible – I just want to talk about the dynamics between these interests.
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### Author:  [@Master\_Wang-Ka](https://boards.straightdope.com/u/Master_Wang-Ka)
#### Post date: [December 20, 2002, 4:26pm UTC](https://boards.straightdope.com/t/inheritance-and-the-dead-hand-how-much-control/144036/2 "2002-12-20T16:26:49Z")
Um… well… it occurs to me that our government was originally set up by dead guys. So was much of our education system.
I believe that when my offspring are children, I should, to some extent, put their interests above my own. I sacrifice so that my child can live a good life, go to a good school, and so on, yes?
Once they’re grownups, it’s another matter. Durned if I’m going to pay their way or make sacrifices so that I can do for them the things that they should be doing for themselves.
This brings in the matter of my estate. Presumably, I built it myself, basing it on my own actions, sacrifices, and so forth, yes? Why, then, should I not have the right to do with it as I please? Why should I NOT have the right to make decisions about where my property and money will go after I am dead?
The only answer I see in your post is “because your descendants should have a right to your stuff once you croak.” I think this is debatable, at best.
Say I have two kids – one a miserable spendthrift, total jerk, drug addict, child molester, whatever, and the other a fine, upright young businessperson… who needs nothing but capital to get that ball really rolling?
Seems like under your direction, my estate would be split evenly between the two of them, despite my belief that any money that goes to Number One Son will simply fuel the Colombian drug lords, whereas money going to Number Two will fuel the economy and help make my grandchildren rich.
Why, then, should I not have the right to make that call?
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### Author:  [@Mighty\_Maximino](https://boards.straightdope.com/u/Mighty_Maximino)
#### Post date: [December 20, 2002, 4:40pm UTC](https://boards.straightdope.com/t/inheritance-and-the-dead-hand-how-much-control/144036/3 "2002-12-20T16:40:49Z")
> [@](#):
>
> \*Originally posted by Wang-Ka \*
> \*\*Why, then, should I not have the right to do with it as I please? Why should I NOT have the right to make decisions about where my property and money will go after I am dead?
You should. I think I might have not made my point as clearly as I’d like in the OP – although I did say you should have the ability to do whatever you want with it. I’ll clarify – give to whomever you want in whatever proportions, to charity, or given away or destroyed (under our current system an executor won’t destroy property if you request in your will, but that’s another debate.) In short, anything legal.
> [@](#):
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> The only answer I see in your post is “because your descendants should have a right to your stuff once you croak.” I think this is debatable, at best.
What I’m saying is that your descendants should have the right to control what you give them.
> [@](#):
>
> Seems like under your direction, my estate would be split evenly between the two of them, despite my belief that any money that goes to Number One Son will simply fuel the Colombian drug lords, whereas money going to Number Two will fuel the economy and help make my grandchildren rich.
So give it all to Number Two son, nothing’s stopping you. What I _don’t_ think you should be able to do is set up a trust which pays all or part of the interest to your lineal descendants for generations, but leaves the principal out of their reach. For your minor descendants who are alive, you should be able to set up a trust for them until they come of age.
I’m sorry if I was unclear earlier. I suspect that my views may change after I hear what other people have to say, but I suppose I’ve got to be clearer first.
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### Author:  [@Master\_Wang-Ka](https://boards.straightdope.com/u/Master_Wang-Ka)
#### Post date: [December 20, 2002, 4:44pm UTC](https://boards.straightdope.com/t/inheritance-and-the-dead-hand-how-much-control/144036/4 "2002-12-20T16:44:22Z")
Oh.
SO… what you’re saying is that I SHOULD BE ABLE TO:
(a) Leave all my money to my kids if I wanna,
(b) Leave it all to my poodle, if my kids are scum,
© Leave it all to a foundation for the protection of whatever,
…but that I should NOT be able to:
(d) Set up a nonprofit foundation or trust fund that doles out money regularly to my descendants without letting any of them have any say over the principal fund that generates the payments.
…am I right, here?
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### Author:  [@Mighty\_Maximino](https://boards.straightdope.com/u/Mighty_Maximino)
#### Post date: [December 20, 2002, 4:48pm UTC](https://boards.straightdope.com/t/inheritance-and-the-dead-hand-how-much-control/144036/5 "2002-12-20T16:48:17Z")
> [@](#):
>
> \*Originally posted by Wang-Ka \*
> \*\*…am I right, here? \*\*
That’s basically it.
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### Author:  [@TaxGuy](https://boards.straightdope.com/u/TaxGuy)
#### Post date: [December 20, 2002, 4:57pm UTC](https://boards.straightdope.com/t/inheritance-and-the-dead-hand-how-much-control/144036/6 "2002-12-20T16:57:41Z")
> [@](#):
>
> What I’m saying is that your descendants should have the right to control what you give them.
And here’s the crux of the matter. Once you understand the point I’m about to make, I think that you’ll totally agree with everything wang-ka said, and this thread will be moot.
Say Dead Guy dies with $1 billion in cash and two kids. Dead Guy sets up a trust before he dies and gives each kid a 1/2 interest in the income of the trust, and that 1/2 interest passes down to later generations, and no one is ever allowed to get the principal.
What you seem to be saying is that it sucks that Dead Guy gave his descendants $1 billion but didn’t give them control over it. However, here’s the point you’re not getting: the dead guy did not give his descendants $1 billion. He only gave them the income interest in a trust with $1 billion as the trust corpus.
In other words, giving someone an income interest in a trust is a whole lot different than giving someone money outright. Dead Guy had the money, so he could do what he wanted with it, and he chose to put it in trust instead of giving it outright. He could have also set up a corporation and given his kids shares in the corporation; he could have only given call options on those shares. Either way, Dead Guy was NOT giving anyone the $1 billion.
Therefore, Dead Guy’s descendants _did_ have the right to control what Dead Guy gave them, and what Dead Guy gave them was a interest in a trust and not cash.
God that was long-winded.
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### Author:  [@TaxGuy](https://boards.straightdope.com/u/TaxGuy)
#### Post date: [December 20, 2002, 5:00pm UTC](https://boards.straightdope.com/t/inheritance-and-the-dead-hand-how-much-control/144036/7 "2002-12-20T17:00:45Z")
To clarify: all of the things I mentioned above that Dead Guy could have given (cash outright, interests in a trust, shares of a corporation holding the cash, call options on those shares) are distinct legal entitlements that all have different implications. Dead Guy made the gift, so his vision of what entitlements the donees would have should be respected.
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### Author:  [@Random](https://boards.straightdope.com/u/Random)
#### Post date: [December 20, 2002, 5:03pm UTC](https://boards.straightdope.com/t/inheritance-and-the-dead-hand-how-much-control/144036/8 "2002-12-20T17:03:53Z")
I agree with Mighty, but for a somewhat different reason. I don’t have a big problem with our hypothetical dead guy setting up a trust which pays income to descendants forever. I **do** have a problem with the dead guy tying the hands of the trustee, by placing permanent restrictions on how he manages the trust _corpus_ (assets). Say dead guy wants to have the family farm/home/business kept in the family. Sounds nice, but conditions change. Maybe in 100 years, that farm will be in the middle of an urban area, and taxes and other economic issues of the day make it ludicrous to keep it as a farm.
English law used to recognize something similar, called entail. Basically, Lord Doofus would leave the family estate to his eldest male heirs in perpetuity. 200 years later, the family has no money, desperately needs it to modernize the estate farms/pay inheritance tax/educate the children/whatever, and can’t sell any part of Doofus Manor to raise the needed funds. Same problem with perpetual trusts.
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### Author:  [@TaxGuy](https://boards.straightdope.com/u/TaxGuy)
#### Post date: [December 20, 2002, 5:10pm UTC](https://boards.straightdope.com/t/inheritance-and-the-dead-hand-how-much-control/144036/9 "2002-12-20T17:10:39Z")
> [@](#):
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> 200 years later, the family has no money, desperately needs it to modernize the estate farms/pay inheritance tax/educate the children/whatever, and can’t sell any part of Doofus Manor to raise the needed funds.
I can’t sell the Washington Monument or the Chrysler Building either, and I really need money to pay off my student loans. I can’t sell those buildings because I have no interest in those buildings. Likewise, the family members can’t sell them because they have only a right of possession and not a fee simple in the estate.
Why is the scenario you set up bad? The family should never have developed an expectation that they could sell the estate if times were rough, and any expectation they did develop would be unreasonable.
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### Author:  [@Mighty\_Maximino](https://boards.straightdope.com/u/Mighty_Maximino)
#### Post date: [December 20, 2002, 5:12pm UTC](https://boards.straightdope.com/t/inheritance-and-the-dead-hand-how-much-control/144036/10 "2002-12-20T17:12:33Z")
You raise interesting points, **TaxGuy**. However, the Dead Guy presumably severed the legal and the equitable title for the _purpose_ of having only the ability to transfer what he did to his children. I don’t think he should be able to do this, especially not for perpetuity. I agree with **Random’s** points about entail and trustees with their hands tied, but subject to my other problems with perpetual trusts.
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### Author:  [@TaxGuy](https://boards.straightdope.com/u/TaxGuy)
#### Post date: [December 20, 2002, 5:17pm UTC](https://boards.straightdope.com/t/inheritance-and-the-dead-hand-how-much-control/144036/11 "2002-12-20T17:17:45Z")
> [@](#):
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> However, the Dead Guy presumably severed the legal and the equitable title for the _purpose_ of having only the ability to transfer what he did to his children.
Can you explain what you mean by this?
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### Author:  [@Mighty\_Maximino](https://boards.straightdope.com/u/Mighty_Maximino)
#### Post date: [December 20, 2002, 5:25pm UTC](https://boards.straightdope.com/t/inheritance-and-the-dead-hand-how-much-control/144036/12 "2002-12-20T17:25:50Z")
> [@](#):
>
> \*Originally posted by TaxGuy \*
> \*\*Can you explain what you mean by this? \*\*
I certainly hope so. Your posts have been entirely correct about how title in trusts work, as far as I’m aware. I’m not arguing with the mechanics, just that I don’t think it’s a good thing to allow. I don’t have any problem with Dead Guy setting up a trust for himself for while he’s alive, but I don’t think that he should have the ability to decide what’s done with that money for all time. I also don’t think that Lord Doofus should be able to prevent anything from being sold after he’s been dead for hundreds of years. Basically, I think that the living should have both the legal and the equitable title to things they receive from the dead, should they be under no legal disability. (In jurisdictions with Perpetuities, and even without should the trust fail, the _corpus_ gets distributed eventually.)
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### Author:  [@TaxGuy](https://boards.straightdope.com/u/TaxGuy)
#### Post date: [December 20, 2002, 5:39pm UTC](https://boards.straightdope.com/t/inheritance-and-the-dead-hand-how-much-control/144036/13 "2002-12-20T17:39:52Z")
> [@](#):
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> Basically, I think that the living should have both the legal and the equitable title to things they receive from the dead, should they be under no legal disability.
OK, gotcha. I guess then that you and I just disagree on what legal and equitable title really are when stripped down to their essentials.
Plus, it seems that you’re also being formalistic (while kind of arguing against formalism) because Dead Guy could also set up a corporation with the corpus as its only asset and give his heirs minority shares while the “trustee” type guy has majority control. You’re solution wouldn’t solve this equivalent problem.
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### Author:  [@TaxGuy](https://boards.straightdope.com/u/TaxGuy)
#### Post date: [December 20, 2002, 5:41pm UTC](https://boards.straightdope.com/t/inheritance-and-the-dead-hand-how-much-control/144036/14 "2002-12-20T17:41:47Z")
God, sorry for the second double post in one thread, but you also said:
> [@](#):
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> I don’t think that he should have the ability to decide what’s done with that money for all time.
Well, Dead Guy can decide what’s done with the money for all time while he’s still alive. If he destroys the money or gives it to someone else, it’s gone from his family for all time.
OK, I’ll take a breather now.
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### Author:  [@Random](https://boards.straightdope.com/u/Random)
#### Post date: [December 20, 2002, 5:51pm UTC](https://boards.straightdope.com/t/inheritance-and-the-dead-hand-how-much-control/144036/15 "2002-12-20T17:51:50Z")
> [@](#):
>
> \*Originally posted by TaxGuy \*
> \*\*Why is the scenario you set up bad? The family should never have developed an expectation that they could sell the estate if times were rough, and any expectation they did develop would be unreasonable. \*\*
The family loses the farm to taxes. [Bad]
The family manages to pay the taxes, but the farm loses money every year, because farming is no longer economic in what is now suburban Chicago. [Bad]
The farm manages to make an annual profit of $15,000, but the unavailable alternative of selling the land and investing the proceeds in T-bills would generate $500,000 in income per year. [Bad]
These illustrate why such restrictions can be bad for the family. The can also hamper society as a whole. Maybe the farm is the best location for a needed hospital, park, or business that will employ 5000 people. Economic forces would cause this shift in land use to happen if the restriction on sale didn’t exist. [Bad]
As I said, English history backs me up here. Huge areas could not be used for their highest and best use because of entail, and the heirs were rendered destitute by the huge expense of maintaining a 100-room mansion that could not be sold. That’s bad for the heirs (who persumably the dead guy wanted to help) and society as a whole.
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### Author:  [@Mighty\_Maximino](https://boards.straightdope.com/u/Mighty_Maximino)
#### Post date: [December 20, 2002, 5:52pm UTC](https://boards.straightdope.com/t/inheritance-and-the-dead-hand-how-much-control/144036/16 "2002-12-20T17:52:11Z")
> [@](#):
>
> \*Originally posted by TaxGuy \*
> **Well, Dead Guy can decide what’s done with the money for all time while he’s still alive. If he destroys the money or gives it to someone else, it’s gone from his family for all time.**
You’re right, of course; I should have clarified that he shouldn’t be able to decide what’s done with the money for all time _after he’s dead_. While he’s still alive, he can do whatever he likes with it.
I think we do just disagree about a few things. Your front corporation example is intruiging. I will think about this and see what I come up with – and I think your complaint about formalism is also well-placed. However, to an extent all of the law regarding property and especially deathtime transfer is formalistic. It’s not like the right way to do it came down the mountain or anything like that.
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### Author:  [@TaxGuy](https://boards.straightdope.com/u/TaxGuy)
#### Post date: [December 20, 2002, 6:11pm UTC](https://boards.straightdope.com/t/inheritance-and-the-dead-hand-how-much-control/144036/17 "2002-12-20T18:11:37Z")
Aaaargh! We’re just not meetin’ eye to eye, you and me. I don’t think we really disagree on all that much. Once you understand property rights the way God and the Founding Fathers intended, I think you’ll agree with me. 🙂
> [@](#):
>
> While he’s still alive, he can do whatever he likes with it.
Righto, partner. And while he’s still alive, Dead Guy decides to give his family an income interest in a trust where they can’t touch the principal ever. He could have also decided to give his family forty bushels of nothing. So what’s the problem?
**Random**
OK, I think I need to cogitate more on your points, because they are different than **Mighty** ’s points. You may be right: giving someone the right to possess something but not sell it may be a bad thing. However, this is different than giving someone an income interest in a trust instead of the corpus outright (at least where the corpus is cash or an equivalent).
However, note that the stuff you said at the end of you posts isn’t correct. The state can always take the property by eminent domain, Lord Doofus’s wishes notwithstanding.
By the way folks, thinking about stuff like this how I get a paycheck every couple of weeks (so just trust that I’m right, OK? 🙂 ). You’d be amazed how often questions like What is a loss, really? and When does a lease become a sale? come up in tax practice.
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### Author:  [@Mighty\_Maximino](https://boards.straightdope.com/u/Mighty_Maximino)
#### Post date: [December 20, 2002, 7:39pm UTC](https://boards.straightdope.com/t/inheritance-and-the-dead-hand-how-much-control/144036/18 "2002-12-20T19:39:27Z")
> [@](#):
>
> \*Originally posted by TaxGuy \*
> \*\*Aaaargh! We’re just not meetin’ eye to eye, you and me. I don’t think we really disagree on all that much. Once you understand property rights the way God and the Founding Fathers intended, I think you’ll agree with me. 🙂
They were dynasts? Well, I guess so, to some extent 🙂
> [@](#):
>
> Righto, partner. And while he’s still alive, Dead Guy decides to give his family an income interest in a trust where they can’t touch the principal ever. He could have also decided to give his family forty bushels of nothing. So what’s the problem?
Free alienability, I suppose. You could just as easily stick your beneficiaries with a spendthrift trust that they can’t sell, transfer, and so on. And then as your beneficiaries multiply through the generations like sand on the beach, you end up with a situation where a fairly substantial corpus is generating only a little bit of money for a whole lot of people, which isn’t its maximum economic use. And nothing can be done about it, because the dead hand of Dead Guy still holds the purse strings. It’s like the poor beneficiaries that go broke while being saddled with Lord Doofus’ manor house. I feel that perpetual trusts and dynasties are against public policy, being economically inefficient (and somewhat odious to me on a personal level).
Trusts are legal fictions anyway; I don’t see any problem with making them automaticly revoke at the settlor’s death, and then give the beneficiaries a choice to either opt into the arrangement or just take their share in fee simple. I still haven’t figured out what I’d do about the corporation yet, but it would probably be something similar.
Incidentally, I hope to get paid for thinking about these things after I pass the bar in a year and a half or so, so I appreciate the practice.
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### Author:  [@TaxGuy](https://boards.straightdope.com/u/TaxGuy)
#### Post date: [December 20, 2002, 7:58pm UTC](https://boards.straightdope.com/t/inheritance-and-the-dead-hand-how-much-control/144036/19 "2002-12-20T19:58:45Z")
> [@](#):
>
> Incidentally, I hope to get paid for thinking about these things after I pass the bar in a year and a half or so, so I appreciate the practice.
Be a tax lawyer then, man. If you do corporate or business transactions then you’ll get paid to change the name, address, and dollar amounts on reams of documents. And don’t get me started on litigators . . .
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### Author:  [@wireless](https://boards.straightdope.com/u/wireless)
#### Post date: [December 20, 2002, 8:01pm UTC](https://boards.straightdope.com/t/inheritance-and-the-dead-hand-how-much-control/144036/20 "2002-12-20T20:01:42Z")
I just have to say that the concept/image of “Doofus Manor” created in my head by **random** ’s post has had me chuckling all through the rest of this thread!
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