How much trust, in the general sense, is required by a trust in the legal sense? The separation of management and beneficial ownership creates a risk that a trustee will act, or fail to act, based on its own interests. This paper explores the features of modern US trust law and practice that elevate the risk and the features that attempt to ameliorate the risk. The paper then offers two striking observations. The first is that US trust law is moving in both directions. Some aspects of modern trust law and practice require greater trust in the trustee, while other aspects of modern law and practice reduce the need for trust in the trustee. The second observation is that, to the extent US state legislatures have enacted rules diverging from uniform acts or Restatements, the divergent rules tend to increase – not decrease – the need for trust in the trustee.
Gallanis, Thomas P, How Much Trust Do Trusts Require? (April 7, 2020) in Fiduciaries and Trust: Ethics, Politics, Economics and Law (Paul B Miller and Matthew Harding eds, Cambridge University Press 2020).