Calvin H. Johnson
(Texas) & Lawrence W. Waggoner
(Michigan), 'Perpetual Trusts: The Walking Dead' and 'Congress Should Effectively Curb GST Exemption for Perpetual Trusts', 136 Tax Notes 1215 (Sept. 3, 2012):

In
separate but complementary letters to the editor of Tax Notes, Calvin
Johnson and Lawrence Waggoner respond to an article by Dennis
Belcher and seven other practicing attorneys that defend the GST
exemption for perpetual trusts. In Federal Tax Rules Should Not Be Used
to Limit Trust Duration, 136 Tax Notes 832 (Aug 13, 2012), the attorneys
argue that the duration of a trust is a state law issue. Their article
is actually a response to a Shelf Project article: Lawrence W. Waggoner,
Effectively Curbing the GST Exemption for Perpetual Trusts, 135 Tax
Notes 1267 (June 4, 2012).

In Perpetual Trusts: The
Walking Dead, 136 Tax Notes 1215 (Sept. 3, 2012), Johnson argues that
the harm to the national wealth done by perpetual trusts is a federal
responsibility. Trusts reduce the value of wealth, and settlors could
figure that out if they were not seduced by the tax exemption. Specific
settlor instructions get out of date and become an impediment after a
generation. Delegating to trustees accountable to no one means trusts
are managed primarily for the benefit of the trustees. Perpetual trusts
become monsters, the walking dead. The federal exemption is motivating
the harm; federal law is responsible for the harm that perpetual trusts
cause.

In Congress Should Effectively Curb the GST Exemption for
Perpetual Trusts, 136 Tax Notes 1216 (Sept. 3, 2012), Waggoner reaffirms
his Shelf Project proposal and his criticism of the Treasury
Department’s proposal for dealing with perpetual trusts. The Treasury
Department’s proposal would leave many trusts and much wealth GST exempt
for much longer than Congress originally intended. The Waggoner
proposal, if enacted, would be much more effective. Belcher and the
other attorneys argue that Congress should do nothing (a position
refuted by Johnson), but if Congress is to do something, the attorneys
essentially embrace the Treasury proposal.

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