Mr. Foley, a partner in Schwabe, Williamson, Wyatt, Moore & Roberts, practices law in Portland, Oregon. He is a Trustee of The Foundation for Economic Education.
Tier incessant attrition of the Remnant, coupled with an obvious and concomitant decay of civilization, calls forth general thoughts of the consequences of morbidity and mortality, and particular concern for the concept of stewardship. All human beings realize that this earthly journey necessarily possesses a beginning and an end, and that during this pause in the inexorable gulf of time, each person acquires intellectual and spiritual things of value, if not material goods.
Some perceptive individuals reflect upon the severe constraints imposed on mankind by the regulatory state and seek to release us all from these fetters of the Leviathan; their legacy may consist of wise words or material property which they wish to dedicate to the enhancement of the freedom philosophy and the resultant surcease from human bondage. It is to these individuals alone that I address this essay from my solitary perch as an attorney who practices law with the combined purpose of representing individuals in their quest for liberty and, in so doing, enabling me to indulge in my first love, the study of the foundations of the moral private property order.
Stewardship countenances trust. A good steward wisely employs that which has been entrusted to him so as to achieve the ends directed by the creator of the trust. The virtuous steward must never substitute his judgment or his purposes for those set forth by the trust creator. In this tract, several types of stewards merit discussion: First, those persons who create value as a heritage for the future (“trustors” or “settlers” in legal parlance) and second, those individuals charged with the obligation of carrying out the trus-tors’ directives (“trustees”) and those individuals or institutions receiving the bounty of the trustor (“beneficiaries”).
The impetus propelling this article derives from the following all-too-common occurrence: An individual, employing his talents in a principled and creative manner during his earthly sojourn, accumulates a store of wealth; he also acquires a belief in the essential premises of the freedom philosophy and wishes to bequeath part or all of his estate to assure the continued exposition of that coterie of moral precepts; he seeks out legal advice and designs a trust or a foundation or any of several other juridical devices to accomplish his goal; after his demise, an objective observer perceives that those entrusted with effecting the trustor/donor’s beneficent purposes actually thwart his intentions and devote his property (the “trust res,” in the lingo of the legal profession) to persons and causes which the would-be benefactor most likely would find both loathsome and odious!
Several compelling questions arise from this common set of circumstances: First, how does the mulcting of the trust comport with principles of justice? Second, what legal means exist to rectify such thwarted expectations? Third, how better could the trustor and his counsel design his estate plan to avoid clear miscarriages of intention? I devote a few lines to each of these seminal inquiries, fully cognizant of the fact that each issue deserves far more than the cursory attention bestowed here.
Principles of Justice
The fundamental principle of justice is respect for free and nonaggressive choice. One essential element therein consists in the ability of an individual to rely upon promises made in good faith. Creation of an estate plan in any one of numerous common forms entails express and implied contractual undertakings to use and guard the entrusted property as a good steward within strict moral and ideological guideposts. Consequently, de facto abolition of the trust by misuse of the assets for repugnant purposes not only breaches solemn covenants but also amounts to theft. In a phrase, the events described do not accord with justice.
But what of the law—does it not compel enforcement of final promises? Unfortunately, our Anglo-American jural inheritance contains state-compelled “policy” norms which circumscribe and curtail the free transfer of property by an owner at or after his death. The law, indeed, often aids the defaulting steward. The English common law—an instrument employed to establish and assure vitality to the monarchy and, hence, the Levia-than—early ordained a legislative and judicial policy against “restraints on alienation” (limits placed upon the free transfer of property by and to citizens and institutions, including those who took property by inheritance or gift). Two of several examples, the judicially-enacted “rule against perpetuities” and the Parliamentary Statutes of Mortmain, illustrate this policy. The rule against perpetuities, which survives to this day in some form in most Anglo-American jurisdictions, limits the temporal existence of many trusts. The Statutes of Mortmain constrained the gifts of real property to the (Roman Catholic) Church; several states currently limit the amount and type of asset which may be transferred to certain charitable institutions.
In addition, most English-speak-ing states enacted other legislation or created additional judicial barriers which continued to retard the untrammeled discretion of the trustor in the disposition of his property. For example, most of these United States permit a surviving spouse to take a portion of an estate in direct contradiction to a will, a trust, or any other estate planning device. Again, in earlier years, children [particularly the eldest legitimate male offspring (the doctrine of primogeniture)] occupied a favored position and could elect against or challenge transfers of property under stated circumstances.
Of course, state and federal inheritance and estate taxes, and death duties (normally steeply graduated with an eye to redistribution of wealth) further hinder implementation of the trustor/testator’s wishes. The most salient governmental power invading the arena of property disposition on death involves the laws of intestate succession, which provide explicit directives for the transfer of a decedent’s estate upon his death without a valid will—and the state courts exercise the power to determine validity of a will or other testamentary document!
Indeed, proponents of statism often argue that the case of intestate succession provides an instance of the mandatory need for the establishment of a government; the supporters of the state urge that government must exist pursuant to a Rule of Necessity and that without laws providing for the orderly transfer of property upon death sans directions, civil chaos would ensue. In fact, the pioneers in the Oregon Territory formed the first formal government in that region as the result of the death of Ewing Young, the wealthiest man in the area, who had the audacity to die possessed of considerable land and cattle but without a will.
I do not choose to enter the limited government vs. rational anarchy fray at this juncture; I pause only to observe that the assertion of necessity in this milieu may not be well taken, as property of many kinds and types could just as well return to “ferae naturae,” in the quaint old English phrase, to an unclaimed natural state ready for use by the first entrepreneur to come along.
Not surprisingly, I adhere to the unpopular and distinct minority position that the creator or legitimate possessor of property should also possess unharried freedom to disperse his property as he sees fit, so long as the commanded use does not coerce or work a fraud or aggressive act against another person or group, and so long as the chosen disposition does not violate or obviate a prevailing and enforceable contractual right of another.
One would hope that each of us would use good sense and basic morality in the devolution of our earthly goods, as well as our ideas—that each of us as testator or trustor would act as a good and wise steward—but I find myself quite incapable of discerning just what constitutes the ultimate reasonable or moral action for anyone else. As the old saying goes “don’t criticize your brother’s steps unless you have walked in his shoes.”
Moreover, I surmise that the private property order cannot long survive the theoretical onslaughts of the command state if we bequeath to the government (most likely, the elite who use pressure group power, or the rabble who construct the majority) the power to divine right and wrong, good and evil. One who creates or fairly acquires value should possess the ultimate choice of the use of those things, (recalling the caveat concerning coercion and fraud): He should be able to consume, hoard, bequeath, give, transfer or destroy his wealth in the manner best suited to his subjective value structure as he determines, even if the entire world believes his actions to be cockeyed and foolish.
Does the law afford no assurance of compliance with the desires of the deceased trustor? Precious few, particularly where the trustor designs a less than traditional devise or designates an unpopular beneficent purpose—and preservation and enunciation of the precepts of liberty do not draw great favor from the standard bureaucratic judge or regulator.
If the gift descends to a named person or institution, judicial enforcement presents less of a problem, since the specified beneficiary possesses standing (judicially recognized ability) to sue to enforce the transfer, in addition to an obvious interest in receipt of the legacy. Nonetheless, a transfer of an estate to ABC College or XYZ Foundation may work only a transitory effect for the good envisioned by the trustor: Institutions exhibit the perverse habit of change of principle depending upon the individuals at the helm, and ABC College or XYZ Foundation may, within a very short time, develop a contrary tendency, substituting the study of Marx for the sampling of Locke. The law occasions little solace to the disappointed under these circumstances,
More invidiously, a deathbed transfer for a wise purpose may be interdicted after the passage of time by an all-knowing legal system which determines, as a policy matter, that the transaction bears an unlawful component which must be slaked by the mighty state. Thus, a donation by will to establish and maintain a school for “poor male white orphans” in the city of Philadelphia in 1831 may run afoul of a legal doctrine born 125 years later which would compel the doors of all educational institutions to be flung open to all members of both sexes and every race, no matter the original donor’s intent.
Since the law tends to reflect a varying mixture of the ridiculous and the sublime at any given time, no one can rest easy with a considered choice of bequest; a grantor must recognize that future purveyors of power may very well obviate the best of plans for the worst of reasons. The result of inhibition of personal freedom in this milieu constitutes robbery, pure and simple, and a generally uncontested one at that since the trustor cannot reach out from the grave to protest and the jural structure normally quells all potential living challenges with opprobrium or a sneering twaddle about lack of standing (there exists no legal basis for the contender to object in this case because he does not display a legally-recognizable interest).
A Tale of Three Stewards
Perhaps a litany resembling the foregoing inspired a well-known tax and probate lawyer of my acquaintance to suggest (only half in jest) that the perfect estate plan occurs when one succumbs while placing his last nickel in a slot machine. Unfortunately, that little joke contains two fundamental fallacies. First, it does not answer the question of disposition of the gambler’s final account if, by chance, his last nickel calls forth four lemons; such a calamity à la Ewing Young might result in even greater governmental intervention in our lives, all in the grand name of necessity. Second, and more pertinently for those who take responsibility and accountability seriously, it is just such a consumption-oriented, live-for-the-day philosophy (solicited and impelled by the growth of monolithic government) which contributes mightily to decay of capita] and reduction in the standard of civilization. Those who believe in responsibility and accountability for their actions here also recognize that their stewardship includes a duty to distribute wisely their material and spiritual legacies; consumption appetites leave precious little of value for the future.
Focus on the two obvious stewards, the trustor and the trustee, reveals some startling similarities in obligation. Each steward participates in a solemn contract; each must strive to fulfill that promise. Less apparent, but equally penetrating upon reflection, rests the mandate upon the third steward, the beneficiary of the gift.
At the outset, the trustor owes the obligation to choose wisely his beneficiary and his trustee, but his obligation neither begins nor ends there. This essay assumes, as its minor premise, that the trustor has created and accumulated something of value during this venture, something which should be passed forward at death.
What Is of Value?
First, then, the trustor must analyze what it is that he possesses which exhibits true and lasting value. Few of us will be noteworthy in the fourth generation hence; even with the modern wealth of paper and microfiche, all but a minuscule fraction of the present day inhabitants of this earth will be remembered imperfectly if at all; how many reading these words really know anything about their great grandparents: Their loves, their tragedies, their beliefs? How many students attending classes in the nation’s great institutions of higher learning really know anything concerning the benefactor for whom their particular hall of study is named?
While moth and rust take their own sweet precious time in these days of synthetics, plastics and alloys, wordly treasures do not seem to enjoy longevity in the eternality of time. What the trustor may possess in surfeit is not so much material as spiritual or intellectual: Seminal ideas conceived and insights gained from experience in living within the boundaries of fundamental principles of natural law.
While the material largess may wither and fade after a generation or two, wisdom, if properly nurtured, will live on to guide future seekers after truth. Indeed, one acquainted with truly salient ideas may wish to cloak his own life with disguise or anonymity, the better to show forth the concepts of great worth. Thus, the trustor must accumulate things of permanent value and he must acknowledge the importance of those items and his accountability therefor, before he concentrates upon the method of dissemination and distribution.
The trustor’s second chore—the choice of beneficiary—affords no easier task. The commonplace disposition of goods to the immediate family often occurs by rote and with a grudging sense of duty if not outright compulsion. Few individuals objectively analyze that which they convey and their intended recipients. The man who spends his last nickel in Reno may be doing his offspring a true favor since one school of thought observes the unpleasant tendency of second and third generation legatees to “dissipate inherited wealth unwisely.” The true wealth conveyed to our immediate families may well consist of rules for living and canons of beliefs; these tend to prove far more lasting than a gold watch and a shuttered bungalow.
To Preserve Liberty
Suppose that the testator/trustor, cognizant of the true value which he has created and collected, wishes to pass his wealth on with the express intention of sustaining the march of liberty. How shall he choose the instrument to accomplish his goal? One common practice involves an outright gift to persons or institutions who will carry on the donor’s good works. These recipients very well may be members of the family, or friends and trusted associates, or foundations, schools, churches and like enterprises. In any event, the trustor’s task is similar: He must ascertain whether the recipient possesses the principle, the integrity and the honor to be a good steward of the candle handed forward at the grave.
The rule is simple; its execution proves exceedingly difficult. Human observation and analysis prove mighty deceptive: A gulf may separate appearance and reality. The heir or the foundation which today displays fidelity to fundamentals may tomorrow succumb to false doctrine and expedience. In the true sense, therefore, the recipient also possesses obligations as a steward to live up to the trust reposed in him. If the settlor chooses carefully and with attention to principle and natural order, he has discharged his stewardship obligation to the best of his ability; there remains to the recipient a duty to carry on the flame in righteousness.
One other common device exists to facilitate the transfer of property for a good cause: The ubiquitous trust, the theme impelling this introductory little essay. Although cloaked in discrete trappings, the trust adduces inquiries and problems similar to those discussed heretofore. The trustor normally establishes a trust to accomplish one of two general desires: On the one hand, he may wish to convey his estate to a person or a group or class of individuals as the ultimate beneficiaries, but he determines that the beneficiaries are not capable of prudent management and thus require a trustee to protect their interests within the guidelines of the trust; on the other hand, he may wish to diffuse his estate over a long period of time after his death for certain charitable or beneficent purposes (including, perhaps, the funding of scholars or institutions to promote the freedom philosophy), to which end he charges his trustee to carry out his will in this endeavor. As with the choice of beneficiary, the trustor must select his trustee (and any successor trustees) with astute care. As with the beneficiary, the trustee becomes a steward for the cause under acceptance of the contractual direction of the creator of the trust.
The Role of the Beneficiary
Despite some obvious examples, little attention is paid to the proclivity of some direct beneficiaries to stray from the principle of true stewardship. The law imposes no real sanction against the defaulting beneficiary who squanders his inheritance—particularly in light of the judicial disapproval of restraints on alienation. With some exceptions, most devises or bequests are transferred “in fee,” an archaic notion referring to the passage of all elements of ownership in a property. Once vested with all rights in a property, the recipient may do with it as he pleases (save forceful or fraudulent use), harmoniously with the private property order. Positive law affords no means of accountability; only the natural law of consequence exacts due sanctions.
A more perplexing problem arises where a trustor dedicates his estate in trust for beneficent purposes, yet the original trustees or their successors emasculate the purposes of the instrument, ignore the mandate of the trustor, and apply the trust res in a manner directly contrary to the will of the trustor. As noted, the legal system offers little help: A proper recipient under the terms of the trust may challenge disbursement in a court of equity, but the chances of success of this attack ordinarily dwindle in light of general language in the document granting broad discretion to the trustees, together with a juridical propensity to slight the cause of liberty and promote the liberal doctrine of slavery.
No easy solution exists for the reflective trustor faced with the panoply of problems outlined here. Few of us are able to forecast the development of the political and legal systems. Few of us can judge even our closest friends, family and advisors with unerring accuracy. Few of us display even a modicum of consistency to basic principle. In a sentence, our finiteness trips us up at the threshold and we find it almost impossible to regain our balance down the path. The most carefully chosen words and the most adeptly drafted sentences recorded on parchment suddenly obtain singular and divergent meanings at the hands of courts and legislatures bent on mischief.
Suggestions to Help the Lover of Liberty Prevail
Is it all dross, or can the thoughtful and persistent lover of liberty prevail? Only the future will answer that question in each and every instance, but I offer several suggestions to those who would heed the warning sounded, realizing that I, like Socrates, really know only that I know very little.
First, rely upon and repair to fundamental principles in harmony with natural law. Consistency and unrelenting order mark the universe; that same adherence to principle and method suggest the best chance of success.
Second, assess what is valuable within that which you own, and concentrate on the task of passing that value on to those who will appreciate the gift. Recall that man generally engages in a quest for remembrance, but that the most ornate and opulent splendor will not assure fulfillment of that dream. Note the power of ideas: those few individuals most revered from ancient history—Jesus, Socrates, Confucius—owned virtually nothing of material worth, yet their ideas guide us today.
Third, select your trustees and beneficiaries with the same care and caution that would attend the serious affairs of life. Seek out persons of principle, integrity and honor; nothing less will do. Act as a good steward; demand that your trustees and your beneficiaries perform likewise.
Fourth, provide for successor trustees and residuary beneficiaries with the same prudence; the mode of substitution should be carefully established and astutely monitored by those who share your ideals. Be aware that the flaws in the system usually develop in the secondary and tertiary selection process.
Fifth, craft the contractual instrument—be it will, trust, charter, or contract—with exceeding great care. Delineate your principles and your standards for administration explicitly, cognizant of the frailties of the language.
Sixth, during your lifetime, constantly reassess your purposes and your choice of means in view of changing developments in the world and your own ever-increasing wisdom. No instrument offers such perfection that it cannot stand improvement.
Finally, when you have run the good race, rest easy in the brilliant assurance of Mr. Nock that if you have something of value to contribute, the Remnant—whom you will never know—will hear you. 
1. Obviously, a wealthy man or woman might also display adherence to myriad intellectual doctrines, and thus face the dilemma analyzed herein. It is the doctrinal voluntarist and his predicament which piques my concern.
4. "Mortmain” literally meant “dead hand” in the Norman-French lexicon which served as the early English legal language. The kings, through controlled Parliaments, restricted the amount of realty which could be devised to the Church, noting that the Church in the Middle Ages served as the primary institutional rival to the monarchical state.
5. Most states require competency of a testator (one making the will), clarity of the instrument, proper witnesses (normally, a witness cannot be one who takes a share under the will), and a host of other procedural minutiae. Moreover, some states treat wills as expunged or invalidated upon a subsequent marriage or divorce; some provide strange tests for competency, lack of fraud and duress and the like; and some jurisdictions have developed a whole host of technical rules which seem to delight in invalidating a holographic (handwritten) will. Other doctrines abound; these comments serve solely as examples.
6. For those interested in my views on the subject, see e.g., “Individual Liberty and the Rule of Law,” 21 Freeman, pp. 357-378 (June 1971) [Reprinted at 7 Willamette Law Journal 396-418 (December 1971)] and “The Source of Sovereignty,” 32 Freeman, pp. 167-175 (March 1982).
8. Of course, individual devisees may demonstrate like deviation, even if the gift bears no ideological aspects; many a parent has bequeathed pittance or plenty to children or other heirs, allowing the latter to squander their inheritance in near record time.
9. See Commonwealth of Pa. v. Board of Directors, 353 U.S. 230, 77 S. Ct. 806 (1957) and holding on remand, In Re Girard College Trusteeship, 391 Pa. 434, 138 A2d 844 (1958); Ultimately, the Pennsylvania Supreme Court upheld private administration of the school under the terms of the will. Query: would this holding be followed today? I think not; see a recent example of judicious meddling, In the Matter of Johnston, 460 NYS 2d 932 (March 21, 1983).
10. "Wealth” in this vernacular ordinarily refers to money, property or investments. “Unwisely” constitutes a value judgment on the part of the observer which may well be unmerited and the product of envy.
11. Trusts generally fall into two categories, inter vivos (a “living” trust created during the settlor’s lifetime) and testamentary (created by will to become effective at death unless re-yoked). The cursory analysis here provided applies generally not only to both inter vivos and testamentary trusts but also to private foundations, charitable organizations and like institutions created for the purpose of discussion and dissemination of ideas.