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University of Cincinnati Law Review

Abstract

This Article identifies the key role that trust law can play in resolving collective action problems pertaining to assets with multiple stakeholders. Devising a multi-beneficiary trust may serve as an effective institutional alternative, when the direct governance of an asset by its co-owners reaches a deadlock, and the partition of the asset among them is either impractical or inefficient.

The Article examines various case studies in which property may become deadlocked among multiple stakeholders, featuring either commons or anticommons problems. In the case of land, the need to assemble land from multiple owners for (re)development, or the task of governing common properties in residential associations, may be prone to such deadlocks. In the case of intellectual property, such as in governing the copyrighted repertoire of a prominent musician posthumously, partition of copyrights to specific pieces of work among multiple heirs may prove inefficient and damaging to the artist’s legacy. The same may also apply to tangible goods that have a particular value when part of a collection, such as certain artworks or cultural artifacts.

Jurisprudence on trusts focuses on the scope of fiduciary duties owed by a trustee to the trust’s beneficiary, with the question of multiple beneficiaries usually arising in the specific context of an intergenerational trust. This body of law can also be utilized, however, to address scenarios of contemporaneous multiple beneficiaries. Somewhat like a corporation, the trust employs legal mechanisms to govern a distinct pool of assets, while dealing with competing or conflicting claims both among beneficial owners and vis-à-vis third parties. The trust can thus serve as an alternative for deadlocked property when an ex ante or ex post incorporation of assets is unfeasible or inappropriate, and is less intrusive than other solutions, such as eminent domain.

Unveiling the potential of multi-beneficiary trusts for governing deadlocked property may call for incentivizing the voluntary establishment of inter vivos or testamentary trusts. But it can also prompt the creation of statutory mechanisms that would grant courts the discretionary power to establish trusts ex lege to resolve a persisting deadlock, at least for a specific period of time or for the execution of a certain project. This Article further argues that turning co-owners into co-beneficiaries in such a statutory trust should not be considered a taking of property.

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