Article by Stewart E. Sterk
Individuals living in organized society have limited freedom to choose the laws that apply to them. I cannot simply announce that I am subject to the New Hampshire resident income tax; if I want to enjoy the benefits of New Hampshire tax law, I have to move to New Hampshire. Similarly, if I want to take advantage of Florida's homestead exemption to protect myself from creditor claims, my only option is to move. As long as I live in New York, I am stuck with New York income taxes and New York's homestead exemption. Those are some of the prices I pay for living in New York.
In some circumstances, I can take advantage of the laws of other states without changing my home. I can take advantage of Montana's eighty miles per hour interstate speed limit by taking a vacation in Montana. If I want to buy a gun without a permit and carry it around, I can do so if I take a trip to Arizona or a host of other states. But I can't bring my driving practices, or my gun, back to my home state.
In none of these cases can I simply stay home and claim the benefits associated with the laws of another state or country. My home state restricts my choices because those choices would have consequences for other members of the community, and local law reflects the community's choice about the balance between my preferences and the consequences of effectuating those preferences.
If I cannot ordinarily dictate the law that applies to my actions, why should I be able to--without leaving my home state--create a trust that avoids obligations imposed on me by my home state? That is, why should a court ever honor a choice-of-law clause in a trust instrument? Even if the trust instrument I execute is silent about choice of law, why should I be able to avoid my home state's law by locating the trust in another state?
About the Author
Stewart E. Sterk. Mack Professor of Law, Benjamin N. Cardozo School of Law, Yeshiva University. Thanks are due for the valuable comments by participants at the Tulane/ACTEC Symposium, and for Sophie Winnick's excellent research assistance.
Citation
97 Tul. L. Rev. 1097