Buckles: The Federalization of Fiduciary Obedience Norms

Johnny Rex Buckles (Houston) has posted The Federalization of Fiduciary Obedience Norms in Tax Laws Governing Charities: An Introduction to State Law Concepts and Analysis of Their Implications for Federal Tax Law, 4 Estate Planning and Community Property Law Journal 197 (2012).  Here is the abstract:

State law has long regulated the conduct of charity fiduciaries by imposing fiduciary duties on them. Most commonly recognized are the duty of loyalty and the duty of care (or prudent administration, in the case of a charitable trust). Whether charity fiduciaries are subject to a third duty, a distinct “duty of obedience,” is a matter of some debate. Part of the debate appears to originate from differing conceptions of the scope of the duties of loyalty and care, whereas other aspects of the debate appear to stem from competing visions of the degree to which fiduciaries should be bound by their historic charter purposes, missions, or both. The basic questions center upon whether — and, if so, under what circumstances and on account of what duty — charity fiduciaries must cause their charities to operate in accordance with the law, their charter purposes, and their precise missions (i.e., the specific charitable objectives that the charity has adopted to advance more general charter purposes). This article surveys the basic legal and policy issues under state law, examines how federal tax law embraces or rejects various obedience norms, and discusses how federal tax law should be reformed so as to promote more effectively the elementary obedience norm that does feature prominently in federal tax law — the charity advancement norm.

Lloyd Mayer