¶ 201
Overview
Scope of the chapter. This chapter examines the three location decisions that every long-term trust requires: the law that will govern it, the place where it will be administered, and the courts that will hear disputes about it. It begins with the classical choice-of-law rules of the Restatement (Second) of Conflict of Laws and the codified rules of the Uniform Trust Code, and explains why American law separates questions of validity, construction and administration and may assign each to a different law. It then considers the Uniform Conflict of Laws in Trusts and Estates Act, given final approval by the Uniform Law Commission in 2026, and the Hague Convention on the Law Applicable to Trusts and on their Recognition, which governs the recognition of American trusts in many of the countries where clients hold assets or have family. It examines the statutes by which offshore and domestic jurisdictions protect their trusts against foreign law and foreign judgments, the constitutional limits on a court's jurisdiction over a trustee and trust property, and the constitutional limits on a state's power to tax trust income. It closes with a method for choosing the governing law and the place of administration for a particular trust.
Four terms. The words used for location in trust practice are used loosely, and the looseness causes errors. This treatise uses four terms with fixed meanings.
- Governing law is the body of law that determines a question about the trust. A trust may have one governing law for all purposes or several, each governing a different class of question (see infra ¶ 230).
- Place of administration (or principal place of administration) is the place where the trust is in fact administered: where the trustee keeps the records, makes decisions and holds or manages the property. The Uniform Trust Code uses the term "principal place of administration" and lets the instrument designate it within limits (see infra ¶ 220.04).
- Situs is a practitioners' word that usually means the place of administration together with the governing law chosen to accompany it. When a planner speaks of "moving the situs" of a trust, the planner usually means changing both. This treatise uses "situs" in that combined sense only where the context makes the meaning clear.
- Forum is the court in which a dispute is heard. The forum applies its own choice-of-law rules to decide which law governs, so the forum and the governing law are separate questions, and a choice of governing law protects the trust only as far as the forum that hears the dispute will respect it.
Why location matters more than it did. For most of the history described in chapter 1 (see supra ch. 1), a trust was created, administered and litigated in one place. The settlor lived there, the trustee was a local bank or a family member, the property was local, and the beneficiaries lived nearby. The question which law governed rarely arose, because every connecting factor pointed to the same state. That alignment has broken down. Families are dispersed across states and countries. Trust property consists largely of intangible interests in entities and financial accounts whose location is a legal construct. Trustees are corporate fiduciaries with offices in several states, and the functions of the trustee are divided among administrative trustees, directors and protectors who may live in different jurisdictions (see infra chs. 6–15). Several states have built trust codes designed to attract trust business by offering features unavailable elsewhere: perpetual duration, directed trusts, self-settled spendthrift trusts, purpose trusts and quiet periods. The result is that a modern trust usually has connections with several jurisdictions, and its designer must decide deliberately which law and which place will control.
Two sets of rules. The choice of law and place of administration is governed by two sets of rules that must be read together. The first is the forum's choice-of-law rules: the Restatement (Second) of Conflict of Laws, which most American courts still follow for trusts, the Uniform Trust Code in the states that have enacted it, and, prospectively, the Uniform Conflict of Laws in Trusts and Estates Act. These rules decide whether the forum will give effect to the settlor's choice. The second is the constitutional framework: the Due Process Clause, which limits the jurisdiction of a court over a trustee and the power of a state to tax trust income, the Full Faith and Credit Clause, which requires a state to recognize the judgments of courts with jurisdiction, and the Commerce Clause, which limits discriminatory and unapportioned state taxes. A choice of law that the forum's conflict rules respect may still fail if a court with jurisdiction enters a judgment that another state must enforce, and a place of administration chosen for tax reasons may fail if the trust keeps contacts with the state whose tax it was meant to avoid.
The argument of the chapter. The settlor's freedom to choose the law that governs a trust is broad but not unlimited, and its limits are different for different questions. Choice is freest for the meaning of the trust's terms, broad for matters of administration, and narrowest for the validity of the trust and of provisions that affect third parties, such as spendthrift provisions and self-settled trusts. A choice of law accomplishes most when it is accompanied by a real place of administration in the chosen state: a trustee resident there, records kept there, decisions made there and, where possible, property held there. The planner should therefore choose the governing law and the place of administration together, as one decision, and should draft the instrument so that both can be changed when circumstances change (see infra ch. 20).
Sources. The Hague Convention text and its status table were read on the website of the Hague Conference on Private International Law. The Uniform Trust Code provisions were read in the text of enacting states that adopted them without change, and the Uniform Conflict of Laws in Trusts and Estates Act in the drafting committee's June 2026 draft; the final text approved in July 2026 should be consulted before reliance. The state tax decisions discussed were read in full text. The offshore statutes are cited in the revised editions discussed in the companion volume, Lighthouse on Asset Protection, chapters 22 to 24.