Estate planning professionals received a critical update at the 60th Heckerling Institute on January 12, 2026, as legal experts announced that the traditional conflict of laws framework for trusts established in 1971 has become obsolete. The panel highlighted how modern trust situs rules must evolve to reflect today’s multi-jurisdictional wealth management landscape, where digital assets and interstate competition have replaced the property-centric approach of previous generations.
The Uniform Law Commission and the American Law Institute are leading comprehensive reform efforts to modernize these rules through the Restatement (Third) of Conflict of Laws and the Draft Uniform Conflict of Laws in Trusts and Estates Act. According to the presentation, the new framework eliminates outdated distinctions between real and personal property while simplifying how practitioners draft choice of situs provisions for contemporary trust arrangements.
Why Traditional Trust Situs Rules Have Failed
The 1971 Restatement (Second) of Conflict of Laws was designed for an era when real estate dominated trust portfolios and probate courts provided constant oversight. However, the modern wealth management environment operates fundamentally differently, with liquid financial assets, non-probate transfers, and aggressive jurisdictional competition among states offering varying tax and privacy benefits.
These locational anchors no longer reflect how wealth is transferred or managed today. The old regime created unnecessary complexity by treating land trusts differently from personal property trusts and by distinguishing between testamentary and inter vivos arrangements.
The Reform Solution Simplifies Trust Conflicts
The emerging legal framework seeks to create a unified approach to trust situs selection regardless of asset type or trust creation method. The reforms collapse historical distinctions that required separate analysis for different property categories, according to the Heckerling presentation.
Additionally, the new rules prioritize settlor intent as the primary guiding principle. The draft Act establishes donor autonomy as the starting point, allowing clients greater freedom to choose governing law subject only to strong public policy limitations.
Modern Choice of Situs Provisions
Based on Sections 207 and 208 of the draft Uniform Conflict of Laws in Trusts and Estates Act, comprehensive choice of law provisions should now address both the principal place of administration and governing law in a single, unified statement. The designation remains controlling when a trustee’s principal place of business or residence is located in the designated state, or when trust administration actually occurs there.
Furthermore, unless trust terms expressly prohibit changes, trustees may transfer the principal place of administration to another jurisdiction, with governing law automatically shifting to the new location. This flexibility represents a significant departure from the rigid anchorage model of traditional trust situs rules.
Five Critical Compliance Considerations
Estate planners must honor donor autonomy by ensuring client intent drives drafting decisions. The new framework treats settlor choice as paramount, moving away from mechanical application of default rules.
Practitioners should eliminate outdated property distinctions from their trust documents. The proposed changes abandon the historical situs rule that governed land by its physical location, instead applying the settlor’s chosen law uniformly to all assets, whether real or personal.
Establishing Sufficient Connection
For a situs designation to be controlling under the new rules, the chosen state must maintain a substantial relation to the trust. Section 207 of the draft Act specifies this requirement is met if a trustee resides or has a place of business in that state, or if administration actually occurs there.
Meanwhile, practitioners must understand default rules that apply when choice of law provisions fail. In the absence of an effective designation, the law of the settlor’s domicile typically governs substantive validity, while the law of the principal place of administration governs administrative mechanics.
Practical Implications for Estate Planning Practice
The modernization eliminates the need for separate rules governing interpretation versus construction of trust terms. The draft Act applies the chosen law to both actual intent and gap-filling rules, reducing potential litigation over which state’s law applies to different aspects of trust administration.
In contrast to the old anchor metaphor where trust situs was fixed like a ship in harbor, the Restatement (Third) approach functions more like a GPS home port setting. The trust can move across state lines and hold different property types while remaining governed by its chosen jurisdiction’s rules, provided it maintains the required functional connection.
Action Steps for Practitioners
Estate planning professionals should immediately review existing trust documents to identify provisions drafted under obsolete conflict of laws principles. Firms should revise form libraries to incorporate the unified framework that treats all property types and trust creation methods consistently.
However, client education remains essential as these reforms increase flexibility in trust situs selection. Practitioners must explain how the new rules allow greater strategic choice while requiring careful attention to maintaining sufficient state connections.
State adoption of the Uniform Conflict of Laws in Trusts and Estates Act will occur gradually over the coming years, though specific timelines remain uncertain. Estate planners should monitor legislative developments in their jurisdictions and consider amendment protocols for existing trusts that would benefit from the modernized framework.
