Utah Jazz and the Legacy Trust
Wednesday, 1 March 2017
by Erin McAllister, Paralegal
“As a family, we have always considered the Utah Jazz a community asset and it has been our privilege to serve as stewards of this team for more than 30 years,” said Miller. “There have been many opportunities to sell and move the franchise, but from the day Larry and I purchased the Jazz our goal was to keep the team in Utah. The Legacy Trust will help to ensure this commitment is kept for generations to come.”
What is a legacy trust? A legacy trust, also known as a dynasty trust, is a form of generation skipping trust (GST). This type of trust is normally irrevocable and is intentionally formed to pass assets from the grantor to the grantor’s descendants beyond his/her immediate children (i.e. to grandchildren, great grandchildren, etc.).
A GST allows an individual to pay the estate tax once on assets placed in the trust, and the beneficiaries are allowed to use the property while the assets are in the trust and enjoy the income of the trust during their lifetime. Meanwhile, transfer taxes don’t have to be paid on future transfers until the trust ceases to exist.
The Utah Jazz Legacy Trust has the potential to last hundreds of years. Dennis Haslam, who worked with the NBA to complete this deal has said, “This has the potential to last hundreds of years, maybe longer.” In common law, there is what is known as a rule against perpetuities; this rule forbids instruments such as trusts “from tying up property for too long a time beyond the lives of people living at the time the instrument was written.” In Utah, the law allows trusts to last 1,000 years. Assuming the Miller legacy trust utilizes Utah’s maximum time frame for trusts, the Jazz could be owned by the trust for 1,000 years.
The trust agreement provides for the profits to stay within the trust. The Millers have stated the trust will not provide any "material benefit to the family from the Jazz." It seems the profit stays within the trust. The profit that stays within the trust will be used as retained earnings, for expansion, for player salaries, or other operations. It appears that the trust agreement provides that the earnings of the Jazz are to be reinvested in the team, and since it is a provision of the trust, the trustee has to follow its directions in administering the trust.
This legacy trust agreement requires the Millers to be stewards of the team. It is an organized way to keep the Jazz in Utah with the resources it needs in a trust, and to give the Miller family an opportunity to have stewardship over it and to be the ones to take care of it in the future. This direction would be part of the trust agreement to guide future trustees.
The Miller family obtained permission from the NBA to transfer ownership to a legacy fund that will be managed by Gail Miller acting as trustee. Following Gail, a six-member board of managers will assume the role of trustee. Those six members will all be Miller family members, to be chosen in a process outlined in the trust's founding documents.
Having said all of the above, and from my outside perspective, moving the Utah Jazz to a legacy trust is wonderful. I appreciate the Miller’s innovative thinking and I look forward to having the Jazz in Utah for years and years to come.
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