On The Application Of Trusts In The Adult Appointed Guardianship System

The Adult Appointed Guardianship System removes the shackles of legal subordination and gives adults the freedom to choose their guardian,but the agency risks associated with the administration of property are significantly increased.By placing the guardianship estate under the management of a trustee of a trust,the agency risk can be addressed through the independence of the trust estate,and the security of the guardianship estate can be ensured by the duty of loyalty imposed on the trustee.This article aims to explore ways to break through these difficulties,based on the useful legislative and practical experience of China and other countries(and regions),in order to achieve synergy between trusts and intended guardianship and to protect the assets of more wards.Chapter 1 discusses the importance of the application of trusts to guardianship,divided into two parts: the limitations of the intended guardian in managing the property and the significant advantages of having the property managed by the trustee of the trust.The general lack of kinship ties between the intended guardian and the ward,coupled with inadequate guardianship oversight mechanisms,leads to a significant increase in the agency risks associated with the administration of property by the intended guardian.The independence of the trust property and the special liability created by trust law for the trustee in the event of a breach of the duty of fidelity demonstrate the safety of trusts in the management of guardianship property.Chapter 2 sets out the current status and dilemmas of the application of trusts in the context of statutory guardianship,analyzing the features of such trusts through practical examples handled by WANXIANG Trust,and examining the current institutional environment and the dilemmas in the practical operation of such trusts in light of these features.Firstly,the qualifications of trustees and principals of such trusts are limited.If the trustee receives low remuneration and manages the property for more than one trustee,it will touch the scope of business trust.However,China limits the trustee of business trust to 68 trust companies approved by CBRC,and other individuals/organizations face difficulties in obtaining the qualification of trustee.Leaving the trust companies alone will lead to limited eligibility of the trustees and weak synergy of personal care.Secondly,the trustees of such trusts need to be better supervised.It is difficult for the trustee to exercise internal oversight when the principal/beneficiary becomes a ward.At the same time,China’s trust law does not affirm the statutory status of a private benefit trust monitor,making it difficult for self-created monitors to perform their duties.Thirdly,the shackles of the Trust Property Disclosure easily lead to the failure of the purpose of establishing such a trust.On the one hand,the Trust Property Disclosure in China is limited to specific property and only one way is registration.On the other hand,China has linked the registration of trust property to the effectiveness of the trust,but has not clarified in the trust law and any normative documents how to implement the registration of the trust,which could easily lead to the trust described in this paper not being effective,and then the purpose of externalizing the guardianship property to the trustee of the trust to safeguard the property would be defeated,and the incentive for the trustees to establish such trusts would be significantly reduced.Chapter 3 sets out the successful experiences of other countries(regions)in the application of trusts to intended guardianship,including various trust products and systems of trust monitors(administrators,conservators).Although the situation varies from country(region)to country(region),there are certain elements to learn from.The main elements include: firstly,learning from Chinese Taiwan,where a trust company and a public welfare agency act as co-trustees to address the problem of the trust company’s weak capacity for personal care coordination.Secondly,the establishment of a public trustee in Singapore to solve the problem of restricted qualifications of trustees and principals.Thirdly,study the introduction of family court supervision in Japan,subject to restrictions on their rights.Chapter 4 explains how to break through the dilemma described in Chapter 2,and proposes corresponding measures in three aspects.First,in terms of subject matter,on the one hand,the subject matter function of trust companies as trustees should be improved,including acting as co-trustees with public welfare organizations and guiding trust companies to lower the threshold of principals;on the other hand,the government should try to set up non-profit public trustees to serve families who cannot meet the threshold of trust companies as principals.Secondly,a systematic system of trust supervisors should be established,and the specific circumstances,qualifications and obligations of these supervisors should be drawn from the trust laws of other civil law countries(regions).The Family Court should be appointed to oversee the selection,resignation and dismissal of the supervisor.At the same time,the right to choose a successor trustee should be given to the trustee in the trusts mentioned herein,so that the life of the ward will not be affected by the termination of the trustee’s duties.When there is no suitable trust supervisor,public welfare agencies can be invited to act as trust supervisors.Thirdly,a uniform system of Trust Property Disclosure should be established to suit the characteristics of such trusts.The "registration effective doctrine" should be amended to "registration effective doctrine" and the scope of registration should be limited to registration effective real property rights and registration intellectual property rights.For other property,a trustee notification obligation and a "trustee-in-possession" approach should be adopted.