The Trust Property Bankruptcy Isolation System

Bankruptcy isolation of trust property is a unique function thrust system owned. It means that during the whole existence of a certain trust, the trust property is isolated not only from the bankruptcy of the testator, but also from the bankruptcy of the trustee and the beneficiary. The function of bankruptcy isolation theoretically is based on the independence of trust property. According to the principle of independence of trust property, the trust property is independent from property of testator, property of trustee, also the property of beneficiary. This article first analyses the rationale which bankruptcy isolation of trust property is based on. Then, we combine it with the Anglo-American case. We analysis the relevant regulations and laws, followed by suggestions and recommendations, in order to introduce a deep and thorough discussion of bankruptcy isolation.This article consists of four chapters. The first two chapters mainly introduce the system of trust property’s bankruptcy isolation, by giving the definitions and features of trust property, trust property independence via the Anglo-American case. The procedures of bankruptcy isolation are also included in this chapter:trust publicity and trust transfer. The chapter three focuses on the trust property’s bankruptcy isolation. The chapter four evaluates the risk of law on trust property’s bankruptcy isolation. There are two major risk forms:Void trust and trust revocable. We agree the efficiency of current law in regulating the involved parties’ behaviors and responsibilities, while also raise critical views on its content and rationale. We deliver our views on confusion brought by the law in China defines trust property as "entrust" not "transfer" and offer suggestions on the issue as well. Besides, trust registration is the standard procedure to take the law into effect. It is very unfavorable to trustee as well as testator. In the end, we humbly leave our recommendations and suggestions based on the two issues mentioned above.