Study On Testamentary Trusts Of China

Testamentary trust or trust of after death is one of the civil trust which is established inthe form of testament in order to dispose the heritage according to the decedent’s will.Testamentary trust plays a significant role in many circumstances such as disposing theheritage, settling the disputes derived from inheritance, ensuring the heritage is distributedaccording to the will of decedent and achieving legitimate tax avoidance in the inheritance taxcountries. The earliest origin of testamentary trust could be the heritage trust of ancient Rome.However the heritage trust at that time was not the real testamentary trust we know today butjust a kind of heritage disposing system. It is generally believed that the origin of moderntestamentary trust was derived from the usufruct system from medieval England.Testamentary trust system is widely implemented in western countries and Japan whichillustrates the advanced nature of this system.The earliest origin of China’s trust business could be traced back to the Republic ofChina. However it was until2001that China formally promulgated the “Trust Law” andofficially stipulated the testamentary trust system. It has been more than a decade since the setof the trust law, but our testamentary trust system was rarely practiced in the past ten years. Inthree decades of reforming and opening up, our economy has been well developed, thefinancial power continues growing and personal wealth is increasing rapidly. Cases in courtcaused by heritage disputes are frequently reported in recent years which indicates that ourlaw of inheritance had lagged the development of modern society and could not meet people’sdemand after thirty years development since it was promulgated in1985. So we can say that itis a trend of our time to implement and practice testamentary trust system thoroughly.Although testamentary trust system is stipulated in our “Trust Law”, the content is too simpleand something unreasonable can be found in it. This might be a problem which hinders thesystem being applied into practice. Therefore this paper is going to investigate thetestamentary trust system systematically and try to provide some referable suggestions on theimprovement of our testamentary trust system.The paper is divided into four parts. Part one first introduces several live cases to discussthe conception of testamentary trust system and analyze the necessity and possibility ofpracticing it. Then it conducts an investigation in the historical origin and introduced the development of modern testamentary trust system generally through the examples of England,America and Japan. Part two is an introduction of the fundamental theory of our testamentarytrust system. In this part, the author systematically introduces the conception and features oftestamentary trust and testamentary trust property, party of testamentary trust and theestablishment, alteration and termination of it. Part three focuses on investigating the existinglegal regulations to analyze the deficiencies and obstacles that hinder the development of ourtestamentary trust system. From the perspective of legal system, the main problems are thatthe legal conflict between the form and process of establishment of testamentary trust, legallimitation of testamentary trust trustee, uncertainty of the ownership of testamentary trustproperty and irrational regulations of our trust registration system. Moreover, from theperspective of society, the main problem is that our practice of testamentary trust is hinderedby the backward notions of our people. In the view of the deficiencies analyzes in part three,in part four the author proposes his academic suggestions in order to provide a reference forthe future development of our testamentary trust system.