Analysis On The Structure Of Life Insurance Trust In China

Life insurance trust(LIT)is a combination of life insurance and trust.The settlor changes the beneficiary under the original insurance contract to the trust beneficiary by setting up a trust.This innovative financial product with the cooperation of trust and insurance is regarded by the market as a business opportunity for the trust industry.LIT is known in the industry as a low-profile family trust.Compared with the high fund threshold of a family trust,LIT,which makes full use of insurance leverage function,is less financially demanding.LIT uses flexible trust to make up for the shortcoming of insufficient use of insurance benefit.In today's increasingly aging society,it has opened up a new way of inheriting wealth and protecting the lives of vulnerable people.The transaction structure and legal relationship of LIT are more complicated with the integration of trust and insurance.With many parties involved,there are some problems such as insurable interest and legality of trust property.Due to the constraints of life insurance,the supervision problem of the trust end and lack of regulatory regulation for LIT in China,the goal of the settlor to establish LIT is uncertain to achieve.In practice,the beneficiaries of LIT are usually young children or those who have limited capacity to manage their own insurance benefit.Comparedwith ordinary trust beneficiaries,such as investors with certain investment and wealth management knowledge in the collective fund trust plan,the LIT beneficiaries are vulnerable and the norms and requirements of rights protection of LIT beneficiaries need to be stricter.If we merely rely on the innovative design and pure contractual agreement on the commercial side,the uncertainty problem of LIT cannot be solved.Therefore,it is necessary to better realize the purpose of LIT to protect vulnerable groups and wealth inheritance through specific legislation and supervision system.This paper intends to analyze the three legal models of LIT in China from the perspective of the protection of LIT beneficiaries,and compare them with the LIT modes of other countries or regions to find out the shortcomings of LIT in China.By analyzing the rights protection measures under the existing trust law,the author intends to explore how LIT in China can be better developed and improved and how to realize and guarantee the beneficiary rights of LIT beneficiaries.The first chapter of this paper discusses the development status of LIT in some countries and regions.LIT has been developed in other countries and regions for many years.Based on different purposes such as tax planning or financial security,different models have been developed in different places.And there are some details that can be used for the development of LIT in China.At present,there are three LIT operation modes in China's practice,including property right trusts and a simple fund trust.The second chapter of this paper makes an in-depth analysis of the legal issues existing in the LIT structures.The problems in the insurance end include the validity of the trust property,the validity of the change of parties under insurance contracts,the influence of the pledge or discount of the policy on the LIT structures,the risk of the policy being executed and so on.On the trust end,there are problems of the design complexity of the trust scheme,and also other problems like the qualifications of the trustee,the lack of supervision of the trustee and the taxation of the trust.The third chapter of this paper analyzes the measures of rights protection available to beneficiaries of LIT under the existing laws and regulations.The deficiencies of protection of trust beneficiaries and performance of the trustee'sobligations mainly include the fact that the rights granted to the beneficiaries of the trust are not enough,the effect for the beneficiary to exercise the existing rights is limited,the corresponding remedies are not provided and the standards of trustee's obligations are unclear.The last chapter of this paper puts forward some suggestions on the protection methods of beneficiary rights of LIT.First of all,the LIT operation modes should be optimized,and the stability of the overall structure of the LIT should be enhanced by introducing the irrevocable trust model.At this stage,obstacles to the business cooperation between trust companies and insurance companies should be eliminated.Secondly,the scope of application of the trust supervisor can be expanded in the trust legislation,and the trust supervisor can exercise the rights of some beneficiaries in the era of the absence of the settlor.And it's also necessary to improve the scope of application of the trust registration system to strengthen the supervision of the way and scope of trust companies to use insurance benefit.Thirdly,the trustee's loyalty and caution duty standards should be clarified,and the scope of responsibility for the failure of trustees to effectively perform the obligations should be regulated.The internal control mechanism of the insurance company and the trust company should be improved to strengthen the rights relief for the trust beneficiaries.In the construction of the rights protection system,the first way is to improve the trust beneficiary rights content in the legislation.The second way is to include LIT in insurance regulations or trust regulations by refering to the legislative provisions of Japan and Taiwan to regulate the operation modes of LIT in China.In terms of supervision,in addition to strengthening the administrative management of trust institutions,it is also necessary to strengthen the civil compensation relief when the beneficiary's rights are violated,and strengthen the use of judicial remedies.