Comments from the Perspective of Private Trusts
Makoto Arai ＊In this comment I have suggested trusts as a method for managing the assets of the elderly or disabled, and examined some concrete
examples of their use. I believe that it is vital to enable trusts to respondto varied individual needs. Trusts are ordinarily individual matters, andshould center on personal trusts. However, thus far in Japan the focus of
the trust business has been collective trusts, and unfortunately the current situation makes it difficult to claim that personal trusts have sufficiently developed. In light of the future aging society, it is desirable thatthe trust business attempts to move towards personal trusts. In orderto accomplish this change it is necessary not only to reform the awareness of the trust banks that carry out trust business, but also to launcha debate about the best way to regulate the supervisory authorities.
Although trusts are a system for managing assets, they are not asystem for personal affairs, so we must bear in mind the danger thatusing trusts will cause the personal welfare aspect of asset management
to be neglected. It is difficult in personal trusts to distinguish between
asset management and personal affairs. But it is unnecessary to do so.
For example, the purpose of a special donation trust is "contributing to
the stable life" of the beneficiary who is a person with special disabilities.
But the concept of "contributing to the stable life" is not purely a matterof asset management; it is also a matter of personal affairs. It is unnecessary for the trustee to take direct responsibility for the care of the beneficiary, but because the personal welfare matters are inevitably linked
with the asset management of the trust, a forward-looking stance ofacceptance is essential for the future popularization of personal trusts.
＊ Professor, Faculty of Law, Chuo University― 231 ―

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At the very least, it should be entirely possible (for example, throughcoordination with adult guardianship under civil law) to position trusts
within the system of support, including personal affairs, that is provided
for all aspects of the lives of the elderly people who are the beneficiaries.
Furthermore, in order to popularize personal trusts, Japan must establish an awareness of paying appropriate trust fees. The notion that"welfare is a benefit provided by the government" needs to be eradicatedand a change of perception is required in which users will understandmore about "buying" personal trusts. This will doubtless correspondwith the increasing tendency for the trust business to be a fee-paying
business. Of course, there will naturally be a need for settlors to enthusiastically build up their knowledge about personal trusts as fee-paying
trusts, and give that knowledge back to users. Finally, in order to popularize personal trusts, it will be necessary to nurture corporate trusteesthat will be able to execute the trusts in an appropriate manner.
There have been new movements regarding personal trusts, as I
will illustrate with the two examples. The first is the education funddonation trust. This is a new form of trust designed to transfer assets of the elderly to the younger generations and support educationand human resources. It was introduced pursuant to the tax exemption
measures on donations relating to one-off education fund donations, intandem with the revisions to the taxation system in 2013. For example, in the event that grandparents create a trust and appoint a trustbank as trustee for educational funds, of which the beneficiary will bea grandchild, and entrust the bank with cash, sums of up to 15 million
yen would be exempt from donation tax. Trusts like this are a typicalpersonal trust, and are often mentioned at the start of the representative British and American textbooks on trust law.
The second type of trust uses special contract cash trust schemes
to help systematically distribute funds for everyday life. The settlors
deposit cash for their day-to-day life funds in a cash trust and receive
regular payments to cover their living costs as the beneficiaries (self― 232 ―benefit trusts). When the settlor begins to inherit, the recipient of the
one-off payment (the second beneficiary), designated by the settlor fromamong the heirs presumptive, receives the one-off payment. After thesettlor has begun to inherit, the person designated by the settlor fromamong the heirs presumptive to receive the residual funds (the secondbeneficiary) receives the residual funds of the trust.
These two types of trust represent a significant contribution to
the development of personal trusts in Japan, and their future direction
merits close attention.

― 233 ―