Current Status and Issues of Trusts withFamily Members as Trustees（Civil Trusts）
Hiroki Hachiya（Sumitomo Mitsui Trust Bank, Limited）
1.	 Introduction
Under the current Trust Act, there are high expectations for"trusts with family members as trustees（civil trusts）", which havecomplementary and alternative functions to adult guardianship andwills, as a means of protecting property without limiting the capacityof the individual. Over the past few years, judicial scriveners andother professionals have been actively involved in the formation andcontracting of trusts, and financial institutions have begun to offer
trust accounts, with the number of trust accounts increasing rapidly
since fiscal 2017.
2.	 current status of civil trusts
In civil trusts, the most common type of trust is a trust that aims
to provide property management and livelihood support to "persons
who are unable to properly manage their own property, such as theelderly" as beneficiaries（so-called self-benefit welfare-type first party
trusts）.Of the civil trusts brought to us by qualified professionals, 97%
are trusts to supplement or replace guardianship and 87% are trusts（1）to replace（substitute）wills to designate the successor of property.

It is characteristic that the trustees（children of the elderly）often
play a leading role in the establishment of civil trusts, and qualified
professionals mainly provide consulting services to the trustees in― 159 ―

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relation to the establishment of trusts and contractual services.
3.	 challenges of civil trusts（2）

In the case of trustee-led civil t rusts, there is an inherent
problem whether the elderly, who are both trustees and beneficiaries（hereinafter referred to as "beneficiaries"）,have lack of will power andtrust intentions or do not understand the contents of the trust.
In addition, since trustees are often non-specialists with limited
legal knowledge, there is a concern that the fiduciary duties originallyrequired may be relaxed or that the trust affairs may not beperformed. In addition, in the case of a testamentary trust, the trustee
is usually the holder of the vested rights, which may lead to conflictsof interest with the beneficiaries.
In order to dispel these issues, qualified professionals involvedin the formation of trusts are required not only to explain the trust
agreement to be executed, but also to have a high level of professional
responsibility to explain the fiduciary duties under the Trust Act andthe relationship between the trust provisions and the Trust Act incases where the trust provisions are different from the provisions of
the Trust Act. In this case, a high degree of professional accountability
is required.
A financial institution providing a trust account would needto have special administrative rules to deal with deposit claims
as trust property, which cannot be dealt with by ordinary deposit
administrative rules, and would need to be able to deal with suchclaims upon the death of the trust party, upon termination of thetrust, upon seizure, etc. Currently, there are no uniform administrative
guidelines among financial institutions, which makes trustees feel
uncomfortable.

― 160 ―

4.	 prospects for trusts
The need for "welfare trusts" is expected to increase in the future.
In order to promote the healthy spread of trusts with family members
as trustees, it is necessary for qualified professionals and financial
institutions to use and cooperate with their expertise to protect
beneficiaries. To this end, it must be remembered that civil trusts
are not a panacea and do not deal with "personal protection", and thatthey do not have public supervision. We believe that it is necessary toconsider collaboration with voluntary guardianship, which does havepublic supervision, and in the future the use of the registration system（3）

for supervision work at the Legal Affairs Bureau.

（ 1 ） Leaders in the formation of trusts / 73% judicial scriveners, 9%lawyers, 8% tax accountants, 8% administrative scriveners（our data atthe end of February 2021）（ 2 ） Hiroki Hachiya,『Trusts with Families as Trustees』（Yuhikaku, June
2018, Jurist No. 1520）,p. 41.
（ 3 ） It explains the utilization of legal registration systems regarding
guardianship in Japan to supervision on the property managementof guardians. Hiroshi Takahashi（the society for civil law researches,January 2020, Adult Guardianship Practices no.84, p.75）― 161 ―