Chairman's message (15 April 2013)

15 April 2013

Tatsuo Wakabayashi

Chairman of the Trust Companies Association of Japan, President of
Mitsubishi UFJ Trust and Banking Corp.

Since the Trust Companies Association of Japan was established in 1926 to promote the development of trust systems and public good, the Association has constantly undertaken activities that have popularized and improved the soundness of the trust system.
To date, the trust system has provided and demonstrated various functions that have satisfied society's needs and expectations. The trust system continues to develop as an important element of the social and economic infrastructure in Japan, with total trust property exceeding US$7.5 trillion.

1. Contribution to the economy and society through the use of trusts

With the growing awareness of trusts, Japan is facing an unusual era of extraordinary transformation. The Association is seeking to further contribute to the development of society and the economy by maximizing the use of trusts.

The government has been considering many measures to reinvigorate the Japanese economy following the inauguration of the new administration. One major pillar of the stimulus plan is a strategy to foster private sector investment.

Trusts can make various contributions to growth strategy, such as the generational skipping transfer of financial assets held by the elderly to encourage consumption and the use of private sector funds to build social infrastructure.

One example is a measure to encourage grandparents to give lump sum cash gifts to fund grandchildren’s education by making such gifts tax-exempt. This was incorporated in a recent economic stimulus package and a tax reform proposal, which were approved and passed into law at the end of March 2013. The Association had been calling for such a measure for many years.

As a result, “qualified educational fund giving trusts” became available in April 2013. The intent of qualified educational fund giving trusts goes beyond promoting consumption by transferring financial assets to younger generations and stimulating the economy.

Japan faces the urgent problem of a low birth rate and aging society, and observers believe that qualified educational fund giving trusts will contribute to the social requirements for educating younger generations and developing much-needed human resources.

Although this is one example, we provide new products and services in a timely manner to meet society’s needs and deal with the various issues in Japan’s society and economy. We also actively propose tax reforms and regulatory reforms and accept our duty as the historical managers of trusts.

2. Exercise of the fiduciary duty as a manager of trusts

With the growing opportunities to use such trusts and society's increasing expectations for trusts, the facts of which we should be constantly aware as managers of trusts are that trusts are a system based on a high level of improve public confidence in trusts in the trustee and that a trustee must comply with the fiduciary duties.

Each manager of trusts must maintain a high level of ethics that satisfies client expectations of the trust with social values and ethics at an even higher level than that expected of ordinary workers.

Furthermore, we strive daily for improvement as managers and investors of trust property and demonstrate high levels of expertise and conduct operations by paying close to attention to the various risks in the rapidly changing environment to improve public confidence in trusts.

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