Major points of Trust Act Amendments (2006)

The Trust Act was amended in December 2006 (Enacted September 2007). The points of the amended Trust Act were as follows:

1. Explanation of the trustee's duties under appropriate conditions

(1) Explanation of the regulations pertaining to the duty of loyalty

In addition to establishing general regulations pertaining to the duty of loyalty, restrictions on a broad range of conflicts of interest were established between trustees and beneficiary.
In addition, this amendment clarified that such conflicts of interest are allowed (as discretionary provisions) if certain conditions are met, whereby the terms of the trust permit such conflicts of interest.

(2) Explanation of the regulations pertaining to the duty not to delegate

The scope of trust business that a trustee is permitted to delegate to a third party was expanded.

2. Provision of rules to increase the effectiveness and flexibility of executing beneficiaries' rights

(1) Explanation of the beneficiaries' method of making decisions for multiple trusts

While permitting decisions to be made by majority vote of multiple beneficiaries, this amendment provided rules concerning matters such as meetings of beneficiaries and the protection of beneficiaries who oppose resolutions.

(2) Establishment of the systems of "trust supervisor" and "beneficiaries' agent"

Apart from recognizing the appointment of a trust caretaker when there are no beneficiaries, a system was established that provides for the appointment of (a) trust supervisors to supervise the trustee on behalf of the beneficiaries and (b) beneficiaries' agents to execute the beneficiaries' rights even where beneficiaries have been specified and exist.

(3) Provision of rules pertaining to the duty to prepare and preserve books

Provisions were made for new rules that mandated the trustee to periodically provide certain information concerning trust property to beneficiaries in order to explain and improve the effectiveness of information disclosed to beneficiaries.

(4) Establishment of rights to demand suspension of the trust business of trustee conduct

This amendment established beneficiaries' rights to demand Suspension of the trust business of trustee's conduct in contravention of the trust as a preemptive measure for providing effective relief to beneficiaries.

3. Improving the system to deal with the uses of trusts

(1) Creation of a system to consolidate or split a trust

While clarifying the procedures to consolidate or split a trust, new regulations were established to enable appropriate adjustment of interests between the related parties.

(2) Establishment of "trusts with certificates of beneficial interest", "limited liability trusts", "declaration of trust", and similar financial instruments

New types of trusts (trusts with certificates of beneficial interest, limited liability trusts, trusts with no provisions on the beneficiary, and declaration of trust) were established to address the needs for trusts in various forms.
In addition, regulations pertaining to security trusts, household trusts, and others were improved.

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