Impact of recent revisions

Although trusts were originally intended to be used primarily as a mechanism for asset administration, the new system of trusts introduced by the amended Trust Law that was promulgated on December 15 2006 and implemented on September 30 2007, which system includes limited liability trusts and declaratory trusts, will probably encourage the increased use of trusts as vehicles for other business activities (business type trusts). As trusts allow for the separation of trust assets from settlers' assets and from the trustees' personal assets, thus eliminating exposure to settler and trustee bankruptcy risks, trusts are very similar to special purpose companies. For this reason, trusts have long been used for business activities in place of companies. For example, trusts have been created to hold rights to loan receivables (loan trusts), to hold land and buildings and distribute the rental proceeds to beneficiaries (real estate trusts) and to manage funds provided by...