ASIA PACIFIC-WIDE Trends and Developments Contributed by: Lu Li, Yinuo Zhang and Wenting Ma, Xuxiaoping Law Firm
that educational expenses for minors or dependants remain unaffected if the settlor loses capacity. This evolution in client demands imposes higher requirements on the delivery of legal services. The siloed model under which clients instruct separate lawyers to draft wills, trust deeds and guardianship agreements can no longer satisfy their needs. These standalone instruments lack internal consistency and mechanisms for resolving conflicts, and will face severe interoperability hurdles when implemented in practice. Key Practical Considerations When Constructing Integrated Cross-Border Wealth Management Solutions Co-ordinated guardianship-disbursement mechanism Voluntary guardianship agreements and trust deeds shall be drafted concurrently to establish a co-ordi - nated “guardianship-disbursement” mechanism. It ensures that after the settlor loses legal capacity, arrangements for personal care and asset disburse - ment instructions are implemented strictly in accord - ance with the settlor’s prior wishes. The core risk is that if the two instruments are prepared separately, conflicts may arise between the exercise of powers by the guardian and the disbursement instructions under the trust (for instance, where the guardian objects to a proposed trust disbursement), which could directly disrupt care arrangements or block disbursements. To address this risk, reciprocal cross-references and uni - form dispute resolution clauses should be included in both documents, specifying the adjudication mecha - nism and order of priority in the event of discrepancies between the guardian’s views and the disbursement criteria set out in the trust deed. Appointment, replacement, scope of authority and supervision of trust manager The next consideration is identifying candidates and scope of authority for the “voluntary manager of trust assets” and establishing a triangular check-and-bal - ance mechanism covering “implementation-supervi - sion-reporting”. It is advisable to specify in detail in the trust deed the appointment procedure, replace - ment conditions, scope of authority and supervision regime applicable to the manager. Even where the vol -
untary manager and the voluntary guardian are the same person, an independent third-party supervisor (who may be a lawyer, a notarial institution or a pro - fessional family office) must be appointed to conduct compliance reviews on the manager’s disbursement instructions and regularly report the utilisation of funds to beneficiaries. The introduction of an independent supervision mechanism can effectively guard against moral hazard and abuse of powers. Specific and actionable permitted purposes of trust assets The permitted purposes of trust assets shall be spe - cific and actionable. The authorised uses of trust funds shall be explicitly enumerated in the trust deed (such as elderly care service fees, medical expenses, emergency treatment costs and funeral expenses), with pre-established review procedures, documen - tary requirements and payment timeframes for each category of disbursement. Institutional Innovations in China: Replicable Legal Structure Models for the Asia-Pacific Region Driven by the aforesaid trends, China has achieved groundbreaking progress in legislation and judicial practice concerning guardianship regimes, trust frameworks and wealth succession in recent years. These institutional innovations cater not only to the enormous market demand within Mainland China. The underlying legal logic – separating personal care authority from asset management powers, fulfilling succession intentions via trust mechanisms, and establishing fallback safeguards through governmen - tal and social resources – offers a valuable institutional reference for Asia-Pacific jurisdictions grappling with accelerated ageing, shrinking household sizes and increasingly complex cross-border succession mat - ters. Implementation and expansion of the voluntary guardianship regime Article 33 of the Civil Code of the People’s Repub - lic of China first established the voluntary guardian - ship regime. It permits an adult with full civil capacity to appoint a guardian in writing, who shall perform guardianship duties upon the adult’s total or partial loss of civil capacity. The introduction of this regime provides a legal basis for HNW individuals to make
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