I’m reading a book about Japanese “trust”.
There were major changes in the laws in trust and NPO in Japan recently.
There are private trust and commercial trust. Private trust is the one that was introduced by the change in law recently.
Instead of a will that you make, private trust can do many many things that a will could not do in the past to have a flexible and lasting scheme that will last more than one generation, to guarantee a desired transition of estates.
One particular example is a situation when you want to pass your estate to your spouse first but then pass a particular estate such as a house or a land plot to one of your children. It will be dependent to the will of your spouse. According to Japanese Civil Law, a will is only binding to your inheritance but not to the further generations down. Later transitions after your spouse’s death is not guaranteed.
But a trust can do.
For an example, one of your children is handicapped but you want to pass your house to your wife first. But you want to make sure that after her death, it will go to the said child.
You can set a trust that will give you the benefit of the house, then after your death to your wife, then to the kid.
The recent change in the law makes it possible to assign anybody as your trustee. You can assign your family member as trustee or even yourself. Before, you could name only qualified institutions.
According to the Civil law, the legal owner of the assets will the trust but its beneficiary will be regarded as the owner for the tax. If you put your asset into a trust and its beneficiary is your children, they will be regarded as being given the assets and therefore will be subject to Gift Tax.