The 1961 Korea Trust Act has been criticized as being an archaic law that does not reflect generally accepted international trust standards and practices.
The revised trust law was passed to alleviate many of the problems of the old law. The new law in Korea will come into effect in July of 2012. The most significant changes are listed below.
- The new Korea Trust Law allows the designation of a settlor as a trustee. The trustee, however, will be unable to windup the trust and will be required to meet specific formalities when executing the powers as trustee.
- The new Trust Law of Korea allows for beneficiary certificates to be issued by the trust.
- The new law allows the the trust to issue bonds.
- The new Korea Trust Law allows for a trust to obtain a limited liability status.
- The new Korea Trust Law allows for a trustee to designate a third party to manage the trust if the beneficiary approves in writing and a justifiable ground exists.
- The new Trust Law in Korea allows for a trust to be forced to return assets that are part of a trust if the trust is being utilized simply as a tool to protect the assets from creditors.
Most of the major criticisms have been addressed, however, the application of law in Korea is often less predictable than the west, thus, we will have to see how the court and the bureaucracy interprets and applies the new Korean trust law.
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