South Korean government will amend financial regulations to promote the trust business in a bid to broaden asset management options in the rapidly aging society and the era of low interest rates.

The Financial Services Commission (FSC) on Thursday announced its financial reform plan for 2017 that includes plans to revise regulations that oversea trust funds and enact a new trust investment law.

Trust is an investment vehicle that the trustor entrusts assets or property and the trustee, a company or bank, manages the assets or property for a certain period of time.

The financial authority will raise the property limit a person can entrust to a financial organization as the first step to promote the trust business. When the cap is increased, various types of trust fund products such as living trust or testamentary trust could become available.

Living trust is a type of trust in which a person puts his assets into the trust that is administered for himself during his lifetime and transferred to the designated beneficiaries upon his death. Testamentary trust refers to a trust that is created based on the trustor’s will to make sure his assets are managed properly even in the event of mental illnesses such as dementia. There is a life insurance testamentary trust that allows the trustor to ensure his designated beneficiary such as a minor child to receive payments regularly rather than a lump sum after his death.

The FSC plans to establish trust business act to allow non-financial organizations such as medical corporations or law firms to provide trust products related to health or inheritance.

The FSC will draft the bill by forming a task force team by June this year and submit it to the National Assembly around October.

By Chung Seok-woo and Park Yoon-ye

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]