Law Articles
2024-07-17
Law Articles
Legal Exploration of Trusts, Guardianship Declarations, and Assistance Declarations for Elderly Family Members
【Charlotte Wu, Partner, Zhong Yin Law Firm】
charlotte.wu@zhongyinlawyer.com.tw
When handling property trusts for elderly family members, we often face specific legal challenges. This is particularly true as the elderly may experience mild dementia, memory loss, or diminished expressive abilities due to aging or health issues. For individuals who are unable to fully express or understand their intentions due to mental disorders or other cognitive impairments, Taiwanese law provides a guardianship declaration system. According to Article 14 of the Civil Code, the court may issue a guardianship declaration upon request for individuals who, due to mental disorders or other cognitive impairments, are unable to make declarations or receive declarations.charlotte.wu@zhongyinlawyer.com.tw
The primary purpose of the guardianship declaration system is to provide comprehensive legal protection, ensuring that these individuals receive proper care while safeguarding their property and rights from harm. Those under guardianship are regarded as legally incapable, and any legal actions must be undertaken by their guardian or require their consent to be valid. The court appoints a suitable guardian based on specific circumstances, typically a relative or trusted individual.
Legal Effects of Guardianship Declarations:
- Representation: Individuals under guardianship are considered legally incapable, and all their legal actions must be represented by their guardian.
- Property Management: Guardians are responsible for managing the property of the person under guardianship, ensuring it is not lost.
- Legal Protection: Guardians are accountable for all legal actions of the person under guardianship, ensuring their rights are fully protected by law.
In addition to the guardianship declaration system, there is also an assistance declaration system for individuals with partial capacity to express intentions or understand legal consequences. According to Article 15-1 of the Civil Code, the court may issue an assistance declaration to protect the interests of such individuals upon request. The primary aim of the assistance declaration is to balance the protection of these individuals while respecting their autonomy. Individuals under assistance declarations retain certain capacities to express intentions and understand legal consequences, thus enabling legal protection without rendering them fully legally incapable.
The target group for assistance declarations primarily includes adults and married minors. The assistance declaration system grants individuals with assistance declaration legal capacity, but they must obtain the consent of their assistant for certain important actions. According to Article 15-2 of the Civil Code, these actions include but are not limited to:
- Acting as a sole proprietor, partner, or corporate officer.
- Engaging in borrowing, entrusting, guaranteeing, gifting, or trusting assets.
- Legal actions such as lawsuits.
- Settlements, mediations, or signing arbitration agreements.
- Transferring, encumbering, selling, leasing, or borrowing real estate, ships, aircraft, vehicles, or other significant property.
- Inheritance division, legacies, renouncing inheritance rights, or other related rights.
- Other actions designated by the court upon request.
If individuals under assistance declarations perform the aforementioned actions without the assistant's consent, the validity of their actions will be handled according to Articles 78 to 83 of the Civil Code. For instance, unilateral actions without the assistant's consent will be deemed invalid, and contracts made with others without the assistant's acknowledgment will also lack legal effect.
However, if the assistant refuses consent and the person under assistance declaration can prove that the action does not harm their interests, they may apply to the court for permission to obtain legal capacity.
Arrangements and Benefits of Property Trusts under Taiwanese Law
In Taiwan, property trusts are an effective financial management tool, particularly suitable for arranging the assets of elderly family members. According to the Trust Act, a trust is a legal relationship wherein the trustor entrusts property to a trustee for management or disposition according to the trust agreement, for the benefit of the beneficiaries or for specific purposes.
Property trusts can be arranged in various ways to meet different needs, with common types including:
- Living Trusts: The trustor establishes a trust during their lifetime, entrusting property to a trustee, with beneficiaries being the trustor themselves, family members, or other designated individuals.
- Testamentary Trusts: The trustor establishes a trust within their will, which takes effect upon their death, with the trustee managing the property according to the will's instructions, typically for the trustor's heirs.
- Charitable Trusts: The trustor establishes a trust to use property for specific charitable purposes, such as education or charity, with the trustee responsible for managing and utilizing these assets.
Benefits of Property Trusts:
- Asset Protection: Trust property is managed separately from the trustor's other assets, reducing the impact of personal debts and effectively protecting asset security.
- Financial Management: Trustees possess professional financial management capabilities, providing long-term, stable financial management services to beneficiaries according to the trust agreement.
- Inheritance Arrangements: Trusts enable advance arrangements for asset inheritance, avoiding disputes and losses due to inheritance conflicts.
- Tax Planning: Properly designed trust structures can achieve legal tax reduction goals, enhancing the effectiveness of asset transfer.
- Flexibility: Trust agreements can be flexibly designed to meet the specific needs of the trustor, addressing various financial management and inheritance arrangement requirements.
Conclusion
The assistance declaration system, guardianship declaration system, and property trust system complement each other within the Taiwanese legal framework, providing comprehensive legal protection and financial management tools for the elderly and their families. The assistance declaration system safeguards the autonomy and legal rights of individuals with partial capacity, while the guardianship declaration system offers comprehensive legal protection for those completely incapable of legal action. Property trusts ensure asset safety and effective transfer through professional management and flexible arrangements. By thoroughly understanding and effectively utilizing these systems, families can achieve optimal management and protection of elderly family members' assets.
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Charlotte J.H. Wu 吳婕華律師
charlotte.wu@zhongyinlawyer.com.tw
TEL +886 2 2377 1858 EXT 8888