Constrained by the reality of our country's financial industry, especially because of the lag of the law itself, there are still many problems in the law that have not been solved or improved, which is the difficult problem facing our country's life insurance trust. Firstly, the independent development of Trust Law and Insurance Law in China, life insurance trust itself is still facing a legal gap, and therefore directly affects the protection of beneficiaries' rights and interests, and even the original intention of life insurance trust deviating from beneficiary protection in practice. Secondly, the active attempt of life insurance trust has encountered regulatory difficulties due to the independent operation of China's Banking Regulatory Commission and insurance Regulatory Commission. It should be said that under the background of a new round of institutional reform, the merger of the CBRC and the Insurance Regulatory Commission has established a good start for the supervision of life insurance trusts, but how to operate in the future is still facing many uncertainties. Insurance and trust have the function of tax avoidance to a certain extent in the nature of their products, however, the tax issue of life insurance trust is still facing uncertainty. Throughout the region, the practice and legal system construction of life insurance trusts in the United States, Japan and Taiwan have established their own distinctive life insurance trust management models and legal systems, and have constantly improved the supervision of life insurance trusts. Foreign practice and legislation also provide positive experience for our country to learn from.

First, the legal problems of life insurance trust in our country

China's trust industry started relatively late, but with the Trust Law as the core of the relevant trust legal system, the "One law and three regulations" (later referred to as "one law and three regulations") with the "Trust Company Management Measures", "trust Company net capital Management Measures" and "trust Company aggregate fund trust plan Management Measures" as the auxiliary legal norms, the trust legal system has been basically established. The emergence of "one law and three regulations" undoubtedly fills the gap of the trust legal system in long-term practice, and plays a very important role in guiding and regulating the development direction and business products of the trust industry. However, due to the imperfect legal system, life insurance trust has been limited to a certain extent in the development process because it can not get the support of relevant laws and regulations. The emergence of the life insurance trust has led to the introduction of relevant laws in the insurance industry, so the problems in the actual operation of the life insurance trust are facing the blank in the insurance law.

1. Protection of beneficiary's rights in life insurance trust

China's Trust Law stipulates the rights and obligations of the beneficiary, but it only considers the situation when the beneficiary is a person with full capacity, but ignores the situation when the beneficiary is a person with limited capacity or no capacity, the trustee or trust agent infringes his property. If the beneficiary squanders the life insurance trust property, which leads to the failure to guarantee a normal life, or the property proceeds are defrauded due to his own habits, mental inadequacy or lack of behavioral capacity, the current law is not able to fully and effectively protect the beneficiary. Because the beneficiary is the ultimate "owner" of the life insurance trust property, and the beneficiary is generally in a weak position in the life insurance trust structure, the protection of the beneficiary's rights involves the whole trust itself. How to reasonably protect the beneficiary's rights and obligations to prevent their rights from being infringed is the primary problem that must be solved today.

Although the Trust Law of our country protects the rights and interests of the beneficiary, when the trustee discharges the life insurance trust property without authorization, the beneficiary only pursues the trust property to the court, and cannot punish the profit caused by the improper disposal of the trust property. Therefore, the trustee may choose to take risks in the face of rich interests and arbitrarily control the trust property, resulting in the rights and interests of beneficiaries are infringed. The Trust Law also provides that when a trustee disposes of trust property contrary to the purpose of the trust, the beneficiary may revoke the disposition. Although it seems that the Trust Law gives the beneficiary and the trustee general rights, it does not mention how to exercise the revocation right when the beneficiary is a minor, which directly causes the beneficiary's rights and interests cannot be protected, which is contrary to the original intention of establishing the life insurance trust.

2. Life insurance trust tax dilemma

At present, our country has not designed the tax policy for the life insurance trust, which has been deeply concerned by the policyholder. The income of the life insurance trust comes from the beneficiary after the insurance claim is settled, and the trustee receives the insurance money and manages it. This means that there is no beneficiary income without the insurance money, which is different from bank savings, so the 20% interest tax is not applicable. Its income is not in line with the holding investment, naturally does not apply to the red interest tax, resulting in the property income tax issue is still unclear. From the perspective of Ping An, Pacific, Taikang and other insurance companies, they only remind the client to pay taxes on the proceeds of the funds in accordance with the relevant policies of the state, and let the beneficiaries declare themselves. However, there has been no information on the formulation of a special tax policy on life insurance trusts. However, under the current tax system in our country, beneficiary income needs to pay individual income tax, whether to calculate the property income of life insurance trust in individual income tax, it is different opinions. If its property income is included in the personal income tax, its tax rate is no different from that of other trust products, which directly leads to the violation of the original intention of life insurance trusts, making its products lose their innate advantages.

Nowadays, many experts are calling for the legislation of life insurance trust income tax. However, the income tax law of life insurance trust has not been legislated and perfected in our country. The fundamental problem lies in the fact that life insurance trust has just started and the attitude of the state to it is very vague. If its attitude is not clear, legislation is unlikely. Because its legal framework is not perfect, the principal will test a small amount when considering the choice of life insurance trust products, afraid of having to pay high taxes, and dare not deliver a large amount of property to the life insurance trust, so that its development is stagnant and there is no further development.

Improving the protection of the rights of beneficiaries of life insurance trust in China by learning from other countries

Article 22, 23, 46 and 47 of the Trust Law of China stipulate the rights and obligations of the beneficiary, but the above article only considers the situation when the beneficiary is a person with full capacity, but ignores the situation when the beneficiary is a person with limited capacity or no capacity, the trustee or trust agent infringes his property. If the beneficiary squanders his life insurance trust property and cannot guarantee a normal life, or suffers fraud due to his own habits or lack of capacity, it cannot be explained by the current legal provisions. If in the life insurance trust, the beneficiary is a minor or the old, disabled, mentally incompetent, and others use their defects to defraud or bully the beneficiary's property, it violates the original intention of the client to establish the life insurance trust. A similar situation has occurred in the United States, so the US government has established a waster trust for the situation.

The Wasteful trust was originally designed to prevent beneficiaries from spending too much money. Later, the capacity of the waster trust did not stop there, the waster trust has worked to protect the rights of the beneficiaries or create benefits for them to ensure life, but also to prevent the beneficiaries from their own defects or carelessness caused by the interests of the damage. Therefore, the beneficiary is not allowed to dispose of its right to proceeds without authorization, which actually protects the beneficiary, and also solves the loss suffered by the beneficiary due to fraud and other reasons from the root.

The scope and rights of beneficiaries are bound to be stipulated if China is to properly learn from the American wasteful trust to protect the beneficiaries and restrict the trustee or trust agent. In terms of the scope of beneficiaries, the spouse, children, grandchildren or relatives of the principal who should bear the moral obligation of support can be beneficiaries. As for the selection of beneficiaries, in terms of capacity, the beneficiaries should be old, disabled or damaged, can not be trusted to handle their own life, easy to be deceived, etc., resulting in damage to their own interests. If the beneficiaries are capable and careful enough to handle their own affairs, they cannot become beneficiaries in the trust of the waster.

In terms of the rights of beneficiaries, if the trustor establishes a waster trust, its purpose is not to restrict the property control of the beneficiary, but to allow the beneficiary to enjoy a luxurious life, which will cause the majority of people to oppose, and is not in line with the original intention of the waster trust. Therefore, the beneficiary can obtain a fixed income of the property quantity, for our country to carry out the waste trust is particularly important. The states of New York and Washington State have provisions that "the income obtained by the beneficiary through the waste trust is enough to pay for the education and basic living of the person." Virginia limits the total amount of trust property involved in a beneficiary's trust through a waster trust to $200,000. China should also follow the US state law, set a limit on the amount of property in the trust of the waster, the beneficiary can only use the proceeds for education and life, and set a cap on the property, which can not only limit the squandering of the beneficiary's property, but also protect the beneficiary from other interests.

Under the premise of not violating the provisions of laws and regulations, if the beneficiary cannot repay the debt at the end of the term, then the trust property can be used to pay off. This is different from the relevant provisions in the United States, where the Uniform Trust Code provides that a beneficiary may not transfer his or her beneficial interest in violation of a valid waster clause, and that creditors of the beneficiary or the transferee of the beneficial interest may not require the principal to distribute the interest to him or her before the proceeds are delivered to the beneficiary. The legal provisions and China's "trust Law" on the disposition of beneficial rights is different, personal opinion, should be considered according to the circumstances, that is, whether the beneficiary has a waste of trust beneficiary qualification, if the beneficiary due to their own problems led to improper management, then the use of China's "trust Law". However, if the beneficiary defrauded or defrauded another beneficiary, it is subject to the provisions of the Uniform Trust Act of the United States, and its trust property cannot be used to pay off debts. But in the case of government debt, the waster trust must also be repaid.

Therefore, when China's life insurance trust products are carried out, the American waster trust can be added to it, which can protect the beneficiary's property and satisfy the original intention of the settler to set up life insurance trust.

Three, improve the life insurance trust tax and supervision

1. Improve the tax policy of life insurance trusts

Due to the lack of legislation of life insurance trust, there are no relevant laws and policies to stipulate the subject and amount of tax. In the course of practice operation, it leads to the deficiency of the tax system of life insurance trust. With the continuous improvement and development of life insurance trust in our country, it faces various tax problems, and it is urgent to determine its tax subject, improve tax policy and related judicial interpretation.

There are relevant laws and regulations on inheritance tax and gift tax in Taiwan, so citizens mainly use traditional self-benefiting trusts for tax avoidance.  There are essential differences between life insurance trust and life insurance, and once the trust contract takes effect, a large amount of property will be involved. If gift tax is exempted at this time, the phenomenon of illegal transfer of assets will not be ruled out. At this time, gift tax will be difficult to play its role in regulating income distribution, and it will also cause damage to our tax system and national income distribution to a certain extent. The tax rate of this tax should be set differently from the tax rate of other assets to encourage the development of life insurance trusts at a lower tax rate. Such measures not only enable gift tax to still play its regulating role in income distribution, but also enable life insurance trusts to retain their original purpose of protecting the property rights of beneficiaries.

Although our country has not yet expressed its position on the relevant income of trust property in the legal system, and has not made relevant provisions on the income tax payable on its income, it is certain that our country's tax system will be more and more perfect. The income generated by the life insurance trust is bound to be different from that of the individual income tax, both in terms of tax rate and related provisions on payment, and has a significantly preferential orientation. Under such preferential policies, life insurance trusts also have their unique competitive advantages in the face of other financial products.

2. Improve the supervision of China's life insurance trust

Because the banking Regulatory Commission and the Insurance Regulatory Commission have been merged into the China Banking and Insurance Regulatory Commission, which is a public institution directly under The State Council. From the macro point of view, the supervision of life insurance trust in China has been solved, but its substantive ownership problem is still not solved. Before the merger, the CBRC, as the trust regulator, enjoyed the right to supervise it according to law, and the CIRC, as the insurance regulator, enjoyed the law enforcement on the life insurance trust. However, because the CBRC and the CIRC have not made substantive progress on multiple regulatory issues, the life insurance trust can not be properly solved in the regulatory issues. At present, the two regulatory departments have been merged into the China Banking and Insurance Regulatory Commission, but the core solution is not the supervision of life insurance trusts, so whether it can pay attention to and supervise its problems thoroughly needs the introduction of subsequent laws. However, the specific supervision is still confused, and there is a certain degree of unclear supervision in the communication between departments. The fundamental reason why China's life insurance trust cannot expand and expand is also because the supervision is not clear, which makes the risk prevention and control ability of life insurance trust weak, which is not conducive to the stable development of life insurance trust.

Therefore, a regulatory department can be set up specifically for trust products, and it can follow the unified scheduling of the bank insurance supervision, but it can operate independently. In this way, the life insurance trust can have an independent and exclusive supervision department, whose professionalism will undoubtedly improve the working efficiency of the trust and reduce its error rate, thus enabling the trust institution to get a better development. In fact, in the operation of life insurance trusts, appropriate supervisory officers can be set up in all aspects. In the event of a dispute, if the problem occurs in the insurance link, the corresponding problem will be supervised and handled by the insurance department. Similarly, when the dispute is in the trust link, it can be handled by the banking department. The advantages and disadvantages of this method are balanced, and the advantage is that it can allocate management at the first time in the dispute, which is more clear. However, if the dispute involves both trust and insurance, the problem is also similar to the previous unclear regulation. Therefore, if there is a dispute, in the case of the regulatory subject can be determined, that is, to its regulatory department for appeals. However, if it is not possible to determine the regulatory body, you can also appeal to the professional regulatory body of the Bank insurance regulator. In this way, disputes can be solved efficiently and properly, and the decentralization of supervision departments is clear.

In addition, the supervision of industry self-regulatory organizations is also particularly important. The Trust Association, established in 2005, can also protect the legitimate rights and interests of the trustee, maintain fair competition in the trust industry and make up for the shortcomings of self-management, so as to establish and maintain a fair, orderly and effective trust market.

Not only relying on government departments and related organizations supervision and restriction, our country can also imitate Taiwan to formulate a supervision system similar to the trust supervisor in view of our country's national conditions to supervise the development of life insurance trust in our country as well as prevent lawless phenomena. The Trust Law stipulates that trust supervisors have the right to file lawsuits or carry out other legal acts in their own name to safeguard the interests of beneficiaries. Public trusts shall have trust supervisors, who are prescribed by the trust documents; if not, they shall be appointed by the administrative body of public undertakings. When the legislature of our country establishes trust supervisors, it is different from the private trusts that the beneficiaries have clear beneficiaries from the establishment. In the process of implementation of public trusts, because the scope of beneficiaries is relatively wide, it is difficult for the majority of beneficiaries to supervise the trust activities of the trust trustees directly, so trust supervisors are set up in public trusts. China's current trust supervisor system only makes arrangements for public trust, private trust has no relevant provisions. Life insurance trusts are established by parents to protect the life of their children after their own death. In order to better achieve this purpose, it is necessary to learn from the trust supervisor of a public trust to determine the supervisor of a life insurance trust. It can also supervise the protection of persons with limited capacity or persons without capacity during the exercise of their rights by the trustee and the trust agent. The current trust supervisor system in our country is still insufficient in terms of the rights and obligations of trust supervisors. In order to ensure that the trust supervisor system can play an effective role after learning from life insurance trusts, we should improve the specific rights of trust supervisors, such as the right to know, the right to revoke, the right to dissent and the right to claim compensation, and set the appointment standards for trust supervisors. The trust supervisor can be a natural or legal person, preferably a person with relevant professional knowledge, which can effectively prevent the generation of malicious trusts. However, it should be noted that the stakeholders and staff of the trustee institution cannot act as the trust supervisor and should withdraw from the selection of the trust supervisor.

Conclusion: In terms of protecting the rights of beneficiaries, China's life insurance trust should refer to the wasteful trust of the United States, but our country should be based on protecting the rights of vulnerable beneficiaries, which is different from the original intention of the establishment of the United States to prevent the beneficiary from squandering the benefited property at will. In addition, China urgently needs to formulate the Trust Industry Law and add provisions to protect the rights of beneficiaries, or, consistent with the United States, introduce wasteful trusts to completely prevent the rights of beneficiaries from being infringed.

The problems of unclear tax system and unclear supervision will appear in the practice of life insurance trust. In terms of tax, whether or not there is an estate tax in the future, that is, there is an estate tax, life insurance trusts still have a unique advantage to avoid tax. In terms of whether to pay gift tax and personal income tax, it is necessary to restructure the tax system, and the upper limit can be set. If it is within the limit, it should pay a little tax or not pay it, but if it exceeds the limit, its tax rate should be increased. So far this can guarantee the advantage of the life insurance trust, but can not harm to the tax system of our country. In conclusion, the tax system on life insurance trusts should be reformed as soon as possible.

In the case of unclear supervision, a special trust supervision department should be set up under the premise of supervision merger, and it is urgent to formulate laws and regulations on the supervision of life insurance trusts to determine the regulatory body, and cooperate with the trust association to carry out supervision. It is also necessary to learn from the public trust to set up the trust supervisor of the life insurance trust to thoroughly protect the rights and obligations of the parties. Therefore, only perfect laws and regulations, adequate protection of the rights of beneficiaries, and clear taxation and supervision can enable life insurance trusts to develop and grow more rapidly in this fertile land of China.