Korea has witnessed an increasing number of commercial transactions using a trust for past ten years. Trusts are known as a legal device having flexibility in design and expected to be used more in commercial as well as non-commercial transactions in Korea. The Trust Act of Korea (the "Trust Act"), however, has not been practically amended since it was enacted in 1961. Thus, many legal scholars say that the Trust Act should be modernized, reflecting changes in the market. Looking at the trust laws of overseas countries, the law of trust is not an exception in worldwide trend of harmonization of law. Principles of European Trust Law, which consist of eight principles, were published in 1999 in order to have common principles of the trust law and facilitate transactions in European jurisdictions. In addition, Draft Common Frame of Reference ("DCFR") published in February 2009 provides basic rules on trusts in its Book X. In comparison with Principles of European Trust Law, DCFR provides more specific rules on trusts. With respect to the establishment of trusts, DCFR has 13 provisions, following traditional views developed in the Court of Chancery in England. It elaborates, inter alios, the requirements for establishment of trusts-inter vivos trusts as well as testamentary trusts, requirements for self-declaration, rules on refusal of trust by an intended trustee and rejection of beneficial interests by a beneficiary. It also provides provisions regarding priority of rules of succession law over the trust law and whether trusts or gifts are created in certain instances. This article explains basic rules on the establishment of trusts provided in DCFR. This introduction will shed some lights on how the Trust Act should be amended and modernized to be harmonized with the trust law of other countries.

Korea has witnessed an increasing number of commercial transactions using a trust for past ten years. Trusts are known as a legal device having flexibility in design and expected to be used more in commercial as well as non-commercial transactions in Korea. The Trust Act of Korea (the "Trust Act"), however, has not been practically amended since it was enacted in 1961. Thus, many legal scholars say that the Trust Act should be modernized, reflecting changes in the market. Looking at the trust laws of overseas countries, the law of trust is not an exception in worldwide trend of harmonization of law. Principles of European Trust Law, which consist of eight principles, were published in 1999 in order to have common principles of the trust law and facilitate transactions in European jurisdictions. In addition, Draft Common Frame of Reference ("DCFR") published in February 2009 provides basic rules on trusts in its Book X. In comparison with Principles of European Trust Law, DCFR provides more specific rules on trusts. With respect to the establishment of trusts, DCFR has 13 provisions, following traditional views developed in the Court of Chancery in England. It elaborates, inter alios, the requirements for establishment of trusts-inter vivos trusts as well as testamentary trusts, requirements for self-declaration, rules on refusal of trust by an intended trustee and rejection of beneficial interests by a beneficiary. It also provides provisions regarding priority of rules of succession law over the trust law and whether trusts or gifts are created in certain instances. This article explains basic rules on the establishment of trusts provided in DCFR. This introduction will shed some lights on how the Trust Act should be amended and modernized to be harmonized with the trust law of other countries.

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constitution of trusts, declaration of trusts, intention to create a trust, trust assets, beneficiary, beneficial interests, trustee, inter vivos trusts, testamentary trust, Draft Common Frame of Reference, donation, succession law