Shanghai has announced a pioneering pilot program for a new type of elder care service trust, marking a significant step in social policy innovation.

In June of this year, the Shanghai Financial Regulatory Bureau, Shanghai Civil Affairs Bureau, People's Bank of China Shanghai Branch, and the Shanghai Municipal Financial Office jointly issued a notification regarding the pilot program for innovating and developing elder care service trusts, with three institutions including Shanghai Trust, Hua Bao Trust, and Jian Yuan Trust taking the lead in the trial.

Trusts have long been perceived by many as high-end wealth management products with entry thresholds starting at millions of yuan, seemingly distant from the lives of ordinary people.

However, this new Shanghai pilot policy aims to bring elder care service trusts into the homes of average citizens.

What exactly is an elder care service trust? What elder care challenges can it help solve for ordinary people? How can it achieve inclusivity?

The Challenge of Caring for an Octogenarian

The case of 81-year-old Mr. Zhang from Shanghai's Huangpu District, whose elder care dilemma was recently resolved, has garnered significant media attention.

The elderly gentleman bore a heavy family burden: his long-term hospitalized, disabled wife and a son with a mental disability.

After being appointed by the court as the sole guardian for both relatives, the elderly Mr. Zhang was deeply worried: who would care for his wife and son if he became incapacitated, developed dementia, or passed away? How could the family's assets be managed to secure their future?

Mr. Zhang's predicament could not be solved by an individual or a single department.

The Huangpu District Civil Affairs Bureau, in collaboration with Ruijin Erlu Sub-district, legal firms, notary offices, and trust institutions, crafted an integrated "advance directive guardianship + special needs trust" solution tailored for him.

"The advance directive guardianship system and the elder care service trust provide a dual guarantee for the personal care and asset security of Mr. Zhang's family," said Wang Huijuan, Deputy Director of the Huangpu District Civil Affairs Bureau.

Mr. Zhang's case represents the nation's first complete "advance directive guardianship + special needs trust" safeguard solution for a special needs family and serves as a model for promoting elder care service trusts in Shanghai.

The specific approach involves, at the personal care level, establishing a three-tiered order of guardians for Mr. Zhang according to his personal wishes.

Shao Hui, Party Branch Secretary of the Shanghai Luwan Notary Office, explained that the first order was assigned to his friend, the second to that friend's son, and the third to a social organization approved by the neighborhood committee, with the committee explicitly designated as the guardianship supervisor.

In terms of asset management, Mr. Zhang injected the family's assets into a special needs trust and personally drafted a "Letter of Wishes," specifying the intended use and standards for the property.

Wu Haibo, Deputy General Manager of Shanghai Trust, explained to reporters that this trust scheme fully respects Mr. Zhang's wishes and implements a layered instruction management mechanism.

When Mr. Zhang is conscious and possesses full civil capacity, he directly issues instructions for asset use.

If Mr. Zhang becomes incapacitated or passes away, the guardian he designated in advance will manage the funds according to the "Letter of Wishes."

Addressing the Shortcomings of Advance Directive Guardianship

Mr. Zhang's situation is not an isolated case.

By the end of 2025, Shanghai's registered population aged 60 and above reached 5.8438 million, accounting for 37.6% of the total population.

Among them, over 400,000 seniors are disabled or have dementia, more than 300,000 live alone, and the number of families with elderly members caring for disabled dependents continues to rise.

The lack of elder care and proper asset management has become a major concern for many seniors.

However, industry insiders acknowledge that traditional advance directive guardianship models have significant shortcomings.

A guardian simultaneously controls both care and assets, which, without third-party oversight, can easily lead to moral hazards.

In practice, there have been cases of guardians withholding or skimping on care funds, switching from high-quality nursing homes to inferior facilities, disposing of seniors' property or transferring deposits for personal gain, or even neglecting their duties to pressure seniors into asset disposal.

"The new policy addresses the shortcomings of traditional advance directive guardianship. Its core innovation lies in constructing an elder care service chain of 'advance directive guardianship + elder care service trust + care institution,' achieving the separation and balance of the three functions of managing people, money, and services," said Wu Haibo.

Specifically, the advance directive guardian is only responsible for arranging medical care and daily living after the senior becomes incapacitated, without access to the trust's dedicated funds or authority over assets.

The trust company, as the asset manager, places the senior's assets into an independent, closed account and disburses funds strictly according to the pre-drafted "Letter of Wishes."

Formal care institutions vetted and included by the civil affairs department can directly access the trust payment channel with valid service invoices, ensuring full transparency and traceability.

"Under this model, even if an elderly person completely loses cognitive ability, medical, nursing, and related expenses can still be accurately disbursed, effectively safeguarding their basic rights," Wu added.

Extending Coverage to Those Preparing for Old Age

The new policy identifies key service targets including seniors with advance directives, those living alone, families with only one child facing difficulties, and families with elderly members caring for disabled dependents.

Recently, Shanghai Trust helped a family with a special situation resolve their worries.

A middle-aged couple with an autistic son, after years of moving between various care institutions that frequently closed due to poor management, were deeply concerned about their son's future care after their passing.

They joined with other parents in similar situations to establish a dedicated autism care facility and connected with a trust company to set up a special elder care trust, injecting their own assets into a dedicated trust account.

In the future, even after the parents pass away, trust funds will continue to be disbursed to the care institution for operational and nursing costs according to the pre-drafted "Letter of Wishes," providing lifelong, stable care for their child.

"However, elder care service trusts are not limited to these special needs groups. Seniors with children, as well as single individuals and childless middle-aged groups preparing for old age, can also obtain elder care security through these trusts," said Wu Haibo.

For instance, Shanghai Trust executed the nation's first elder care trust advance payment service for an elderly couple with children.

In good health and capable of independent decision-making, the couple chose to move into a nursing home together.

However, they were reluctant to entrust their living expenses to their children for management, not due to distrust, but because they felt frequent requests for daily care and medical expenses would be inconvenient.

They commissioned Shanghai Trust to establish an elder care service trust, stipulating that the trust would directly transfer over 8,000 yuan per person per month to the nursing home for care fees.

The entire fund flow is autonomous and controllable, eliminating dependence on their children.

The couple felt this preserved their financial autonomy in their later years while simplifying the payment process.

Single individuals and childless middle-aged groups can also consolidate various assets like cash and property through a trust: during healthy years, assets can be used for daily living and rehabilitation; after passing, remaining assets can be directed to relatives, friends, or donated to charitable causes according to their wishes.

The new policy also emphasizes the inclusive nature of elder care service trusts.

Products launched by trust companies participating in the pilot have significantly lowered establishment thresholds.

Taking Shanghai Trust's products as an example, they cater to preparatory needs across different ages and family structures, with options starting at 300,000 yuan and 1 million yuan, and a 50,000 yuan product mainly for emergency medical purposes, making them accessible for ordinary working families to configure as needed.

Real estate, equity, and other immovable assets and rights can also be incorporated into elder care trusts, opening a new path combining "home equity release for old age" with trust custody.

Shanghai Trust has already implemented related cases where the settlor places their own property into a trust, retaining full use rights during their lifetime, with rental income supplementing daily living expenses; after their passing, the property is distributed according to the trust's terms, both revitalizing the value of the real estate and broadening the funding sources for elder care.

Innovative Policies Break Implementation Bottlenecks

The value of a system is ultimately reflected in its implementation.

Industry insiders told reporters that the new policy contains many innovations, establishing a comprehensive framework for the standardized operation of elder care service trusts.

Firstly, it sets regulatory red lines for elder care service trusts, clearly classifying them under asset service trusts and strictly prohibiting the promotion of asset management trusts under the guise of elder care service trusts.

"The new policy downplays the wealth management and investment attributes of elder care service trusts, focusing instead on ensuring the standardized use and precise disbursement of elder care funds, solving the problems of 'how the money should be spent and who it should be spent on,'" said Fu Yuxiang, Head of the Strategic Development Department at Shanghai Trust.

Secondly, it opens service对接 channels.

The new policy states that the civil affairs department will lead in building a platform for selecting high-quality elder care service providers, incorporating various service entities such as nursing homes, community senior canteens, aging-in-place modification agencies, and companion/assisted bathing services to form a comprehensive service network.

Finally, it creates mechanisms for "advance payment" and "trust property advance manager."

Under the traditional trust model, if a settlor suddenly becomes incapacitated and unable to express their wishes, the fund disbursement chain can easily break, leading to "frozen" elder care funds.

The new policy clarifies that a settlor can designate a trusted individual or organization in advance as the "trust property advance manager."

After the settlor becomes incapacitated, this manager can issue payment instructions to the trust institution based on the trust contract and the "Letter of Wishes" to cover elder care and medical expenses.

"This innovation can prevent the trust from reaching an impasse. If a settlor suddenly becomes incapacitated and unable to express their wishes, establishing a guardian requires a capacity assessment and court recognition, which takes time. The establishment of a 'trust property advance manager' ensures the continuity of trust payments," explained an insider.

Regarding fees for elder care service trusts, reporters learned that customized services involving specific contract terms or documents require negotiated fees.

However, for standard versions, the management fee structure is very affordable and entirely within reach for ordinary families.

Promotion Still Faces Multiple Hurdles

However, reporters found that while this inclusive elder care trust model charts a new path for retirement planning, several practical barriers must be overcome for widespread adoption.

The first hurdle is the tax threshold for incorporating real estate into trusts.

If citizens wish to place their own homes or equity under trust management, the property transfer process simultaneously triggers multiple taxes and fees such as deed tax and value-added tax, with no current policy for special exemptions or support.

A rough calculation for an ordinary residential property valued at 3 million yuan shows that establishing the trust would incur additional costs of tens of thousands of yuan in taxes and fees, deterring many families considering home equity release for old age.

The second hurdle is the scarcity of professional social organizations capable of providing stable, long-term advance directive guardianship services.

Shanghai is currently accelerating the cultivation of a batch of standardized institutions to fill this supply gap.

The third challenge is the public's limited awareness of this new elder care product, with some elderly groups even harboring resistance due to past negative impressions of wealth management.

A frontline trust salesperson admitted that during daily consultations, most people cannot distinguish between elder care service trusts and traditional wealth management, indicating a need for deep-rooted educational efforts.

The fourth challenge lies in the yet-to-be-established sustainable operational model for the industry.

Currently, the inclusive trusts offered to ordinary families only charge basic management fees, yielding minimal profit for trust institutions per transaction, necessitating the exploration of long-term profitable pathways for the sector.