What is a trust? Understand clearly how it differs from REIT.

Question

If you see REITs listed on the stock market and wonder if they are trusts or not, the truth is that REITs are just a type of trust. They are not different things, but it’s easy to misunderstand if you don’t understand the fundamentals of (Trust) what it is. In fact, it’s a legal tool that is more flexible than many think.

Simple Explanation of (Trust)

Imagine this: You own land or have a lot of money but don’t have time to manage it. You then appoint someone you trust as a (trustee) to manage it on your behalf, while you still hold the legal ownership. When the trustee manages and earns returns like (rental income), they pass it on to you or the (beneficiaries) you designate.

That’s a trust — a way to manage assets through a third party. It’s both simple and complex at the same time.

Assets that can be managed include unlimited: capital, real estate, stocks, bonds, businesses, any income-generating assets.

Why Use a Trust? What Are the Real Benefits?

Playing with smart tax tricks

A trust is not a transfer of ownership that incurs taxes. It transfers benefits of ownership, depending on each country’s laws.

Stability when you are not at your strongest

If you are ill or unable to make decisions, a revocable trust (Revocable Trust) allows professional trustees to manage on your behalf. When you recover, you can revoke it and regain control.

Distributing benefits without asking anyone

A trust directly benefits the beneficiaries without formal ownership transfer.

Very flexible because it’s a contract

Established by agreements between parties, making it easy to modify. Unlike funds that require complicated permits from authorities.

How Many Types of Trusts Are There? Quite a few!

Besides being revocable or not, trusts come in many forms:

Asset Protection Trust (Asset Protection Trust) — To shield owners from lawsuits
Blind Trust (Blind Trust) — No knowledge of where the money goes, to prevent conflicts of interest
Charitable Trust (Charitable Trust) — Distributes to those in need
Generation-Skipping Trust (Generation-Skipping Trust) — Benefits across generations
Real Estate Trust (Land/Real Estate Trust) — Example: REIT
Marital Trust (Marital Trust) — For spouses
Special Needs Trust (Special Needs Trust) — For disabled or special individuals

Players in the Trust Game: 3 Roles, 1 Paradise Play

1. Settlor/Grantor (

The person with assets who decides to set up a trust. Even if it’s irrevocable )Irrevocable(, you still hold ownership but cannot benefit from it directly.

) 2. Trustee ###
A professional who manages the assets according to the agreement. They do not benefit from the assets but earn a fee for their work.

( 3. Beneficiary )
The person who receives the benefits. They have the right to claim damages if the trustee cheats and can also pursue the assets if misappropriated.

Three Conditions Must Be True, Otherwise the Trust Fails

A trust must have:

Clear Intent ###Certainty of Words( — The contract clearly states who establishes and who manages.
Clear Subject Matter )Certainty of Subject Matter( — Know what is being managed, with a profit-making plan.
Clear Beneficiaries )Certainty of Object( — Know who receives the benefits, not someone who disappears or has died.

Missing any one of these conditions will cause the trust to collapse.

REIT vs Trust vs Fund: What’s the Difference?

) Trust vs REIT

REIT (Real Estate Investment Trust) is a trust that only manages real estate. General trusts can manage more types of assets.

Similarity: Both are not legal entities, established by contracts, and do not require complicated permits.

Trust vs Fund (Fund)

Major differences:

Legal Entity: Funds are legal entities; trusts are not.
Function: Trust manages the founder’s assets; funds pool money from many investors to invest further.
Returns: Trust directly distributes to beneficiaries; funds pay dividends to unit holders.

Trusts in Thailand: What options are available?

The SEC allows two types of trusts:

First: Active Trust (Trusts for Growth)

Designed to generate profits:

II/HNW Trust Fund — Investment trusts for wealthy individuals
REIT — Real estate trusts seen in the market

Second: Passive Trust (Dormant Trusts)

For managing assets without active investment:

ESOP — Employee stock ownership plans
EJIP — Joint investment trusts between companies and employees
Reserve/Sinking Fund — Trusts for bond repayment

Currently, nearly 99% of trusts in Thailand are REITs because they are easy to sell to investors and assets can be clearly valued.

Summarizing for Clarity

Trusts are not very complicated — they are simply a way for someone to manage your assets on your behalf. When the assets are real estate, it’s called a REIT.

In Thailand, most retail investors only see REITs listed on the stock exchange, which have the advantage of clear asset valuation, making it easy even for beginners to buy and sell.

Trusts are a good option for those who want to invest in large assets without needing huge capital — small investments but proportional benefits. That’s all.

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