I often hear friends talk about trust and REIT, but I still don’t quite understand what a trust actually is and how they differ. After looking it up, I feel it’s necessary to share this knowledge clearly.

A trust is a legal tool for managing assets. There is a person called a trustee who receives the transfer of the assets from the owner and manages them according to the owner’s wishes. The benefits generated from the management are then passed on to the beneficiaries. What a trust can manage is extremely diverse—whether it’s funds, real estate, stocks, bonds, businesses, or even art and other income-generating assets.

The benefit of setting up a trust is that it allows returns to be passed to other people without actually transferring ownership of the assets. It was originally mainly used for estate management, but later it was also adopted for investment purposes. In addition, it can help ensure that the management is carried out for the purposes the owner wants, and there may be tax advantages as well.

In terms of types, there are many forms of trust, such as revocable trusts and irrevocable trusts, or they can be categorized by purpose, including asset protection trusts, blind trusts, charitable trusts, real estate trusts, marital trusts, and many others.

To set up a trust, there are three parties involved: the settlor (the asset owner), the trustee (the manager), and the beneficiary (the recipient of the benefits). In addition, there are three key elements: clarity of intent, clarity of the assets, and clarity of the beneficiary.

When comparing a trust with a REIT, it’s important to say that a REIT is a type of trust established specifically to manage real estate. Both do not have the status of a legal entity, but the fund (Fund) is different because it is a real legal entity and is established under stricter legal requirements.

In Thailand, there are only two types of trusts that are permitted to be established: active trust (managed to generate benefits) and passive trust (held for certain purposes). Most of what you see in the market is REIT, which is a form of active trust that invests in real estate.

In brief, a trust is a flexible and effective tool for managing various types of assets. If the trust manages real estate, it’s called a REIT. And when the trustee manages and generates returns, those returns are paid out as dividends to unit holders. It’s another good option for people who want to invest in large assets but don’t have a lot of capital.