## Investing in Trust for Thais: What You Need to Know About REITs and Trusts

Most investors are still confused about whether **Trust** and **REIT** are the same thing or different, or if the mutual funds we're familiar with are the same. In fact, they can be entirely different because, although all three are tools for asset management, their mechanisms and legal requirements differ. Today, we will clear up this confusion and help you understand which type of investor Trust is suitable for.

## What is a Trust? Open Your Mind to Adam

A **Trust** is a legal instrument for managing assets. The principle is that a person who owns the property, called the (founder), transfers the assets to another trusted person, called the (manager), to generate returns that are paid to a third party, the (beneficiary).

Assets managed through Trust can be diverse, including cash, real estate, stocks, bonds, businesses, artworks, debts, or other income-generating assets.

Simply put, a Trust is a system of "letting others manage your money" to generate income that benefits third parties or achieves specific objectives.

###Where can Trust be used, and where should caution be exercised?(

**Trust offers many benefits:**

First, it can deliver returns to third parties without actually transferring ownership of the assets, which is especially useful for managing complex inheritance.

Second, the Trust )manager### must operate according to the contract, providing strong protection for the owner.

Third, some countries offer tax advantages for Trusts, depending on local laws.

Fourth, revocable Trusts allow professionals to manage assets when the owner is ill or incapacitated, and can be revoked for personal management when ready.

Fifth, Trusts are more flexible in setup and modification than REITs or ordinary funds because they are merely contractual agreements between involved parties, without requiring multiple registrations or approvals.

(How many types of Trusts are there? Know them.)

Trusts are classified based on revocability:
- **Revocable Trust** – can be revoked, changed, or canceled
- **Irrevocable Trust** – cannot be revoked once signed

Additionally, there are other types based on purpose:
- Asset Protection Trust – asset safeguarding
- Charitable Trust – for philanthropy
- REIT (Real Estate Investment Trust) – real estate investment
- Land/Real Estate Trust – managing real estate
- Marital Trust – managing marital assets
- Special Needs Trust – for specific needs

And many more. Trusts that "generate profit from investments" are called **Active Trusts**, while those that merely "hold assets" for other benefits are called **Passive Trusts**.

## Who Are the 3 Main Players in a Trust?

A Trust involves three parties:

**1. Settlor (The Founder) – Asset Owner**
The person who initially owns the assets. After signing the Trust agreement, they retain ownership but cannot use or control the assets anymore.

**2. Trustee (Manager) – Trusted Person**
An individual or institution responsible for managing the Trust according to the agreement. They do not benefit from the assets but can charge management fees.

**3. Beneficiary (Recipient) – Lucky Person**
The person entitled to receive returns from the Trust. They can claim if the Trustee breaches the agreement and can recover the assets.

## What Are the 3 Conditions for a Complete Trust?

A Trust is formal not just because the three parties are involved, but because the following three conditions are met:

**1. Certainty of Word – Clear Intent**
There must be a clear written contract between the Settlor and Trustee specifying what to do and where.

**2. Certainty of Subject Matter – Assets Must Be Specific**
Assets must be clearly identified, existing, and managed properly.

**3. Certainty of Object – Beneficiaries Must Be Certain**
Beneficiaries must be identifiable persons, not deceased or missing.

## Trust vs REIT vs Fund – Want to Know? Study Them

**Trust vs REIT are quite similar:**

REIT is a type of Trust, especially for real estate. The key difference is that REITs are limited to real estate investments, while general Trusts can manage almost any asset.

Both Trust and REIT are not legal entities and are established by contracts.

**Trust vs Mutual Funds (Fund):**

- **Legal Structure:** Funds are legal entities; Trusts are not.
- **Management Method:** Funds pool investors' money to invest according to a plan; Trusts transfer assets to Trustees for management.
- **Establishment Process:** Funds require registration and approval; Trusts are more flexible.

## Which Types of Trusts Are Allowed for Investment in Thailand?

In Thailand, Trusts are permitted only for fundraising in the capital markets. The Securities and Exchange Commission SEC authorizes two types:

**1. Active Trust – Managed to Generate Benefits**
Established to manage assets for income, such as:
- II/HNW Trust Funds – for institutions and high-net-worth investors
- REIT – for real estate

**2. Passive Trust – Holding Assets for Specific Purposes**
Set up to manage assets for particular benefits, such as:
- ESOP – issuing and offering shares to directors and employees
- EJIP – joint investment projects between employers and employees
- Reserve Account / Sinking Fund – for debt repayment

In practice, most Trusts established in Thailand are REITs, so most investors are familiar with Trusts mainly through REITs. The advantage is that REITs are easy to classify assets, have consistent quality, and even beginners can buy and sell easily.

## Summary: If You Want to Invest in Trusts in Thailand, What Should You Focus On?

A true **Trust** is an asset management tool based on contracts and trust. Although initially used for estate management, today it can manage almost all types of assets.

When an asset owner has real estate, the Trust can become a REIT, which is an option for those wanting to invest in large assets with limited budgets.

Key point: Trusts are suitable for groups of individuals with a common goal, while REITs are ideal for beginner investors interested in real estate because of transparency and ease of classification. However, if you plan to invest in Trusts in Thailand today, you will mostly encounter REITs. Therefore, it’s worthwhile to study REITs deeply to make sharp investment decisions.