Trust Law in Thailand
* Note: the following is intend only to provide the reader with an overview of the issues that need to be considered when looking at trusts in Thailand; it is not intended to be a comprehensive guide, nor is it intended to constitute legal advice. In the event that you are contemplating a trust in Thailand, it is strongly recommended that you seek the advice of a reputable lawyer in Thailand.
One common question that is often raised by foreigners (who come from common law jurisdictions) in Thailand is how they can go about establishing a trust under Thai law - and, more importantly, what are the Thai law provisions regarding trusts. As you will see, this will constitute the shortest of my articles looking at Thai law issues!
Section 1686 of the Civil and Commercial Code
The provisions regarding trust law in Thailand can be located in Book IV: Succession, Title II: Statutory Right of Inheritance, Chapter IV: Wills With Appointment of Controller of Property of the Thai Civil and Commercial Code ("CCC").
In particular, Section 1686 of the CCC provides as follows:
"Trusts created, whether directly or indirectly, by will or by any juristic act producing effect during the lifetime or after death, shall have no effect whatever." [my bold and underlying].
In short, fellow members, Thai law does not recognise the concept of a division between the legal ownership to property and the beneficial ownership of property, i.e., there is no Court of Equity. As such, the person named as the legal owner of property in Thailand will be seen as the [legal] owner of that property - period.
Sections 1687 - 1692 of the CCC
Having said that there is no concept of trust, per se, under Thai law, one very small exception to this general rule can be found within the provisions of Sections 1687 - 1692 of the CCC. These provide as follows:
Section 1687:
"If the testator desires to dispose of his property in favor of a minor or of a person adjudged incompetent or quasi-incompetent or of a person admitted into a hospital for unsoundness of mind, but wishes to entrust the custody and management thereof to a person, other than the parents, guardian, custodian or curator, he must appoint a controller of property by will.
Such appointment of a controller of property cannot be made for a longer period than the minority or the adjudication of incompetent or quasi-incompetent or the duration of the admittance into hospital, as the case may be."
Section 1688:
"No appointment of a controller of property in regard to immovable property or any real right appertaining thereto is complete unless it has been registered by the competent official."
Section 1689:
"...any juristic or natural person of full capacity may be appointed a controller of property."
Section 1690:
"A controller may be appointed by: (1) the testator himself; (2) a person nominated to do so in the will."
Section 1691:
"Unless prohibited to do so, the controller may appoint , by will, another to act in his stead."
Section 1692:
"Unless otherwise prohibited to do so, the controller shall have the same rights as that of a guardian."
Conclusion
As such, if you have young children, or an incompetent or quasi-incompetent, you can appoint a controller* to manage the affairs of that person - and such controller can either be a juristic entity (such as a law firm) or an individual; provided that the arrangement will only last for so long as: (a) the minor comes of age; or (b) the incompetent or quasi-incompetent person is no longer considered to be such.
Finally, if real estate (land and house) form part of the property in question, make sure you have the arrangement registered with your local land department.
* who is not already a parents, guardian, custodian or curator
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If you have any questions relating to this article, please feel free to PM me or email me. I cannot promise that I’ll be able to answer your questions, but I’ll do my best.
