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Purposes of trust operations
The main goals of trust operations of banking structures or relevant organizations:
• Trust operations must bring income.
• Additional services in the form of a trust help to establish long-term and mutually beneficial relationships with important and necessary clients.
• These operations help establish control over large enterprises and their funds.
On the part of consumers of trust management services, the goals are just as clear. Enterprises do not need to maintain a staff of specially trained employees, purchase special software, costs are reduced. Individuals are freed from the burden of management, constant control, and, in addition, get access to trading platforms of the financial market.
And here the lines from the fable are recalled: "Trouble, when the cobbler starts to bake pies, And the cobbler wears boots." Everyone should do their own thing. And if someone does something better than you, can you trust him? Yes, you have to pay for convenience. But it is better to share part of the income than not to have it at all.
Types of trust operations
Trust operations in the global sense are of two types:
• Management of the client's property. The meaning of this management is that all operations are carried out in the interests of the client and on his behalf.
• Agency services.
There are some differences in these operations for individuals and legal entities.
Individuals are offered fiduciary services for property management under a contract, agency services for transactions on the securities market, depository services, storage of valuable property, execution of powers of attorney, etc.
Legal entities can transfer property, property rights, a portfolio of securities, funds of funds to the trust management, use the services of depositories.
Objects and subjects of the trust
As already noted, the trustee can be both a legal entity and an individual. The trustee may own the following objects, which in turn may become objects of the trust. Somehow:
– companies and their assets;
– real estate, land, transport, equipment;
– money, currency, securities, jewelry;
- property rights.
The subjects of the trust are the parties to the agreement - legal entities or individuals. The founder of the trust can be the owner of the property or the trustee. The fiduciary manager (the one who will directly manage the property or provide agent services) is selected. And all this will be drawn up in the interests of the beneficiary, in whose favor the relevant documents will be drawn up.
Benefit of the trust manager
The fact that trust operations bring commission income is understandable. But in addition to this, the trustee receives the following:
• Use of additional financial resources that will allow to obtain additional profit.
• Receiving commission income in accordance with trust agreements.
• Securities management brings additional benefits.
• Control over large enterprises and their funds.
• The reputation and image of the trust manager allow to attract even more large and promising clients.
Interest of the creditor
If the client does not have special knowledge in effective property management, the experience and capabilities of the trustee will allow him to earn additional income. If we are talking about money, then the money transferred to the trust can bring much more income than the money placed on deposit in the bank. At the same time, in the case of early termination of the trust management agreement, the client loses significantly less than in case of early termination of the deposit. In addition, the client has the freedom to choose the terms of placement.
Commission remuneration
Trust management operations must be beneficial to both the principal and the manager. Both parties calculate the profitability of all possible operations and come to an agreement. Commission remuneration for the trust can be in the form of:
- interest on the appraised value of the property, paid on a quarterly or annual basis;
- a certain amount or a percentage of the profit received from the property in trust management.
The frequency of commission payment is stipulated in the agreement.
Who works in the market of trust services
Both banks and trust companies can provide trust services. There are some differences in the list of their operations. The bank provides the following services:
• Accepts securities for safekeeping;
• Maintains monthly accounting records of the creditor;
• Receives payments, interest and dividend income, rent payments on behalf of the trustor;
• Sells and buys securities in the interests of the client and at his expense;
• Consults on taxes and real estate acquisition, helps to form an optimal portfolio of securities, etc.
Trust companies do not provide purely banking license services, but can offer their clients additionally:
• register a private company abroad;
• provide services for trust management of property and real estate, both in the country and abroad;
• carries out risky, but potentially profitable operations to invest the creditor's funds.
Conclusion
If there is property at your disposal that you don't understand how best to dispose of it, you should try to make money on it. Nowadays, it is quite easy to find a banking structure or a trust company. A certain share of risk is always present in cases where the expected profit from the transaction can be significantly higher than the market one for deposits. But that is the excitement of working on the financial markets!
