[Guozun Law Firm] The Reliability and Security of Personal Trusts — Professional Evaluation by Trust Lawyers and Analysis of Fees

How great is the risk of trust investment, and how should we judge it?

Facing the question from netizens: Is the risk of trust investment great, and how should it be judged? Professional lawyers gave an answer. They believe that, compared with other investment methods, the risk of trusts is relatively small. As a unique way of wealth management, trusts involve the participation of banks, insurance, bonds, and many other aspects, and possess a relatively complete risk control system. Although any investment is accompanied by a certain degree of risk, when problems arise in products, trust companies often adopt rigid repayment measures. From the current situation, the risk of trust investment is relatively small.

The size of the risk of trust investment also needs to be specifically analyzed according to the type of product and the direction of investment. Although trust companies usually promise rigid repayment, in the actual operation process, investors still need to make a comprehensive assessment of the risk of trust products.

It is worth mentioning that the risk of trust funds is relatively large, mainly reflected in principal non-guarantee risk and liquidity risk. Principal non-guarantee risk means that investors may face capital losses; liquidity risk is reflected in the fact that trust funds are usually closed-end investment funds, and realization of funds is relatively difficult. For investors pursuing preservation of capital or steady appreciation, these risks cannot be ignored.

Overall, trust risk is not great, but the specific size of the risk still needs to be judged according to the design of the trust product and the direction of investment. Trust products usually belong to low-risk and stable-income financial products, but different types of trust products have different risk-return characteristics. When making a choice, investors should carefully analyze and make wise decisions.

Factors such as economic environment risk and project risk will also affect the performance of trust products. Macroeconomic conditions, market fluctuations, and changes in interest rates and exchange rates may all affect the returns of trust products. Before investing, investors should fully understand these risks and make comprehensive preparations.

What exactly is an irrevocable trust?

An irrevocable trust is a legally binding trust arrangement. Once established, neither the settlor nor the trustee can unilaterally revoke or terminate the trust. This ensures the certainty and durability of the trust. This kind of trust arrangement is usually used to protect the rights and interests of beneficiaries and ensure that trust property is managed and used according to predetermined purposes and conditions.

The core purpose of an irrevocable trust is to guarantee the stability of the trust and the realization of the trust purpose. In a trust relationship, once the settlor establishes an irrevocable trust, the settlor may not arbitrarily revoke or change the trust arrangement. This ensures that the trust property can serve the beneficiaries in a long-term and stable way.

Once a trust is established, it has legal binding force and generally cannot be revoked at will. The irrevocability of a trust is mainly reflected in legal constraints, and in the fact that ownership of the trust property has already been transferred from the settlor to the trust, and the settlor no longer has direct control over the trust property.

In an irrevocable trust, the settlor must clearly waive the right of revocation when establishing the trust. Unless specific revocation conditions are agreed in advance, the settlor cannot change or revoke the trust plan. Compared with a revocable trust, an irrevocable trust is more thorough in the transfer of ownership of trust property. Once the settlor transfers property into the trust, the settlor no longer has the right to dispose of that property, thus achieving effective isolation of assets.

What knowledge is there about overdue trust financial products?

When trust financial products become overdue, investors need to grasp the following key points of knowledge: response measures, negotiation with the wealth manager, communication and complaint with the manager, and so on. Investors should negotiate with the wealth manager who sold the product, understand the reasons for the overdue situation and possible solutions. If negotiation is unsuccessful, they may make an internal complaint to the manager of the trust financial product and seek a solution.

When responding to overdue trust financial products, investors may adopt the following methods: immediately contact the wealth manager to understand the reasons for the overdue situation and possible solutions; if negotiation is unsuccessful, communicate with the manager and initiate the internal complaint process; pay attention to the underlying assets invested in by the trust product, and understand the next response measures of the trust company or fund manager.

Investors may also use professional tools to obtain industrial and commercial information on the underlying assets, clarify whether the project company is involved in litigation, and whether it has other external investments, so as to more comprehensively understand the risk status of the trust product.

What are the charging standards for lawyers handling inheritance of trust products?

The charging standards for lawyers handling inheritance of trust products vary according to factors such as region, lawyer experience, and complexity of the case. The range for hourly charging is from RMB 200 to RMB 3,000 per hour; for administrative litigation cases not involving property, the lawyer charging standard is usually from RMB 3,000 to RMB 20,000 per case.

For family trust financial lawyers, the hourly charging range is likewise from RMB 200 to RMB 3,000 per hour. The fee for administrative litigation cases not involving property is from RMB 3,000 to RMB 20,000 per case. For administrative litigation cases involving property, the fee is charged on the basis of a basic fee of RMB 1,000 to RMB 8,000, with additional cumulative calculation by segments and proportions according to the disputed amount.

In criminal cases, lawyer fees vary according to the different stages of the case. The investigation stage fee is RMB 6,000 to RMB 18,000, the review and prosecution stage fee is RMB 6,000 to RMB 30,000, and the trial stage fee is RMB 8,000 to RMB 50,000. The fee for acting in criminal private prosecutions is between RMB 6,000 and RMB 60,000.

How should one begin to get involved in trust business?

The basic steps for getting involved in trust business include: deeply understanding trust regulations, becoming familiar with relevant laws and regulations, and ensuring a clear understanding of the basic principles, operation methods, and legal relationships of trusts; clarifying the trust purpose, namely the economic or management objectives hoped to be achieved through the trust; selecting an appropriate trust company, signing a trust contract, and transferring personal property into the trust, to be managed by the trust company according to the agreement.

For real estate trusts, the process mainly includes: determining the trust purpose and property, signing the trust contract, and clarifying the rights, obligations, and responsibilities of both parties; the settlor cooperates with the trust company to transfer the real estate and related finances into the trust, to be managed and operated by the trust company.

Investors may go to a formal trust company to consult the specific handling process. A family trust can centrally manage the settlor’s personal property and carry out investment operations according to a pre-set investment portfolio. It is a kind of professional financial product.

What role exactly does the trustee play?

A trustee refers to the individual or institution entrusted in a trust relationship to manage and protect the trust property. According to the provisions of the trust agreement, the trustee is responsible for the operation and management of the trust property, aiming to realize specific objectives or generate expected returns. These objectives and returns are usually for the benefit of the beneficiaries.

The role of the trustee is that of manager and protector of assets. They must ensure that the management of assets is not influenced by their personal interests or the interests of other institutions, and must follow relevant laws and regulations, contracts, and moral norms, and be responsible to the beneficiaries.

In a trust relationship, the trustee is given certain rights and responsibilities by the trustor on the basis of trust, in order to manage and protect the trust property. The trustee’s responsibilities and requirements are intended to ensure the safety and appreciation of the trust property and provide long-term protection for the beneficiaries.