What is a Trust?
The Trust is considered one of the most useful legal tools. It provides a solution to a broad range of personal and commercial needs of companies, developers, families, creditors, and others.
Specifically, it is a contract by means of which a person called the Settlor transfers certain assets and/or rights to the fiduciary institution (Trustee) so that it can administer them according to the agreed terms, delivering the benefits from the trust to a third party called the Beneficiary.
It is important to mention that trusts can be created for everything and everyone, the only limit is that the purpose of the trust be lawful and possible, preparing, case by case, a contract that is adjusted to exactly satisfy the needs of each client.
Settlor
Individual or entity that contributes assets or rights it owns to the trust, establishing conditions of administration and distribution.
Trustee
Fiduciary Institution that receives such assets or conveyed wealth in the trust property, with the mission of complying with the provisions established by the settlor.
Beneficiary
Individual or entity, national or foreign, that receives the benefit of the trust; can be the settlor itself or a third party.
In Etchegaray Abogados, considering the needs we have observed of our clients over the years, to protect their assets, minimize risks, and give guaranteed functionality to their projects, we have chosen to create an institutional entity as an Unregulated Full Service Financial Company [Sociedad Financiera de Objeto Múltiple, Entidad no Regulada], through which we selectively provide services to our clients as Trustees in trusts for real estate guarantees, real estate developments, sources of payment and assets guarantees, as each of such services are explained briefly below.
Our trust company is authorized by the CONDUSEF to provide those services, and it complies with the current applicable regulations, for the tranquility of our clients, and thus to be able to provide them full services according to their needs.
Through this Trust the owner of real estate or land temporarily transfers its use to a third party (Developer) for the construction and sale of the resulting units.
Housing developments and complexes and tourist and commercial developments are carried out under this scheme.
Advantages:
- Adequate means to bring together the necessary interests and resources in medium and large scale works.
- Permits the harmonious participation of investors, owners, contractors and financers on the same project.
- Security that our involvement as Trust Entity represents, guaranteeing the transparency of the project.
- The Trustee can administer the resources derived from the sale, delivering to each party the proportional profit and liquidating liabilities related to the project.
Efficiently substitutes the Mortgage; since the Trustee receives the ownership of one or more properties to guarantee the fulfillment of payment obligations resulting from any type of financing of the Settlor, establishing in the Trust agreement an execution procedure for the case of breach.
This Trust smooths out the seizure of the assets received as payment guarantee, avoiding unnecessary proceedings and third party claims to a better right with respect to the asset conveyed to the Trust.
The Trustee maintains ownership of the assets and is responsible for executing the resolutions of the Trust in case of compliance or breach of the Settlor.
Ideal for an individual or entity that has accounts receivable and wishes to contribute them to the Trust; with the purpose of the Trustee receiving the resources derived from the collection rights, which will serve as an alternate source of payment to face the obligations the Settlor has with a third party resulting from the granting of loans with lenders.
During its term, the Trustee receives the resources and, according to the instructions of the Beneficiary, delivers on behalf and by order of the debtor the resources to be used for the partial or total payment of the debt.
Ideal for any individual that wishes to protect his assets, since this Trust makes it possible to establish the terms and conditions under which the Trustee delivers the capital, real estate and/or resources to the beneficiaries that he designates as Beneficiary, when the condition established at the creation of the Trust is met.
Advantages:
- Designate minors as Beneficiary
- Avoid probate litigation
- Immediate availability
- No co-owners
- Confidentiality
- Simplicity of procedures
- Legal security of the Settlor
- Security in the management of the resources
- Guarantee of fulfillment of the wishes of the Settlor without long judicial procedures and without need for a will.
- Avoids freezing of the assets while the succession is resolved and eliminates the associated legal expenses.
