Who is involved in a Trust?
The parties that participate in a Trust are mainly:
1. A Settlor,
2. The Beneficiary or Beneficiaries designated by the Settlor
3. Ipal Trust Corp., as Trust Company.
Who can create a Trust?
The Trust can be created by:
1. A natural person or several natural persons;
2. A legal person or several legal persons, among these, companies, limited liability companies, private interest foundations, foreign companies;
3. Public law entities and, in general,
4. any person who is capable of acquiring rights and obligations
How does the Trust Operate?
With the structuring and signing of the agreement, the Settlor must contribute the personal, business or family assets that he wishes to be part of the patrimony. Said assets can be of any nature, present or future, in other words, it can be movable and immovable property, securities, among others. Once the assets are transferred, they leave the personal, business or family patrimony of the Settlor to register under the ownership of the Trust. The constitution of said separate patrimony is made in accordance with the purpose of the Trust, for their own benefit, of a creditor or a third party.
What is the object or purpose of a Trust?
The object or purpose of a Trust may consist in:
(i) guarantee to a third party the fulfillment of an obligation (example: the payment of a loan to a bank for the purchase of a residence);
(ii) Manage assets on behalf of the Settlor (example: the collection of rents from the Settlors Properties);
(iii) inheritance purposes (example: distributing the Settlor's patrimony to its designated Beneficiaries without the need to mediate an inheritance process before the Court);
(iv) investment (example: guaranteeing the issuance and payment of bonds), among others.
How do I protect my personal, business or family patrimony in a Trust?
When the Settlor contributes his personal, business or family patrimony to a Trust, said patrimony becomes a separate patrimony of the Settlor which cannot be subject to seizures, except for obligations acquired by the Trust.
Is the transfer of my personal, business or family patrimony subject to the payment of any tax or fiscal contribution?
No; Said transfer is exempt from all types of transfer tax, as well as the transfer for its return to the Settlor when the Trust ends. However, the transfer of the assets of the patrimony to a third party (who had not initially contributed the assets) is subject to the payment of the corresponding tax for their transfer.
How does Ipal Trust represent me?
The legal status of the Trust is exercised by Ipal Trust on behalf of the Trust, which includes the patrimony that comprise it, in other words, if the Settlor transfers a real estate in the name of the Trust, this real estate will now be registered under the ownership of Ipal Trust.
The foregoing does not mean that said asset is now part of the Ipal Trust's patrimony as Trust Company; said asset is also constituted in a separate patrimony of Ipal Trust that cannot be seized by obligations of the Trust Company, which are not related to the Trust.
What is the difference between a Trust and a Private Interest Foundation?
The most important elements that differentiate these structures are:
(i) in the Trust, the person in charge of executing the instructions of the person who delivers the assets (in this case the Settlor, in the case of a Foundation, the Founder), is the Trust Company who, in turn, is a person regulated by the Superintendency of Banks, the entity that verifies and supervises the fulfillment of the obligations that it acquires,
(ii) in the case of a Foundation, said role is exercised by members of the Foundation, it may be of the Foundation Council accompanied by a Protector, who are not regulated by a third party that verifies, supervises and / inspects the compliance with the instructions of the Founder, as provided in the Regulations. In this case, it is very likely that a competent court will have to intervene in a dispute.
Can I make changes to the original Trust?
Yes, as long as that has been expressly stated in the trust constitution agreement; otherwise, the Trust is considered irrevocable. When a trust is irrevocable, the Settlor must request the authorization of all the parties (including all the Beneficiaries that it has named) to make changes.
Does the Trust have a specific duration?
No; The term of the Trust will depend on the purpose for which it was established, that is:
(i) if it is constituted to guarantee the bank the payment of a loan to buy a residence, its term will be subject to the term of the credit agreement.
(ii) if it is constituted for inheritance purposes, its term will be subject to the will of the Settlor, in other words, if it must be executed during his life and after his death or, only with his death, in the terms and orders that he establishes, with respect to each asset.
(iii) if it is constituted to manage assets, its term will be subject to the time they form part of the Trust's patrimony or to the will of the Settlor and, in general;
(iv) the term of the main agreement that generates the interest to establish a Trust or the object for which it is constituted.