What is a “Trust” in Mexico?

The trust is a legal act in which a natural or moral person (commercial entity), national or foreign, hands over the ownership of assets to another (fiduciary entity) so that it can administer it for them and enjoy the benefit of a third-party administrator.

Those involved in a trust are:

Founder of Trust: It is the national or foreign person that forms a trust (fideicomiso) to assign certain funds, capital, possessions, or rights to the realization of a lawful and determined purpose and entrusts said institution.

Trustee: This is the person put in charge by the fiduciary company to carry out the trust. The founder of trust becomes the owner of the goods or rights destined to the accomplishment of such purpose. Only institutions expressly authorized to do so such as Banking Institutions and Credit Institutions, can be fiduciaries. As anything can be put in a trust, from a property to money, the options and the modalities that serve a fideicommissum can be extensive.

Some common examples are:

  • Investment. It has the purpose of investing financial resources.
  • Guarantee. It is used to guarantee some type of payment or compliance clause.
  • Real estate. This type of fideicommissum is aimed at both natural persons and legal entities. In the same, the founder of trust delivers real estate to the trustee for the latter to lease, sell, or exchange in accordance with the provisions of the contract and transfer the net benefits to the beneficiary.
  • Education. Aimed at natural persons. By means of the same, the founder of trust gives a certain amount of funds to the trustee for him to invest, and with the product the educational expenses of the beneficiaries are guaranteed.
  • Testamentary. It can be constituted by contract or testament, and it can only be made on specific assets. In this way, the founder of trust can delay the division or distribution of the trust assets for a period from his death.

The most common of all trusts in Mexico are the ones used for the purchase of Real Property in the “restricted zone” relating to the Mexican constitutional law precluding foreign persons from purchasing land, homes or any real property within the territorial beach zones or along the Mexican borders.

This law was originally established to protect Mexican sovereignty and the possibility of invasion by water or land along the borders. A future article will discuss the history of the restricted zone

Essentially the trust is a way to guarantee credible administration in a legal, reliable, way that guarantees the wishes of a person with respect to their assets, real estate, economic resources, or otherwise.

Thank you all for your questions this week, for more specific information on the matter, as well as all real estate transactions and estate planning or any other legal matter please contact the author:

Angel Marin Díaz at info@inmtec.net, 415-121-9005 or 415-121-8943

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