According to Mexican legislation, a trust is an act whereby the settlor transfers to a trust institution the ownership or title to one or more assets or rights, to be used for lawful and determined purposes, entrusting the realisation of such purposes to the trust institution itself (Article 381 of the LGTOC, General Law of Credit Instruments and Operations).
Settlor: The person who conveys the fiduciary ownership of the assets.
Trustee: The person who receives the assets as fiduciary property and undertakes to carry out with them what is established in the trust contract.
Beneficiary: The person who receives the benefits stipulated in the trust.
- Define the purpose of the trust: Must be legal and specific.
- Beneficiary selection: The beneficiary may be appointed by the settlor in the constitutive act of the trust or in a subsequent act.
- Determination of the assets or rights that will be part of the trust: All kinds of assets may be the object of a trust, except those which, in accordance with the law, are strictly personal to their owner.
- Choosing a financial institution: Only institutions expressly authorised to do so by law may be trustees.
- Consideration of a trustee’s management fee.
- Define the period of duration.
- Contract registration: The trust whose object is immovable property must be registered in the property section of the public registry of the place where the property is located. In the case of movable property, the trust should be registered in the single section of the Sole Registry of Movable Guarantees of the Public Registry of Commerce
- Request a written contract to be provided to the financial institution: The constitution of the trust must always be in writing.
- Define the terms of the contract.
- Process the transfer of assets or rights subject to the trust: For an act to be registered in the public registry, it must be made in a public document.
It is important to note that trusts can be constituted for everything and by anyone; the only limitation is that the purpose of the trust is lawful and possible, designing, case by case, a contract that fits exactly to meet the needs of each client.