The trust is a legal act of trust, in which one person hands over the ownership of assets to another so that they can administer them for the benefit of a third party. Here is a brief introduction to this very broad topic.
Definition
Rosso and Uriarte (p.32) define the trust agreement as the Legal business by virtue of which a person called the trustor transfers, as a trust, to another person called -trustee-, one or more assets (which become the patrimony trustee) so that upon expiration of a term or the fulfillment of a condition, it transmits the purpose or result established by the former, in its favor or in favor of a third party called beneficiary or trustee.
Intervening parties
Rosso and Uriarte (p.33) identify four parts within the trust agreement:
- Settlor or settlor: He is the one who constitutes the trust, transferring ownership of the asset or assets to the trustee. so that it fulfills the specific purpose of the trust. Trustee: In general, anyone can be. Therefore, they can be natural or legal persons, public or private, national or foreign. etc. However, in the case of financial trust, only financial entities subject to the respective law or legal persons expressly authorized for this purpose may offer their services as trustees. Beneficiary: It is the one in whose favor the administration of the trust assets is exercised. It can be a natural or legal person that may not exist at the time of the contract or will, provided that the data that allow its future identification is recorded. More than one beneficiary and substitute beneficiaries may be designated. If the beneficiary does not exist, does not accept, or resigns, the beneficiary will be the trustee and in default of this will be the settlor. Trustee: He is the one who receives the trust assets once the trust has expired due to compliance with the term or condition.
Advantage
Depending on the type of trust and the agreed clauses, certain advantages are obtained, here are some that usually apply to all or most of the trust contracts:
- Managed assets are unattachable. Accounting and independent audits. Tax benefits. It can be used for unlimited purposes, as long as they are lawful.
According to Escoto (p.114), there are four factors that explain the development of the trust:
- Commercial approach of the figure: A figure that in its conceptual foundations is presented as a contract of a legal nature, transcends this discipline to become a commercial business and especially a banking business due to the importance that banks have given to it as business generating source. The foregoing means that the Trust has been put at the service of bank customers so that they can carry out new businesses using the advantages and versatility it offers. Purpose to be fulfilled: The second factor is that every trust necessarily has an implicit purpose, that is, that every trust is made for something and for something. In a world where so many things are started and not all come to an end, believing that a business that has been proposed is carried out in the most faithful way as a trustee has been commissioned, is a guarantee that instead of limit the possibilities of its development, stimulates it and gives it a renewal impulse. Autonomous heritage: The formation of an autonomous or affectionate patrimony constitutes one of the most outstanding elements of the trust, which allows that the resources placed in trust are not confused accountingly or legally with those of the trustee himself, or even with other trust resources that he may have. under his administration. The establishment of as many autonomous estates as trusts administered by a trustee, breaks with the classic principle of civil law regarding "one person, one estate" and gives the possibility that multiple businesses can be carried out with them. Elasticity of the figure: Finally, the enormous flexibility that the trust figure presents allows multiple businesses to be carried out according to the needs of the clients.
It also states that a trust is similar to a container to which content is added that is set by the client, who defines their needs; It also resembles a tailored suit, to your tastes and preferences, entrusting the trustee to carry out the work of a professional manager in the administration of the trust.
Historical basis
Betancourt (p.551), on the emergence of the trust as a legal figure in Roman Law, explains that it appeared to overcome the lack of passive testamenti factio regarding the legacies of the peregrini, the personae incenae and the cities. As such trust orders were not solemn, and could be made not only in will or codicil but also in word. Therefore, they could also be revoked in any way. That same absence of form allowed that trustee could be anyone; the testamentary or intestate heir, a legatee, another trustee, etc. As such trust commission, it had no action to sanction its breach by the trustee, until Octavio Augusto entrusted its fulfillment to the Consuls, granting them extra ordinem jurisdiction for that purpose.Emperor Claudius (41 AD - 54 AD) created a special jurisdiction; that of the Trustee Praetors. The approach of the trust to the legacy per damnationem was unavoidable, and all the rules of this were applied to it, except the ius adcrescendi and the Catoniana regulation. In the same 1st century. The emperor Vespasiano (69 AD - 79 AD) extended to the trusts the expired laws of Octavian Augustus and the fourth Falcidia. In the time of the Emperor Justinian, bequests and trusts came to be completely equated, differing only in that while the legacies required the testamentary form, the trusts continued to preserve their original nature.The approach of the trust to the legacy per damnationem was unavoidable, and all the rules of this were applied to it, except the ius adcrescendi and the Catoniana regulation. In the same 1st century. The emperor Vespasiano (69 AD - 79 AD) extended to the trusts the expired laws of Octavian Augustus and the fourth Falcidia. In the time of the Emperor Justinian, bequests and trusts came to be completely equated, differing only in that while the legacies required the testamentary form, the trusts continued to preserve their original nature.The approach of the trust to the legacy per damnationem was unavoidable, and all the rules of this were applied to it, except the ius adcrescendi and the Catoniana regulation. In the same 1st century. The emperor Vespasiano (69 AD - 79 AD) extended to the trusts the expired laws of Octavian Augustus and the fourth Falcidia. In the time of the Emperor Justinian, bequests and trusts came to be completely equated, differing only in that while the legacies required the testamentary form, the trusts continued to preserve their original nature.) extended to trusts the expired laws of Octavio Augusto and the fourth Falcidia. In the time of the Emperor Justinian, bequests and trusts came to be completely equated, differing only in that while the legacies required the testamentary form, the trusts continued to preserve their original nature.) extended to the trusts the expiring laws of Octavio Augusto and the fourth Falcidia. In the time of the Emperor Justinian, bequests and trusts came to be completely equated, differing only in that while the legacies required the testamentary form, the trusts continued to preserve their original nature.
Types
There are, among others, the following types:
- Investment: The purpose of which is to invest financial resources. Guarantee: That is used to guarantee some type of payment or compliance clause. Administrative: It is used to assign personal administration to a natural or legal person in compliance with some type of contract.
As already mentioned, the great flexibility of this type of contract allows having very different classes.
General clauses
García (p.159) indicates that within the bases or general clauses of a trust are the main ones that are:
- Establish who is the settlor. That the trustee accepts the position as such. The trustee may be appointed at that time or not, except in a way that may be assigned in the future. It is also established what purpose and what are the purposes of that trust and the term for which it is constituted.
The financial trust
The concept of financial trust is explained below through a couple of educational videos.
Bibliography
- Betancourt, Fernando. Classical Roman law. University of Seville, 2007.Escoto Leiva, Roxana. Commercial Bank. EUNED, 2001. García, William (Compiler). Seminar on credit with default guarantee fund and other credit systems to finance. IICA, 1984 Rosso, Aberto P. and Uriarte, Carlos María. Agricultural financing. IICA, 2003.
