All families at some point have to face the succession of the heritage that they consolidated over the years. The success of this process depends on the patrimonial planning that is had, otherwise the descendants can be exposed to family conflicts.
Globally, there are descendants who were unsuccessful in intergenerational wealth transfers. According to a document prepared by Credit Suisse, 70% of the families failed in the patrimonial succession, 72% of the failed cases are attributed to a break in the chain of communication of the heirs, in addition to disputes between those who consider they have the right to receive the goods.
The report details that estate planning is one of the biggest concerns among heads of families, however only 57% of households globally have a formal or informal estate succession plan. While in Mexico only 6% of the population carried out a testamentary process, according to data from the College of Notaries of Mexico City.
Although the will is a tool that allows estate planning to ensure the destination of the investments, businesses and properties of the person who carries it out, in addition to the protection of minor children, there are other mechanisms that allow greater flexibility such as trusts estate planning
Testamentary and estate planning trusts are tools that work through a contract, in which the settlor provides the assets through the stipulation of said contract that allows establishing precise instructions on what will be done with the assets.
The contributed patrimony will be administered by a fiduciary institution, that entity will deliver the goods and profits to the beneficiaries in due case.
Ernesto Fragoso Montaño, corporate director of Trust & Wealth Banking of the Mexican Real Estate Bank (BIM), explains that any good or lawful right that by nature can be transferred can be contributed to the trust.
“The different clients contribute assets such as real estate, rent collection rights, insurance policies or shares. The trustor defines the conditions for the granting, for example, that the total estate be delivered once the son finishes university,” said Ernesto Fragoso.
Another benefit of this option is found in the Technical Committee, a group of trusted persons appointed by the trustor, who have the power to make decisions in advance or not provided for in the contract in relation to the delivery of the goods.
This legal figure can be constituted by relatives, friends or legal advisers such as lawyers.
The BIM expert highlights that the instruction of a collegiate body such as the technical committee allows estate planning by trust to have advantages superior to the will.
“One of the distinctions between the trust and the will is that this is a rigid document, if one of the beneficiaries does not agree or they are unable to make decisions, the will is executed before a court and can take up to 18 months to process. best of cases, while in the trust the committee is empowered to make the decisions”, explained Ernesto Fragoso.
As for the cost, within Mexico City, opening a universal will costs around 1,600 pesos, however BIM details that executing it can represent about 10% of the value of real estate, a similar value when carrying out estate planning through a trust. .
According to Joan Lanzagorta, an expert in personal finance, fiduciary institutions charge commissions for annual administration between 1 and 2.5% of the value of managed assets, plus the fee for opening a contract, which varies according to each entity.
Currently, institutions such as BanBajío, BBVA, Banorte, Scotiabank, BIM and even the Afore Principal, among others, can open an estate planning trust.
The will or the trust are tools to ensure the perpetuation of the estate that allow not only to maintain solidity in the family nuclei but also avoid expenses before an intestate trial, payment of lawyers, which also implies investing time.