By: Sophia Lozano Chernitsky
As we all know, probate proceedings can cause more problems than those they intend to solve. For this reason, it is common practice to recommend and implement estate planning and succession through the execution and operation of trusts.
A trust is an agreement whereby an individual or legal entity (settlor) transfers ownership of assets and/or rights to a fiduciary institution (trustee) so that said institution may manage and allocate them for a specific purpose, and for the benefit of the person who executed the trust or a third party designated by the settlor (beneficiary).
A trust turns out to be an effective tool when thinking about inheritance, as the settlor sets forth precise provisions regarding the administration and distribution of the trust’s assets, both during their lifetime and after their passing.
An estate trust has several advantages, the most important one being the protection of the assets and/or rights contributed to the trust, as well as the assurance that such assets and/or rights will be managed by the trustee in strict compliance with the settlor’s wishes.
Another advantage of an estate trust is the continuity and preservation it guarantees regarding family assets for over more than one generation, which provides legal certainty to the settlor regarding the existence, conservation and distribution of their assets and/or rights to their descendants.
In summary, an estate trust places the administration and distribution of the settlor’s assets and/or rights solely and exclusively in the hands of an impartial institution whose obligation is to act in strict compliance with the settlor’s wishes and the trust’s purpose, thus protecting the trust’s assets, fulfilling the settlor’s wishes, and transferring the corresponding benefits to the beneficiaries without the concern that said assets will fall into the hands of third parties who may act in bad faith.
