Libro IV · Título II Capítulo V. Fideicomiso

The settlor transfers certain property and rights to the trustee, assigning them to determined purposes.

The trustee receives them with the obligatory limitation of carrying out only those acts required to fulfill the purposes of the trust.

The settlor must have legal capacity to dispose of its property, and the beneficiary, to acquire the benefit of the trust.

The one who cannot inherit due to incapacity or unworthiness cannot be the beneficiary of a testamentary trust.

The legal representatives of minors, incapacitated persons and absentees may create a trust with judicial authorization. It may also be created through an attorney-in-fact with special power.

Only banks established in the country may be trustees. Credit institutions may likewise act as trustees, after having been specially authorized to do so by the Monetary Board.

Any person that, at the moment when according to the trust it corresponds to it to enter to benefit from the trust, has capacity to acquire rights, may be the beneficiary. It is not necessary for the validity of the trust that the beneficiary be individually designated in it, provided that the document creating the trust establishes norms or rules for its subsequent determination.

The settlor may designate itself as beneficiary. The trustee may never be the beneficiary of the same trust.

A trust may be created by contract or instituted by will.

The trust agreement must be recorded in a public deed at the moment of being subscribed, the acceptance of the trustee having to appear in the same act, and the estimated value of the property being recorded in the document.

The Judges of First Instance of the Civil Branch, at the request of a party and with the favorable opinion of the Public Prosecutor's Office, may create trusts in the cases in which by law they may designate persons to take charge of the administration of property. The trustee appointed judicially shall only be an administrator of the property.

Once the legitimacy of a will in which a trust is established is recognized, an inventory and appraisal of the trust property shall be made with the participation of the trustee.

If in the will the trustee is not designated by name, the Judge shall appoint the one proposed by the beneficiary and, failing that, the judge shall make the appointment.

One or several trustees may be designated, and in the latter case, they may act jointly or successively, in accordance with the provisions of the document of creation.

The trustee may carry out all the acts that are necessary for the fulfillment of the purposes of the trust, but to donate, sell or encumber the trust property, an express power recorded in the document of creation is required. If the performance of the trust becomes impossible or manifestly disadvantageous without selling or encumbering the property and the trustee is not expressly empowered for that purpose, it may request judicial authorization.

The trust produces effects against third parties:

1º.From the moment of the presentation of the document of creation to the Property Registry, if it concerns immovable property, real rights and other property subject to registration.

2º.From the moment the transfer is perfected in accordance with the document creating the obligation or the law, if it concerns credits or obligations that are not endorsable.

3º.From the date of the endorsement or registration, as the case may be, if it concerns instruments to order or nominative instruments, or movable property subject to registries or registration.

4º.From the date of the document of creation of the trust, if it concerns movable property not subject to registration.

5º.From the moment the delivery is effected, if it concerns bearer instruments.

6º.From the moment the publication of an edict in the Official Gazette is effected, notifying the interested parties, if it concerns industrial, commercial or agricultural undertakings.

The trust estate shall be liable only:

1º.For the obligations that refer to the purpose of the trust.

2º.For the rights reserved to the settlor.

3º.For the rights that derive from the trust for the settlor.

4º.For the rights legally acquired by third parties, including tax, labor and any other kind.

5º.For the rights acquired by the beneficiary prior to or during the validity of the trust.

The beneficiary has the following rights:

1º.To exercise those that derive from the contract or act of creation.

2º.To demand from the trustee the fulfillment of the trust.

3º.To request the removal of the trustee for the causes indicated in article 786 of this Code.

4º.To challenge the acts that the trustee performs in bad faith or in violation of the provisions that govern the trust and to demand judicially that the property that, as a consequence of these acts, has left the trust estate be restored to the trustee.

5º.To review, at any time, by itself or through the persons it designates, the books, accounts and vouchers of the trust, as well as to order an audit to be carried out.

When there is no determined beneficiary, the rights to which the preceding article refers shall correspond to the Public Prosecutor's Office.

If the trustee sells or encumbers the property in abuse of the powers that the contract or the act of creation grants to it, the settlor or the beneficiary may demand that it be liable for the damages arising from the transaction, as well as promote its removal and the imposition on the trustee of the other actions that correspond.

The trustee must declare that it acts in that capacity, in every act or contract that it executes in performance of the trust.

The rights that the beneficiary may have in the trust are not attachable by its creditors; but the fruits that the beneficiary receives from the trust are attachable.

The trust property may be recorded for the purpose of enjoying preferences over the rights of the persons listed in article 788 of this Code upon the extinction of the trust. When the property is not subject to registration, the trustee must issue a record of acknowledgment so as to keep it in mind at the moment of the liquidation.

The trustee has the following rights:

1º.To exercise the powers and make all the expenditures required for the fulfillment of the trust, except for the limitations established by law or contained in the document of creation.

2º.To exercise all the actions that may be necessary for the defense of the trust estate.

3º.To grant special mandates with representation in relation to the trust.

4º.To receive remuneration for its services; to collect its remuneration preferentially from the income of the trust.

5º.The others that are necessary for the fulfillment of the purpose of the trust.

Unless express authorization to the contrary is given by the settlor in the document of creation, the trustee may only make investments in bonds and negotiable instruments of recognized soundness, issued or guaranteed by the State, the public entities, the financial institutions, the banks that operate in the country and the private companies whose issues the Securities Commission qualifies as first rate.

The trustee has the following obligations:

1º.To perform the trust in accordance with its creation and purposes.

2º.To discharge its office with due diligence, and it may only resign for serious causes, which must be qualified by a Judge of First Instance.

3º.To take possession of the trust property, under the terms of the document of creation, and to ensure its preservation and safety.

4º.To keep a detailed account of its management, separately from its other operations, and to render accounts and reports to whom it corresponds, at least annually or when the settlor or the beneficiary requires it.

5º.The others inherent in the nature of its office.

The trustee must be removed:

1º.If it does not comply with the instructions contained in the document of creation of the trust.

2º.If it does not discharge its office with due diligence.

3º.If it has interests antagonistic to those of the beneficiary.

The removal of the trustee does not terminate the trust, unless its substitution is impossible.

The trust ends:

1º.By the realization of the purpose for which it was created.

2º.By its realization becoming impossible.

3º.By the fulfillment of the resolutory condition to which it has been subject.

4º.By express agreement between the settlor and the beneficiary.

5º.By revocation made by the settlor, when it has reserved that right in the document of creation.

6º.By resignation, non-acceptance or removal of the trustee, if it is not possible to substitute it.

7º.By the passage of the maximum time limit of twenty-five years, unless the beneficiary is an incapacitated person, an incurably ill person or a social assistance institution.

8º.By judicial judgment.

Upon termination of the trust, the property thereof that the trustee has in its possession must be delivered to whom it corresponds, according to the provisions of the document of creation or judicial judgment, as the case may be; and in their absence, to the settlor or its heirs, in the cases indicated in items 2º, 3º, 4º, 5º and 6º of article 787 of this Code, and to the beneficiary, in the cases indicated in items 1º and 7º of the same article.

The following trusts are null:

1º.Those created in secret form.

2º.Those in which the benefit is granted to several persons, successively, who must substitute one another upon the death of the preceding one, unless the substitution is made in favor of persons who are alive or conceived at the death of the settlor.

Trusts created for a time limit longer than twenty-five years shall be valid, but their time limit shall be understood as reduced to the legal maximum.

When an entity of the State, or an institution of social, cultural, scientific or artistic assistance with non-profit purposes, or an incapacitated person or an incurably ill person is designated as beneficiary, the time limit of the trust may be indefinite.

If it concerns security trusts, in the event of non-performance by the debtor, the trustee may promote the sale of the trust property at public auction before a Notary, any agreement that authorizes the trustee to deliver the property to the creditor in a different manner being null.

Bank transactions with a trust as security shall be assimilated to credits with real security.

The trustee of a security trust must be a person other than the creditor.

The document of creation of a trust and the transfer of property in trust to the trustee shall be free of every tax. Likewise, the return of the trust property to the settlor upon the termination of the trust is exempted from every tax.

The contract or act by which the trustee transfers or sells immovable property to the beneficiary or to third parties shall be subject to all the taxes that are in force on the date of the act or contract, but in the case of testamentary trusts, insofar as it refers to immovable property, the tax shall be graduated according to the kinship of the settlor with the respective beneficiary.

The fees of the trustee may be at the charge of the settlor, of the beneficiary or of both; in every case, the trustee shall have preference over any other creditor for the collection of fees, credits and the expenses of the trust itself, that have to be made effective with the trust property.