Types of trust


The types of trust are the categories that are distinguished between those contracts by means of which goods, amounts of money or rights are transferred, whether present or future, to another person (natural or legal) to manage said resources. In Spain this legal figure is recognized only for hereditary control, but in other countries of the world it serves other purposes such as the simple protection of capital.

It should be remembered that the settlor participates in the trust, who transmits their assets, the trustee, who receives them to manage them, and the beneficiary of the opposite or trustee (who in the case of an inheritance would be the heir).

Trusts can be classified based on different criteria, as we will see below:

Types of trust according to the trustee's obligation

The types of trust, according to the obligation of the trustee, are:

  • Pure trust: The trustee's obligation is to keep the assets that will later be transferred, which leads to the unavailability of the assets.
  • Residual trust: The trustee's obligation is to transfer the assets, but it has availability on them and depending on what type of availability there are two subtypes:
    • When the trustee is instructed to keep at least a minimum of the patrimony.
    • Nothing is indicated to the trustee.

Types of trust according to its possibility of annulment

Depending on whether there is the possibility of reversing the contract, we have two types of trust:

  • Revocable: The settlor can change it at any time in his life.
  • Irrevocable: There is no possibility of reversing it once the agreement is established, or upon the death of the settlor.

Types of trust according to the moment of its entry into force

Trusts can also be classified according to whether their entry into force is before or after the death of the settlor:

  • Inter-living trust: The individual constitutes the contract while he is alive to plan an estate that he seeks to transfer in the future. In some cases, such capital may be accessible to the beneficiary before the death of the settlor.
  • Testamentary trust: It is activated upon the death of the settlor. The document specifies how the deceased's assets will be distributed.

Types of trusts according to their purpose

The types of trust according to their purpose are:

  • Guarantee trust: Serves as support for the fulfillment of obligations of the settlor or a third person. For example, a debtor forms a trust to be offered as security for the payment of a loan.
  • Securitization trusts: They allow to back underlying rights to transferable securities. The settlor transfers certain assets and rights to a trust estate. Thus, against said assets, the trustee will issue transferable securities such as bonds and shares. It should also be noted that investors who buy these securities may demand that the trust securities be sold for the issuer to comply with the obligation to pay them.
  • Charitable trust: It is one established for charitable reasons. It is a term to refer to charitable associations.

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