MEXICO Law and Practice Contributed by: Javier Díaz de León, Monica Ramos and Martín Cortina, Díaz de León Abogados
2.7 Transfer of Assets: Digital Assets The Federal Civil Code and the National Code of Civil and Family Procedures allow the transfer of digital assets such as cryptocurrency, token assets and simi - lar intangibles. The Civil Code of Mexico City express - ly regulates digital assets, email accounts, pictures and videos stored in computers, servers and cloud systems transferred by inheritance. In these cases, the premise is the appointment of an executor that manages the passwords and codes required to get access to the use, transfer and disposition of digi - tal assets. In practice, the main difficulty with virtual assets transferred by inheritance is the assigned value for the estate’s inventory as well as the virtual posses - sion of and ownership title to the intangibles. 3. Trusts, Foundations and Similar Entities 3.1 Types of Trusts, Foundations or Similar Entities Mexican Trusts Mexican families may form a Mexican inheritance trust with Mexican banks acting as authorised trustees. The idea of the Mexican inheritance trust is to preserve the tax-free treatment of assets transferred by gift or inheritance. The trust agreement must recognise the legal transfer provisions of the Mexican will. Other - wise, the instruments may have contradictory terms and conditions, and result in adverse tax consequenc - es arising from the operation of the inheritance trust. Foreign Trusts Similar to Mexican Trusts, Mexican families may choose a foreign trust to control, manage and trans - fer foreign assets, such as financial instruments, real estate properties, intangible assets, vessels, aircraft or art collections. The main advantage of using these vehicles is to achieve a tax efficient regime upon the transfer and receipt of assets. These vehicles gener - ally help Mexican residents to be excluded from for - eign estate taxes, as occurs in the US, France, Spain and other jurisdictions. In contrast with the Mexican fideicomiso , the role of “trustee” may rely on non- financial institutions when it comes to foreign trusts. The settlor or beneficiary could take the role of trustee,
case of a foreign trust, a deep technical analysis must be conducted to confirm that the trust execution may qualify as a tax-free inheritance or legacy in Mexico, given that foreign trusts are not exactly similar to the concept of the Mexican fideicomiso . Holding Company The alternative of having a Mexican holding company with underlying assets and subsidiaries is another effective method to transfer assets after a death event. Holding companies simplify multiple transfers by unifying all the family interests underneath. In this way, the testator is not required to complete an exten - sive will or a multi-asset trust, but, in contrast, eve - rything is managed by a single entity. This vehicle is always complemented by a shareholder’s agreement, updated by-laws and a notarised will to dispose of the holding company’s shares. Life Insurance Life insurance is another recognised instrument to secure the living, medical, school and professional expenses of family members. A Mexican or a for - eign financial institution is responsible for managing and investing the premium payments in accordance with the selected plan of the insured family. In some instances, life insurances are complemented by a domestic or foreign trust to control the use of funds by young generations. Purpose Trust Multi-asset families have recently adopted the foreign purpose trust to act as a foreign family office for the supervision, administration, advice and compliance of foreign assets. The idea is to have an independent body that reduces the time spent and liability of fam - ily members in relation to the day-to-day operation of foreign assets, whether companies, funds, bank accounts or foundations. The duration of the purpose trust may exceed 100 years while conserving the phi - lanthropy of the testator in different aspects such as:
• shareholding control; • restrictive covenants; • funding restrictions; • emergency situations; • strategic liquidity events; and • corporate governance within the family.
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