A fideicomiso comes with an estate plan built in — but only if you fill in the blanks.
It is not the question anyone wants to open with when we are standing on a sunny lot talking about sunsets. But it comes up eventually, usually from someone who has already been through a difficult estate back home: what happens to this place when I am gone?
The good news is that if you hold your Rocky Point property in a fideicomiso — the bank trust nearly every foreign owner in the coastal zone uses — the answer is unusually clean. In many cases cleaner than what your family would face in the United States.
Substitute beneficiaries do the work
Your trust names you as the beneficiary. It also lets you name substitute beneficiaries: the people who step into your rights the moment you pass. This is not a will, and it is not a court proceeding. Your heirs present an apostilled and translated death certificate to the trustee bank, the bank obtains a new permit from the Secretaría de Relaciones Exteriores in their names, an appraisal establishes the property’s value as of the date of death, and the trust carries on with new names on it. Mexican probate — which can run a year or longer and cost real money — is avoided altogether.
Plan on roughly 3 percent of the newly appraised value to cover the whole transfer: bank and permit fees, the appraisal, notario, registration, and transfer tax. Mexico does not levy an inheritance or estate tax.
The blanks people leave empty
This is where it goes wrong. I have read plenty of trusts with no substitute beneficiary named at all, or with an ex-spouse still sitting on the line, or with one adult child listed when there are three. The structure is only as good as what is written in it. Pull yours out and read the beneficiary page. If your family has changed since you bought — a marriage, a divorce, a death, grandchildren — have it amended. Naming a contingent beneficiary behind your primary one costs very little and keeps the whole arrangement from collapsing back into a courtroom.
What about a will?
A U.S. or Canadian will can be recognized in Mexico, but it must be translated, apostilled, and validated by a Mexican judge, which turns something simple into a long and expensive case. If you own anything here outside the trust — a vehicle, a Mexican bank account, a lot held another way — a short Mexican will covering only your Mexican assets, signed before a notario, is inexpensive and spares your family a great deal. Keep your home-country will for everything back home.
Do it while it is easy
Three things this month: read your beneficiary page, update it if it is wrong, and tell your children where the document lives and which bank holds the trust. That last one sounds trivial and is not — I have watched families spend months just locating the paperwork.
This article is general information, not legal or tax advice. Confirm your own situation with a licensed notario público and an attorney.
Book a meeting if you would like to talk through how your property is held.
About the Author: Joseph Sanchez is an AMPI-certified real estate agent with RE/MAX Legacy and the developer of Viviente at Sandy Beach. He serves as president of Rocky Point Home Builders and is a proud U.S. Veteran. Originally from Chicago and a Southern Illinois University at Carbondale alumnus, Joseph now resides full-time in Puerto Peñasco with his wife and three children for over 15 years. For more information email rockypointrealestate911@gmail.com.