Substitute Beneficiaries: Why Are They Important When Buying Real Estate In MexicoForeigners who buy homes or property in Mexico within the “restricted zone” (within 100 kilometers of any national border and 50 kilometers of an ocean) must set up a trust called a fideicomiso to purchase the property.
In short: The fideicomiso is set up through a bank, the bank acts as a trustee, and you are the beneficiary. The fideicomiso acts as stewards of the trust, and you – the beneficiary – have full ownership rights, including the right to sell or rent the property.
One of the benefits of using a fideicomiso is that, as with any trust, you can name substitute beneficiaries.
What Are Substitute Beneficiaries?
Substitute beneficiaries are your heirs, named in the trust, the people who will inherit the property upon your death.
Naming beneficiaries on your trust at the time of purchase will prevent the property from going through Mexican probate, which is a process that can take years.
How To Name Substitute Beneficiaries
It’s important to name your substitute beneficiaries clearly in the testamentary clause of the trust agreement. You must use their full legal names, as they appear on their current passports. Any difference in spelling versus the spelling on the passport can result in difficulty for your heirs to claim the property.
If your heirs change their names, you must amend your trust.
Rights And Responsibilities of Substitute Beneficiaries
Substitute beneficiaries must give notice of death to the bank, and show a death certificate and their identifications.
The bank will accept them and register them as the new beneficiaries of the trust. In this way, they will become the new owners of the property with ownership rights and obligations transferred to them.
The team at Warren Brander Realty Group can guide you through the entire process of purchasing property in Mexico as a foreigner. Contact us today for a consultation.