How can I protect my assets in times of crisis?
The concern for preserving our assets and assuring our family a future financial stability is common to all people, for that there are various legal figures that ensure the effective protection of people’s assets, preventing certain assets and real estate from being required by creditors or a third party.
The legal figure of “family heritage” (“patrimonio de familia”) is a social guarantee of protection with respect to some assets considered as family property and a mechanism by which the Mexican State protects the exercise of its freedoms and rights, particularly those that ensure its economic protection. This social guarantee for family protection in Mexico is regulated by the Federal Civil Code and in each Civil Code of the federal entities.
The family heritage is the set of goods at the service of certain family organization in order to ensure a standard of living that allows its normal development, which belongs to some member of the family and benefits its members.
What is the family?
The Law gives us the concept of family, which is understood as people who, being united by marriage or by blood or related kinship, inhabit the same house and have, by law or voluntarily, unity in the administration of the home.
How to set a family estate?
For the constitution of the family estate, only the house where the family group lives and, in some cases, a cultivable plot can be considered. The maximum value of the assets assigned to the family estate will be the equivalent of fifteen thousand days of the general minimum wage, set for the economic zone where they are located.
However, the constitution of the family estate does not transmit the property of the goods to the members of the family, since the member that constitutes it conserves its property; the members of his family only have the right to use the house and dispose of the fruits.
To constitute the family estate a judicial declaration is required, so that it is registered in the Public Registry of Property and takes effect before third parties. For this, the following must be proved before the judge:
- That you are of legal age or that you are emancipated.
- That you are domiciled in the place where you want to establish the family heritage.
- The existence of the family in whose favor the family heritage will be established. Verification of family ties will be made with certified copies of the Civil Registry records.
- That the assets destined for the family heritage are owned by the constituent; and that they do not report liens outside the easements.
- That the value of the assets that are going to constitute the patrimony does not exceed the fixed one.
The family assets can be expanded; the expansion and decrease of the family assets are directly linked to the value of the assets that constitute it. Thus, when the equity decreases from the legally established maximum value, it can be expanded after judicial approval, and it can be reduced when the aforementioned value has increased by more than one hundred percent of the authorized maximum, or when the decrease is beneficial to the family.
The extinction of the family heritage, proceeds when:
- The need for family members ceases.
- They cease to live in the house for more than a year or to cultivate the plot for more than two years.
- There is a need for its disappearance.
- The assets are expropriated.
In all cases of increase, decrease and extinction of family heritage, the Public Ministry must intervene and be decreed by the judicial authority.
Another option to protect family assets is the creation of trusts. The General Law of Securities and Credit Operations establishes that through this type of contract, a party called the trustor transmits to a fiduciary institution the ownership of one or more assets and/or rights to be destined for a specific purpose, entrusting the fiduciary institution to carry out such purpose; for example administration of a fund to pay for the education of a person’s children.
Trusts efficiently protects the patrimony, since the assets or sum of money that is destined to the trust ceases to be part of the trustor’s personal patrimony to be transfer to trustee, for an specific purpose which is determined in the trust.
Another legal tool to protect family assets is donation, which is understood as the contract by which a person transfers one or more property of his own to another free of charge.
The donation cannot include future assets nor the totality of all present assets, since the donor must retain possession of what is necessary for his subsistence according to his or his particular needs and circumstances.
This legal act can only be executed between living people and cannot be revoked, unless the revocation is ordered by a judicial authority.
In all cases it is recommended to consult a legal professional to effectively handle your case; in our office we are committed to provide effective legal advice. Schedule a Free Call With Us.