1. What is a trust?

It is a contract wherein one person styled the Founder (client) transfers assets to another, styled the Trustee (FMM TRUST), to manage them according to certain conditions, for the benefit of certain Beneficiaries.

2. How many parties participate in a trust?

There are 3 parties involved in every trust:

  1. The Founder (client): is a legal or natural person transferring assets to the Trust.
  2. The Trustee (FMM TRUST): is the corporation receiving assets to be administered as per terms and conditions in the trust agreement.
  3. The Beneficiaries. They don't have to sign the trust contract and may even be designated in future, if the contract contains sufficient detail for their identification.

Additionally, the Trust may appoint advisors, custodians, consultants, or committees whose functions can be defined within that contract.

3. What formalities are required to set up a trust?

The trust is formalized via authentication by a notary public of the signatures on a private contract, except for real estate located within the Republic of Panama, in which case the trust agreement must be filed with Panama’s Public Records Office.

4. Does the Trust have legal capacity?

A trust is not a juridical person, the Trustee, who holds title to the trust’s assets in a fiduciary capacity, and who acts for the Trust.

5. How many types of trusts exist?

The following is the usual classification of trusts, based on each one’s purpose:

  1. Collateral trusts
  2. Management trusts
  3. Investment trusts
  4. Family or testamentary trusts

6. What type of assets may be transferred into a trust?

The trust may be constituted on any type of present or future assets; nevertheless, assets acceptable to entrust generally include:

  1. Cash money
  2. Investment portfolios
  3. Insurance policies
  4. Stock certificates
  5. Debt instruments (real estate mortgages, assignment of loan portfolios, cession of cash flows, pledges on stocks, among others)

7. Can several clients contribute to a trust?

Yes, it can have several Founders.

8. Can the client or a third party contribute assets into a previously incorporated trust?

A trust’s assets can increase or diminished during its term, and may receive the Founder's own or a third party’s asset, provided they are acceptable to the Trustee.

9. What happens to assets transferred into a trust? Who owns them?

The trust’s assets are held in the Trustee’s name.  Yet they are not part of his personal property, as they are held in a fiduciary capacity and may only dispose of these assets as per the trust agreement’s terms.

10. How long does the trust last?

A trust does not expire; nevertheless, its legal causes for termination include:

  1. The purpose for which it was constituted is achieved;
  2. That its execution proves unfeasible;
  3. Beneficiary’s waiver or death, without a substitute;
  4. The total absence of assets in the trust;
  5. That the sole Trustee is also its only Beneficiary; and,
  6. Any reason set forth within the trust agreement.

11. Who can find out what happens in a trust?

Only such parties as authorized by the Founder, since the law requires confidentiality from the trustee, its representatives or employees, as well as from government entities authorized to carry out inspections or to request information on the trust and its operations.

12. Does the client lose control over its assets?

The Founder might also be the Beneficiary, and although assets become property of the Trust, the Founder can detail terms within the contract allowing him to retain control over them.