Can a trustee withhold money from a beneficiary?

Can a trustee withhold money from a beneficiary?


The Minimum Presumed Income Tax paid by the trust is attributable as payment on account of the income tax of each of the beneficiary trustors in accordance with the rules of Section 13 of the Minimum Presumed Income Tax Law, without such computation exceeding the limit determined by the increase of the tax liability originated by the incorporation of the gain from the participation in the trust fund.

In this respect, the trust must practice the self-withholding established by Article 12 of the General Resolution for the transactions carried out when it awards the functional units to the beneficiary trustors.

I. The present proceedings have their origin in the presentation made by the trust under the terms of General Resolution No. 1,948, by means of which it inquires about the tax treatment applicable to such trust fund in the minimum presumed income tax and with respect to the income tax withholding established by General Resolution No. 2,139.

What happens if the trustee dies?

What happens in case of death of the trustor? In the event of death of the settlor or trustor, as we have already stated above, the trust does not give rise to restitution, and the assets remain in the hands of the trust entity, while the succession is being liquidated.

How is the income from a trust declared?

The rule states that income and expenses must be declared by the beneficiary of the trust, which in the example is the trustor’s son; if the beneficiary is the trustor himself, he declares both the trust right and the income and expenses associated with the trust.

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Who can administer a trust?

Who administers the trust? There are three parties to a trust: the trustee institution, who administers the money or resources of the trust; the settlor, the person who is transferring the assets or resources; and the trustee, who is usually the beneficiary.

Trustee or beneficiary

Remuneration for the exercise of this activity and the prohibition to acquire assets of the same undertaking.The local Real Estate industry has massively turned to the use of the figure of the trust as a vehicle to develop real estate undertakings. Nobody today doubts the advantages of this tool. And if we had to debate about which of them is the main one, surely on the podium will be the patrimonial isolation enjoyed by the trust assets, making them independent from the people who created them.

The trust turns out to be a simple contract with particular characteristics granted by Law 24441, being as such bilateral, consensual, onerous and formal. Although the legal aspects of these concepts are beyond the scope of this note, we consider it valuable to emphasize certain aspects of the “bilateral” aspect. As the essence of a trust, the relationship between the parties is based on two intangible attributes: the suitability of the trustee – natural or juridical person – and the trust generated by the trustee to the trustor (the former as a natural consequence of the latter).

How much does a trustee earn?

Possible example: for a “turnkey” construction contract for an approximate amount of one million dollars, the trustee’s fee could be between 2% and 4% of that amount, depending on the scope of the work and the team of professionals accompanying the developer.

What are the obligations of the fiduciary owner?

Among the main obligations of the fiduciary owner is the conservation of the thing, that is to say, he must assume the expenses that are necessary for such purpose; he is even obliged to the extraordinary expenses, however when he executes the latter, he will be entitled to reimbursement prior to the …

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What is a fiduciary owner?

Fiduciary owner. The person who receives the thing, with the obligation to transfer it to another in the event that the condition is fulfilled.

Fiduciary property

This future flow may be represented in commercial invoices, contracts of a commercial nature, and in general any other good or service whose value may be estimated in cash, even based on its historical behavior in the market.

The Source of Payment scheme offers security to the credit institutions regarding the repayment of the trustor’s obligations, since the debt service is the first obligation to be fulfilled with the resources that enter the trust accounts, and once the payment of the loan installment has been met, payments may be made to third parties, or restitution of contributions to the trustor.

How are financial yields generated?

Income from interest or financial yields derived from these securities will be realized for tax purposes on a straight-line basis. This calculation will be made taking into account the nominal value, the face rate, the agreed term and the holding time in the year or taxable period of the security.

What taxes does a trust pay?

The trust is not subject to the tax. Neither is it appropriate for the trustors to compute the trust assets for the calculation of the tax, since they ceased to be part of their patrimony at the time of being contributed to the trust.

Who is involved in the trust agreement?

The main parties that usually take part in a Trust are 3: Settlor, Trustee and Beneficiary, as we commented, eventually in some Trusts additional parties may participate such as Settlor A, Settlor B, Settlor C, etc., Trustee in the First Place, …

Trust Agreement

1.1. Given the onerous nature of the transfer of ownership of the real estate by the contributing trustor -individual- to the trust fund, in view of the fact that there is a future consideration, such transaction is subject to the Tax on the Transfer of Real Estate of Individuals and Undivided Estates, to the extent that there is no habitual nature in this type of transfers, in which case it would be subject to Income Tax.

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1.2. Since Articles 11 and 12 of the Trust Agreement in question provide that, in addition to the trustors, its assignees may become beneficiaries thereof, it shall be the Trust that shall be subject to the tax as it is included in Article 69, subsection a), paragraph 6 of the Income Tax Law.

1.3. If the units carried out by the Trust were awarded and deeded to each of the beneficiaries at the value of the contributions made by the trustors to meet all the expenses required for the construction work and completion of the construction project, this would be the value of the transfer.