What is a trust?

México has a Restricted Zone, which is 50 km (31 miles) from the coast and 100 km (62 miles) from the border. Within the restricted zone, non-Mexicans cannot buy properties directly, but are required to purchase through a bank trust. The constitution of Mexico was implemented in 1917, the restricted zone was used to protect against military attacks.

As you can imagine, making an amendment to the constitution is quite challenging.  So, there was an alternative proposed. After 1970, the Bank Trust system was implemented.

A permit is issued from the Ministry of Foreign Relations (SRE, for its acronym in Spanish) that allows the constitution of the individual bank trust. The trust grants the beneficiary (the buyer) to use, modify, borrow, rent or sell the property at their discretion. This is not a lease and your property is not considered an asset of the bank trust.

The trust also provides estate planning. The buyer is the beneficiary of the trust, and there would be a substitute beneficiary established.  This is the person who inherits the property in the event of the beneficiary’s death. The substitute beneficiary can be modified, and the trust would replace a will in your home country.