Trust is a term that comes from English and can be translated as “confidence”. The word is used in the realm of business to name the set of companies that decide to join together to dominate a market.
For instance: “The government announced that it will prevent the creation of a trust within the telecommunications sector”, “This multinational trust controls the soybean market”, “If we could partner with other firms and build a trust, we would be able to increase our profits”.
The intention of the Business that are associated is to create a monopoly and to be able to set the price of products me services according to your convenience. Typically, a common management team is formed to jointly make the main decisions related to the members of the trust.
Usually the State controls and prevents the creation of a trust, since the companies that are associated in this way acquire a dominant position in the market that allows them to commit all kinds of abuses, violating the rights of customers or consumers and their competitors.
On USA, a law was passed in 1890 that prohibits the formation of trusts. This norm was promoted by the senator John sherman, which is why it is usually known as Sherman Law.
It is important to note that, by subscribing to a trust, a company loses its autonomy: their production and marketing decisions are placed under the trust’s board of directors. Its legal status, on the other hand, is also modified.
In another sense, a trust can be a contract that an individual subscribes to manage assets in favor of another subject.
Among the advantages of a trust are the following:
* The company does not undergo a decapitalization, that is, it does not consume or lose its capital, which happens when the net equity becomes negative and the state of technical bankruptcy arrives;
* the expansion of the company opens the doors to a higher collection in the future;
* since the control is stricter, there is less chance of evasion;
* the staff of employees is expanded.
Let’s see, on the other hand, some of its disadvantages:
* After the formation of a trust, it tends to become excessive nationalization;
* investment by capitalists may tend to decline;
* In the short term, you see a lower income by tax to earnings.
The term escrow It is also known in certain Spanish-speaking countries by its English name, living trust. It is a written legal document that partially replaces the will; When active, all of the owner’s assets (which may include his real estate, stocks, and bank accounts) are managed for his own benefit until he loses ownership. life or becomes incapacitated, at which point they are transferred to their beneficiaries.
The living trust is very popular in the United States, where it is used in the following way: the settlor transmits certain goods to the trustee, who assumes the obligation to manage them for the benefit of a third person (the beneficiary). Although this document exists in different forms, the most common is that it is written for the benefit of children, grandchildren or spouses.
Some of the advantages of the living trust are that it allows the owner of the property to decide what will be done with them when he dies, that the creditors of the settlor or trustee cannot seize them (unless there is a fraudulent situation) and that it does not require the process of succession for transfer to the heirs. As negative points, it is true that in some cases its cost exceeds that of a will and that the trustees can take advantage of the settlor in the absence of supervision by the court.