A fiduciary agreement is a contractual tool designed to protect and financially support a person
with severe disabilities.

Through this type of contract, a fiduciary settlor agrees with a fiduciary trustee to allocate their
assets for the benefit of one or more beneficiaries, following a precise program that the trustee
must adhere to.

Advantages and Disadvantages when compared to a Trust

Fiduciary agreements represent a valid alternative to trusts, standing out as flexible and easily
managed tools for asset management. This is particularly true if we consider that the assets in a
fiduciary agreement can be modified. It is the program – the specific activities and purposes for
which the assets are used – that remains legally binding. This provides the fiduciary trustee with
greater flexibility in their administration of the assets.

How does the fiduciary agreement work?

The fiduciary trustee receives a temporary right of ownership over the assets, which is separate
from their personal property, as it is held solely for the interest of the beneficiary.

Beneficiaries can be physical people, even those not yet living — future grandchildren, for
instance — or legal entities, even if not yet established (for example, future charitable
organizations).

Furthermore, beneficiaries can be divided into specific categories:

Beneficiaries of the benefits, who receive the advantages derived from the entrusted
assets.

Beneficiaries of the entrusted assets: These individuals are assigned the assets
during or at the end of the agreement.

Advantages of a Fiduciary Agreement

A fiduciary agreement contract offers three main advantages:

It serves as a powerful tool for action because the assets are segregated without
limitations. This ensures the property cannot be diverted from its intended purpose.

It acts as a self-protection mechanism, designed to guarantee the successful execution
of the designated program.