Living Trust in Colombia

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Why Should I have a Living Trust in Colombia? Most importantly the assets placed into a Colombian trust cannot be forced into liquidation in divorces, taxes, or law suits. Trusts also represent an excellent way to reduce taxes for inheritance passed to children or your spouse.  A Living Trust in Colombia is used to protect your home, property, bank accounts, shares in a Colombian company, business establishment, vehicles, pets, jewelry, valuables, and other assets.

Colombia Legal Alert: Couples enter into a common law marriage in just 2 years! Spouses can have rights to percentages as high as 50% on property purchases or profits from rentals and sales which happen during a relationship.trust estate planning in colomiba

living trust (Fideicomiso Civil in Spanish) is a legal document created by a licensed attorney in Colombia through which your assets are placed into a trust for your benefit during your lifetime, and then transferred to designated beneficiaries at your death or if you become incapacitated. An administrator (trustee) may take control of the assets upon your death, or the beneficiary may also directly receive assets upon death. When children are involved its best to have an administrator oversee the trust for a set period. Once the Living Trust is signed, you transfer ownership of your assets into the trust and you remain in complete control of your property. The trust property can be managed and distributed without going through the probate court.

What is a living trust and how is it different from a last will and testament?
1. Avoid Probate, and Inheritance Taxes - It's a smart way to avoid probate. Keep more money in the family by avoiding potentially lengthy and expensive court proceedings. A will and testament in Colombia is important to keep your wishes clear to cover any items which are not in a trust, such as miscellaneous personal items.

2. Estate Planning - A plan for your family’s future - You set conditions now on how property or money maybe used if something happens to you. Excellent to force financial management of assets for the family if you die, become incapacitated or unable to sign documents. Minors futures are protected. A popular condition for  a trust is to block property sales until a child finishes high school or college. Trusts may also be setup to protect mentally dependent adults. The bottom line is that your family is protected from lengthy and costly processes.

3. Protects Family Assets - Your affairs get handled if you're incapacitated. Avoid going to court by appointing a trustee to take charge of your finances according to your instructions. While you are a live and mentally Capable you maintain complete control of the trust.

Can I transfer property into and out of the trust while I'm alive? Yes. If you have an individual trust, you can transfer property whenever you want. If you have a shared trust, you'll need your co-trustee's consent if you own the property together.

Do I still need a will in Colombia if I have a living trust? Yes, because you may not have transferred your property into your trust before you pass away. It transfers property still in your name alone when you pass away to the trust to be distributed to your beneficiaries. It also lets you name guardians for your minor children. Click here for more information on a will in Colombia.

Aren't living trusts just for the wealthy? Not at all. People of all income levels can set one up to manage their finances in case they become disabled, or to provide for loved ones without going through probate court, which may be required of relatively modest estates.

Keywords for a Living Trust in Colombia:
Living trust is = Fidicomiso Civil or “entre vivos” in Spanish
Traspaso de bienes entre vivos = Transfer of assets between live persons

Time to implement Living Trust:
3 Days to 1 week to prepare and register the living trust.
* Property Title Registration which are moved to the trust usually take about 3 weeks.

Legal Fees:
From $1,500,000 Pesos & Up (500 USD)

Notary Fees:
From $250,000 Pesos & Up (85 USD)

Let us know what you would like in your trust and we can give you an exact quote.

Estate planning in Colombia: A LIVING TRUST is a vital part to legal estate planning which can be complemented by tax planning, a will, and a special power of attorneys for items such as financial, medical, travel, an real estate transactions.

With an estate planning consultation we will help you answer and analyze your concerns so we can prepare the best plan for your specific needs. At COLOMBIA LEGAL & ACCOUNTING we have the expertise to put together the most beneficial estate plan, based upon your desires and expectations. Contact us to today to take the next step toward securing your family’s future.

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How to buy Real Estate in Colombia

How to buy real estate in Colombia

Real Estate Legal Services and Property Buying Tips by Colombia Legal & Accounting SAS

When thinking about how to buy property in Colombia  consider the following tips outlined in this article.  Our experienced real estate attorneys help individuals, families and businesses with all real estate sale, purchase and rental issues. In Colombia it is important for Buyers and Sellers to use licensed attorneys to perform the following tasks:

First and Foremost, Use of an INDEPENDENT LAWFIRM OR ATTORNEY is EXTREMELY IMPORTANTDO NOT USE IN HOUSE ATTORNEYS FROM REAL ESTATE AGENCIES! For obvious reasons, your realtor and their preferred attorney have conflicts of interest. A realtor does not get a commission if a deal does not happen. A preffered attorney for a realtor will not get future business if they do not collaborate with the realtor on problems. Your attorney will look out for your needs but must be independent with no conflicts of interest! Realtors will try to influence deals and push them through, hiding problems, and creating future issues which are passed on to YOU the new buyer. 

  The Colombian Foreign Investment Regulations - The first purchase in Colombia as a foreigner should always be done with someone who understands how to manage the handful of agencies involved in the transaction. If not you can end up with huge problems on your title, visa, and fines for tax evasion or money laundering. Most attorneys and realtors are not familiar with the big picture when it comes to Foreign investments. Correct planning must take place before you even send money to Colombia for purchasing real estate! This process is referred to as legalization of a direct foreign investment, but following traditional old fashioned realtors will get you in trouble as they usually are trying to avoid taxes at property closings. The government audits ALL foreign investments but most local transactions between Colombians are not audited, so Colombian custom is to claim 50-70% lower closing costs (final sale price). If you do this with a direct foreign investment the government will visit you in the future, and it will not be pleasant.

Review residential and commercial real estate contractual transactions for lots, commercial projects, pre-construction, and existing structures.

Negotiate the terms of real estate purchase contract, rental contracts, trasnsfer of rental contracts, loan pay-payoffs, property taxes, repairs, posessions, evictions and more depending on the particular case.

Draft and review contract(s) to purchase or sell property in Colombia, (compraventa/promesa de compraventa)

Review related documents, for example, property title history, clinton list and criminal history  (criminal history and money laundering database check of past owners), rental contracts, grounds keeper labor contracts, Home Owner’s Association rules, financial reports for building administration.

Consider the use of an escrow account in Colombia for large real estate transactions.

Capital investments for commercial real estate developments or projects. Our real estate attorneys can assist in capital or lot for apartment deals.

Our attorneys also assist property owners with more complicated matters such as:

  • Addressing zoning problems
  • Property tax appeals
  • Zoning Permissions, Residential or Commercial Use for Apartments, & Building Administration Rules (VERIFY AIR B&B Daily Rental Permissions Before you Buy!!!)
  • Creation of property management corporations

Owners and renters alike should work with a local law firm to draft and/or review residential and commercial lease agreements. At COLOMBIA LEGAL & ACOUNTING S.A.S we can guide you through how to buy real estate in Colombia. We assist in rental and loan contracts as well.

While general real estate concepts are similar to those in many other countries, including the U.S., there are some very important differences in Colombian law. As a result, it is critical that you retain an experienced lawyer who knows the law, and the process on how to rent, purchase or sell real estate in Colombia, and who can explain these differences and how they may affect you.

escrow and title service for Colombian real estate

The basic steps on How to buy Real Estate in Colombia are:

1. Open a personal Financial Account in Colombia - we can recommend the best places to establish your account and make the introductions for you.

2. Negotiate the property price and determine who will pay which closing costs and how taxes will be addressed - we suggest using a reputable Real Estate professional, such as Paradise Realty, to        negotiate on your behalf in order to ensure the best price if you are dealing with a Colombian resident. Check out property for sale in Colombia here, and venta apartamentos en medellin.

3. Contract one of our real estate attorneys for title and property closing services - We will walk you through every step and ensure that you understand exactly what you are buying and how much you are paying.

4. Have the real estate attorney draft a purchase contract before you make a down payment to hold property.

5. Attend Property Closing & Make Final Payment - this will occur at a Notary’s Office.

6. Registration of Deed with the Proper Authorities.

The purchase of real estate in Colombia may qualify you for a Colombian Residency Visa under certain circumstances. We can explain the current requirements and assist with these additional steps if you are interested in obtaining a Colombian Residency Visa:

As part of purchasing a property with money from another country its very important to have a plan on how to legalize your foreign investment. James Lindzey overseas all foreign investment registrations with the help of our licensed Colombian attorneys, and Colombian accountants. Last but not least this step is very important if you want to comply with Colombian investor visa requirements. The basic outline for legalizing foreign investments are the following.

1. Registration of your Foreign Investment with the Colombian Federal Government at the time of the wire transfer-

2. Confirmation and certification of your Foreign Investment from the Government immediately following the registration of the wire transfer.

3. Processing the necessary immigration application documents to obtain a Visa with the ministry of foreign relations in Colombia.

Click on the “Immigration Law” tab for additional information about this process.

If you are purchasing real estate in Colombia, it is important that you understand exactly what services an attorney should provide at and before the property closing. Property closing services should include:

1. Title Investigation by an Attorney - the attorney should investigate the property deed, title history, determine who actually owns the property, whether any liens appear on the title, etc.

2. Drafting of the sales contract for the purchase of property (promesa de compraventa) - must include all details you desire, including any requested repairs, furniture, appliances, etc

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Other professional services which we recommend before buying a property in Colombia include:

Obtaining a property survey from a civil engineer

Obtaining a property inspection performed by a civil engineer

Requesting an investigation of the property administration association.
Specifically reviewing proof of the administration’s:

Finances

Property bi-laws

Residential & commercial zoning laws

Insurance coverage

 Verification Property is not on Government Clinton List

 Commercial Escrows &  Construction Trusts 

 Living Trusts to Protect your Property and Families Future (click Here)

More foreigners living in Colombia choose COLOMBIA LEGAL & ACCOUNTING S.A.S as their law firm to assist in purchasing a property in Colombia for personal and commercial reasons. Also, we are among the most experienced firms when it comes to negotiating property rental contracts, both commercial and residential.

We strongly suggest that you discuss all of the information you receive with your attorney BEFORE signing a contract to purchase real estate in Colombia. At COLOMBIA LEGAL & ACCOUNTING S.A.S we will complete the due diligence necessary to ensure that your real estate transaction goes smoothly, and all of your questions are answered. Finally, we will educate you on the entire process of  how to buy real estate in Colombia, with complete transparency at the highest level.

CLICK HERE to ask any questions or make an appointment to speak directly with one of our real estate professionals today.

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Colombian Labor Contracts

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If you are a foreigner living in Colombia it wont be very long before you realize that labor law here are much different than in many other countries (for example, the U.S.)  Most foreigners aresuprised to find that even simple jobs such as maids have rights to liquidation payments. It is your responsibility as an employeer to make sure health & workers insurance, pension, uniforms andtransportation are all paid for or you face substantial  monetary penalties/fines. The labor ministry and court system generally favor employees when there is a lack of written documentation so it is critical that you follow domestic labor laws and have a signed contract with an employee. Liquidation payments are required by law and range from 20% to 50% of the employees salary depending on various factors

Running a company in Colombia requires that you are familiar with the various types of Colombian labor contracts you may enter into in order to avoid a costly situation when employees exit or terminate their relationship with you. Some employees will take advantage of those who are not familiar with labor laws in Colombia (often Americans or other foreigners). For example, an independent worker will agree to a higher hourly rate in exchange for not paying their benefits, but upon termination will claim they are also entitled to back pay for benefits.

Our legal staff can assist you with drafting a contract which provides you with the necessary legal protection, combined with professional payroll services.
Types of Colombian Labor Contracts:
1. Project Specific (construction, professional services)
2. Replacement of Personnel (replacement of employee out on maternity sick leave)
3. Seasonal Job (high season employment)
4. Traditional fixed term full-time employment
5. Traditional part-time employment
6. Independent Contractor (a professional who can work independently)
 
Related Legal Services Offered by Colombia Legal & Accounting SAS:
1. Labor Court Disputes
2. Labor liquidation negotiations
3. Human resource services
4. WORKERS RIGHTS Workers rights
5. Work visas for foreigners
6. Certified labor cost projections

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How to Create a Colombian Corporation

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CL&A SAS – Corporate Constitutions: How to create a Colombian Corporation

At Colombia Legal & Accounting SAS, we are experts in creating corporations and ensuring ongoing compliance with Colombian laws. We have assisted in the set up of hundreds of companies, including:

  • Simplified Stock Corporations (known as SAS in Colombia)
  • Multinational Corporations
  • Sole Proprietorships
  • Limited Liability Corporations and Partnerships
  • Branch Offices of Foreign Companies

There are many good reasons to establish a Colombian corporation, including:

  • It limits the personal liability of shareholders and owners.
  • Business owners may qualify for a Colombian residency visa.
  • There are tax benefits.
  • Shareholders are anonymous in the Colombian SAS and SA type corporations.

CL&A SAS has an experienced team of Colombian attorneys, Colombian accountants, and assistants who will streamline the process of setting up a Colombian corporation and prevent the headaches normally associated with creating a corporation. We will file the necessary documents and wait in multiple lines to complete your corporate formation.

Our team will handle all phases of the process and provide a transparent tracking system with daily updates so you can follow the creation of your corporation from start to finish.  We also adhere to strict timelines to ensure you have a smooth experience. Below we have a time line which can help you to understand different steps involved in creating a SAS corporation in Colombia. What is important to understand is that the Chamber of Commerce or the DIAN could at anytime implement new requirements or have computer system errors. Normally a couple times a year changes are implemented in one or more of these agencies and may cause delays in a company creation process. Also this time line is based on a person or persons being share holders. Normally multinational corporations setting up a company in Colombia will have a much larger lead time in preparing documents to be accepted by the DIAN and Colombian Chamber of Commerce. Please contact James Lindzey directly at James@MedellinAttorney.com for more information on this process.  Keep the following time line in mind when you are studying how to Create a Colombian Corporation.

SAS Company Creation Process Time Line (2-3 Days)

1 Company Constitution & DIAN Corporate Tax ID, & Legal Representative Tax ID 1 Days
2 Chamber of Commerce 1-2 Days
3 Financial Certifications 1 Day

Bank Account Setup Times (See Details)

4  Bank Account for Corporation *Bank Accounts can only be open by persons with a valid Colombian ID Card (cedula or cedula de extranjeria) 1-2 Days
5 Investment Account for Corporation, which can handle international wire transfers for investments made in Colombia. This is optional if the legal representative has a Colombian ID but the investment account is the only option available if a foreigner wishes to open an account. Other main purposes of this type of account is to 15 Days
6 Wire to Colombia – Investment in Capital with Wire Transfer for SAS company (Other funding options available) 1-2 Days
7 Register Investment with Colombian Federal Bank via Legalizaition Process and USD to Colombian pesos 1 Day

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Business Owner’s Visa & Investor’s Visa Time Lines
TP 7 VISA 3 to 10 Days / RE VISA 1 Month to 5 weeks

1 Solicit Certification of Investment from Federal Bank (for 5 year visa) 15 Days
2 Accounting Certificates 1 Day
3 Visa Application Approval 3-5 Days *in Colombia
4 Visa Stamping in Bogota / Consulate 3-5 Days
5 Cédula Extranjería Application (the Colombian version of the green card for foreigners) 2 hours
6 Cédula Processing 10-15 Days
7 Pick Up Cédula at Migración Colombia 1 hour

 

REQUIREMENTS FOR ALL COLOMBIAN CORPORATIONS

1) Tax Filings – Every form of Colombian corporation must file tax documents throughout the year. Some companies are obligated to file monthly, while others need to report every few months.

2) Colombian Accountants – All companies must have an accountant to manage payment of sales tax and withholding taxes for providers and employees, if applicable. Accountants also must pay employee taxes which are similar to employee benefits in other countries. The accountant must have current understanding of Colombian labor laws to maintain legal compliance because the Ministry of Labor in Colombia favors employees and protects their rights when interpreting the Colombian Constitution in a dispute.

At CL&A, we provide the following corporate services:

  • Formation of various types of corporations and partnerships
  • Preparation of all necessary documents
  • Hand-delivery and processing of all documents in a timely manner
  • Daily updates and tracking during the entire process
  • Ongoing Colombian accounting support after company formation
  • Payment of required taxes and benefits for employees, providers, etc.
  • Colombian tax planning and filing required tax documents as needed (monthly, bi-monthly, quarterly, etc.)
  • Ongoing advice about Colombian labor laws and Colombia payroll employee benefit issues
  • Preparing and processing Colombia residency visa applications for business owners
  • Obtaining the Colombian ID card (cédula) for Colombian investor’s visa recipients

Contact us today with any questions or to make an appointment to discuss your specific business needs.

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