Why was Puerto Rico's Trust Act stripped from the Civil Code?
The Puerto Rico Trust Act is a legal framework that regulates trusts in the territory. It was originally included in the 1930 Civil Code of Puerto Rico, specifically in Chapter 3 (On the constitution of trusts) of Title 3 (On succession) of Book 3 (On different ways of acquiring ownership). The majority of the articles included in the Civil Code were added to it through Law 41 of April 23, 1928. This law fully incorporated the Anglo-Saxon definition of a "charitable trust" and introduced it in Puerto Rico as trusts for non-pecuniary purposes. Some provisions were added or modified through Law 211 of May 8, 1952.
The other articles have not been altered for seventy years, which obviously makes the figure of the Puerto Rican trust obsolete and ineffective with respect to the current economic and social reality. Seventy-two years ago, society and the economy of our country were very different. It is therefore imperative to develop a regulation worthy of our times. The current development of the trust has had to be based on jurisprudence. Law 211 of May 8, 1952 amended articles 834, 839, 841, 843, 845, 846, 848 and 869 of the Civil Code. Currently, and in practice, the trust has greatly surpassed its regulation in the Civil Code.
Due to the vagueness, legal gaps and lack of definition that permeate the provisions relating to the trust, the Supreme Court has incorporated Anglo-Saxon legal doctrine and has used comparative law to resolve controversies that have been raised about the trust. In this proposal, the location of this legal figure has been changed, which has been regulated in the Book of Successions since its inclusion in the Civil Code in 1928, apparently because of the gratuitous nature of the transfer of ownership in it. However, it is important to note that the essence of its location in the Code is the nature of the right and not the form in which it is constituted. This conclusion is supported by the fact that the trust can also be constituted by an act inter vivos, which separates it from the institutions included in Successions. In comparative law, we can see that each country has found a way to regulate the trust: some through the Civil Code, others through the Commercial Code, others through special laws, including banking and housing; others have regulated it through trust codes or state legislation, and others simply following doctrine and jurisprudence.
In Puerto Rico, the trust has been regulated through the Civil Code, as mentioned above, but due to its great development and the need to adapt to the current economic and social reality, it is necessary to create a separate law that specifically regulates trusts. This is why the Trust Act was proposed, which seeks to provide a modern and flexible regulation for trusts in Puerto Rico, adapting to the current needs of society and the economy. The Trust Act was passed in 2012 and has since been amended to adapt to the changes and developments in trust law.