Malta Trusts have gained momentum since the enactment of the Trusts and Trustees Act in 2004. Prior to this date, trusts were not recognised under Maltese law, since the Maltese private law is largely based on the Civil Law tradition.
The key players in a Malta Trust are (i) the Settlor being the person or entity settling assets on trust, (ii) the Trustee who can be a professional trustee licensed by the MFSA or, in the case of private family trusts, the trustee can be someone related or known to the settlor and finally (iii) the Beneficiaries who can be named beneficiaries or form part a class of beneficiaries. A Malta Trust also allows for the appointment of a Protector.
Malta Trusts can be set-up as private trusts to cater for family interests including estate planning or for charitable purposes. Malta Trusts can have a fixed interest or discretionary, the latter allowing the Trustee discretion in relation to the appointment of beneficiaries and/or the extent of the benefit to which such beneficiaries are entitled.
Malta Trusts offer an effective and flexible instrument for estate planning since the drafting and preparation of the trust is tailor-made to cater for the particular needs of the case at hand. A Malta Trust can be set-up to operate inter vivos, that is, during the lifetime of the settlor, or alternatively, as a testamentary trust that operates causa mortis, on the incidence of the demise of the settlor. A Malta trust may be created verbally, in writing, by operation of law or by a judicial decision.
Malta Trusts can also be set-up as commercial trusts and can be used in collective investment schemes and in security offerings as security trusts. In the case of commercial trusts, a more extensive degree of latitude and flexibility is afforded in the set up of the trust insofar as the terms of the trust are determined from the ad hoc trust deed which reflects the contractual agreement of the parties, whilst also stressing the security and certainty which is required in the commercial context. The regulation of commercial trusts is adept to the needs of the commercial world, and has been conducive to the proliferation of trusts in this field.