Introduction
The trust was fully incorporated into Maltese law as a unique legal institute available indiscriminately to all and sundry by virtue of the Malta Trusts and Trustees Act. The said Trusts and Trustees Act was modelled on the Jersey trusts law (which represented a much acclaimed attempt to codify the English law of Trusts). The said Trusts and Trustees Act also transposed, into domestic law, the provisions of the Hague Convention on the Law Applicable to Trusts and on their Recognition – ratified by Malta in 1994.
Constitution of a Trust
Accordingly, a Malta trust exists when property is transferred by the settlor to a trustee who would be required to hold, administer and perhaps employ and deal in the said property for the benefit of beneficiaries and/or for one or more charitable purposes in accordance with the terms of the trust and the requirements of law (non-charitable purpose trusts generally are currently not permissible).
Property transferred or settled on trust as aforesaid effectively constitutes a separate fund owned by the trustee
Property transferred or settled on trust as aforesaid effectively constitutes a separate fund owned by the trustee and which is distinct and separate from the personal property of the trustee and from other property held by the trustee under any other trust. As a result, personal creditors of the trustee are denied access and recourse against the trust fund and, furthermore, that fund would not form part of the trustee’s personal estate upon his insolvency or bankruptcy or of his estate upon his death.
Nevertheless, the trust is not a legal entity afforded legal personality – such as a company or a foundation. Accordingly, the trust property is managed and administered via the legal personality of the trustee.
A trust may be constituted in any manner – such that a trust may come into existence unilaterally (by means of a declaration in writing containing, inter alia, all the terms of the trust) or otherwise by oral declaration, or by an instrument in writing including by a will, by operation of law or judicial decision.
A trust may validly exist for a maximum of 125 years. This limit does not, however, apply in respect of a trust created for a charitable purpose or a unit trust or a qualifying retirement scheme set up as a trust.
Trustee powers
Trusts may, of course, be created with a virtually limitless range of powers vested in and obligations incumbent upon the trustee and rights appertaining to the beneficiaries. Consequently, different types of trusts may be created, such as discretionary trusts, fixed interest trusts, life interest trusts, contingent trusts, security trusts, trusts for certain prescribed commercial transactions (including securities offerings, collective investment schemes, employee benefit or retirement schemes or arrangements timeshare and multi-property structures).
Tax Treatment
a trust would be transparent for Malta tax purposes to the extent that none of the beneficiaries shall be persons resident in Malta and that any assets acquired and held by the trust shall be located outside Malta
As noted above, a trust would be transparent for Malta tax purposes (such that all income and/or gains derived by the trust would, for Malta tax purposes, be deemed to have been derived directly by the beneficiaries of the trust) to the extent that none of the said beneficiaries shall be persons resident in Malta and, additionally, that any assets acquired and held by the trust shall be located outside Malta.
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