The main Maltese legislation regulating trusts in Malta, namely the Trusts and Trustees Act, Chapter 331 of the Laws of Malta ('the Act'), provides that a trust may be created to hold property settled by a settlor or settlors for the present and future needs of family members or family dependants, as defined hereunder, who are definite and can be ascertained ('the Family Trust').
Pursuant to the Act, the Malta Financial Services Authority ('the MFSA') has drawn up Rules for Trustees of Family Trusts ('the Rules'), which regulate those companies in formation and those companies already incorporated for the purpose of acting as trustees of a Family Trust.
The Rules define the terms 'family dependants' and 'family members' as individuals who are related to the settlor or settlors setting up the trust, by consanguinity, adoption or affinity, in the direct line up to any degree, whether ascendant or descendant, or in the collateral line up to the fifth degree inclusively. Therefore, it has been clarified by the said Rules that a Family Trust may only be set-up for the benefit of said specific individuals.
Applicants must satisfy a number of conditions at application stage and on an ongoing basis, including inter alia, that the trustee must be a limited liability company registered in Malta, all due applications must be submitted to the MFSA, the M&A of the applicant company must limit the company's objects to acting as a trustee in relation to specific settlor or settlors and that at least one of the directors of the company must assume the role of Money Laundering Reporting Officer.
The Rules prescribe a number of duties on the Directors, including inter alia, submitting a declaration and an annual certificate of compliance to the MFSA, maintaining due accounts and records, and obtaining consent from the MFSA before affecting certain substantial changes in the company.
A trustee of a Family Trust shall be entitled to surrender its registration. However, it is obliged to inform the MFSA at an early stage of its intention to do so. The MFSA may require such trustee to delay the surrender of its registration as a trustee of Family Trusts, or to wind-up such business in accordance with any conditions which may be imposed by the MFSA.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
