The replies to these questions assume the position under the law after the enactment of the proposed legislation amending the Trusts Act and other laws relating to trusts and nominees.
What is a trust?
A trust is an obligation to deal with property for the benefit of other persons. It is neither a legal person nor a legal entity but rather a relationship which arises where a person holds property for another.
Who can create a valid trust in Malta?
Any person whether a natural or legal person who has title to property vested in him and is capable of transferring the assets in question may set up a trust if he enjoys legal capacity. This means the person must be over 18 years of age, is not suffering from any mental illness and is not a bankrupt. If the person setting up a trust is a corporation it can create a valid trust so long as the settlement of property under trust is within the objects or powers of the entity.
Who can be a trustee?
Any person resident or operating in Malta or if a corporate entity, registered in Malta, may act as trustee, provided that authorisation shall be required so to act. Furthermore, any person having a licence or authorisation to act as trustee issued by the relevant regulatory authority in an approved jurisdiction, may also act as trustee after following a notification procedure. Some notifications are exempt and others can act as trustee using another procedure when they are not authorised by the MFSA.
Who is the owner of the trust assets?
Once the assets or property to be conveyed in trust are transferred to the trustee, the trustee has full ownership of such property.
How is a trust created?
A trust can be created by means of a private writing, public deed, will and even orally. However, a trust may also come into existence by operation of the law or by a judicial decision.
What is required for a trust to be validly declared?
For a trust to be validly declared, there must be certainty of intention (or words), certainty of subject-matter and certainty of beneficiaries.
What type of property can be placed in trust?
Any form of property capable of being identifiable and capable of being owned can be placed in trust.
What are the legal effects of holding property under trust?
The holding of property under trusts shall have the following legal effects:
(a) that personal creditors of the trustee shall have no recourse against the trust property;
(b) that the trust property shall not form part of the trustee's personal estate upon his insolvency or bankruptcy and
(c) that the trust property shall not form part of the matrimonial property of the trustee or his spouse nor part of the trustee's estate upon his death.
What rights does the settler of the trust have in relation to the trust property?
Unless also a beneficiary of the trust, the settler usually has no rights in relation to trust property.
If a third party sets up a trust for a minor child, to what extent can the parents or those exercising parental authority over the child interfere with the trust fund?
Parents or persons exercising parental authority over a minor child who is a beneficiary of a trust shall have no rights to or over the trust property. However, subject to the terms of the trust, a trustee, upon receiving a request in writing to such effect, shall be obliged to provide full and accurate information to the parents as guardians of the minor beneficiary as to the state and amount of trust property, including the accounts of the trust.