Anyone can settle property in trust as long as he or she can dispose of property according to law. Any person aged 18 or over, who is not subject to any legal disability or impediment to contract, may be a settlor of property in trust. Minors and people who are interdicted or incapacitated at law are unable to settle property in trust.

If a foreign law is chosen to govern the trust, the Hague Convention on the Law Applicable to Trusts applies- Albert Cilia

Can a company be a settlor? A company, commercial partnership or other legal entity vested with legal personality to contract may settle property in trust, provided that the settlement is consistent with the company’s statute or its constitutive document.

The Trusts and Trustees Act allows Maltese and foreign domiciliaries to establish trusts governed either by Maltese law or by foreign law. It further provides in Article 5 that ‘a trust shall be governed by its proper law and shall be interpreted and enforceable accordingly ’.

The terms of the trust may even provide for the proper law of the trust to be changed from the initial proper law to the law of another jurisdiction.

If a foreign law is chosen to govern the trust, the provisions of the Hague Convention on the Law Applicable to Trusts and on their Recognition, which is attached as a schedule to the TTA, will apply to the recognition of the trust and its applicability and enforceability in Malta.

Malta has been a party to the Hague Convention since 1994 and a special law called the Recognition of Trusts Act, 1994, was enacted to ratify the convention and implement it in our domestic law at a time when we had no domestic law on trusts.

With the introduction of the Recognition of Trusts Act in 1994, Maltese courts were able to recognise the validity and enforceability of trusts governed by a foreign law and to give effect to their terms even if the settlor of the trust was a Maltese domiciliary. Since 1994 we have been able to settle our property in trust, but we have been unable use Maltese law as the law governing our trust.

The Trusts and Trustees Act introduced in 2004 changed this, so Maltese settlors could choose Maltese or any other law to govern the terms of their trusts. The Recognition of Trusts Act merged into the Trusts and Trustees Act.

acilia@jmganado.com

Albert Cilia is trust manager at Ganado Trustees & Fiduciaries Ltd.

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