Trusts for which the Settlor has established Maltese law as the proper law of the trust are subject to the provisions of the Trust and Trustees Act (Chapter 331 of the Laws of Malta).
The law establishes the requirement of a license for one to be able to act as a trustee subject to certain limited exceptions. One such exception is found in the Rules for Trustees of Family Trusts which provide for an exception to this rule where a trust is set up to hold property settled by a settlor or settlors for the present and future needs of family members or of family dependants who are clearly identifiable. The benefit of these rules is subject to a registration process as opposed to authorization and licensing as is required under normal circumstances.
These rules regulate those companies which have been set up for the purpose of acting as trustees of a Family Trust. This requires that:
- the objects and activities of said company are limited to acting as trustee in relation to a specific settlor or settlors and providing administrative services in respect of a specific family trust or trusts; and
- the company does not otherwise hold itself out as a trustee to the public; and
- the company does not habitually act as a trustee, in any case in relation to more than five settlors of family trusts at a time.
These requirements are cumulative meaning that they must all be satisfied in order for a company to be able to benefit from the exception created by these rules. 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.
The rules make it clear that a Family Trust may only be set-up for the benefit of said specific individuals.
The company’s conformity which the conditions set out in the rules must be satisfied prior to submitting an application for registration with the MFSA. It is particularly important that careful attention is paid to the drafting of the company’s memorandum and articles of association.
The rules also require that at least one of the executive directors or a senior officer of the company takes on the role of Money Laundering Reporting Officer. Furthermore the directors are subject to the general duties applicable to directors in terms of the Companies Act (Chapter 361 of the Laws of Malta) but are also responsible for ensuring the proper operation and management of the trustee company in line with the provisions of the law as well as the rules.
Some of the important duties which directors of trustee companies should be aware of are the duty to:
- submit an annual certificate of compliance to the MFSA,
- maintain proper records of the identity and residence of all beneficiaries, and
- obtain consent from the MFSA before affecting certain substantial changes in the company.
Grant Thornton renders advice on all aspects pertaining to the setting up of a trust, guiding clients throughout the process, explaining the requirements and implications of such a decision. We also provide trustee services ensuring that our clients’ interests are protected at all times and that no conflicts of interest arise. For more information contact our local expert.