Malta Promotes Further Consultation Regarding Family Trusts

Malta promotes further consultation regarding Family Trusts

The Malta Financial Services Authority has promoted a series of consultation papers leading to the enactment of a regulatory framework regulating ‘family trusts’.

Currently, under the Trusts and Trustees Act, the role of a trustee may only be undertaken by licensed entities, approved by the regulator as ‘fit and proper’ and fully compliant with the fiduciary notions inherent in the office of trustee.

The proposed amendments seek to soften the aforesaid stance, by dispensing the need of authorsation vis-à-vis family trusts. Family trusts are defined as trusts whereby a trust is set up by the settlor for the needs, present and future of family member or dependants, who are related to the settlor. The underlying rationale therefore is to allow a softer regime, given the strictly personal and private nature of the trust.

The trustee function would be undertaken by a trustee company consisting of at least three (3) directors. The composition of the board of directors must be of both family members as well as independent individuals. This allows a balance between having family members overseeing the good governance of the trust, with however, the guidance of qualified individuals, fully conversant with the legal intricancies innate with the role of trustees. The latter role must be a qualified lawyer or accountant, approved by the Authority and independent of the settlor, to ensure impartiality in exercising the role. Impartiality is not confined only to consanguinity or affinity but also to professional rapports that the proposed director in the trustee company may have with the settlor.

The private nature of the trust must be satisfied on an ongoing nature. The trustee company cannot hold trustee to the general public nor act as a trustee on a habitual and continuous basis – as this would defeat the purpose for which the trustee is set up.

The use of family trusts will further cement Malta’s reputation as a trust jurisdiction, and allow families to retain a tighter grip on their wealth management and asset protection.

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