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Amendment of the Malta Trust and Trustees Act

MEDIA ROOM

May 6, 2014

Following almost five years of dialogue with practitioners within the industry, the much anticipated amendments to the Maltese Trusts and Trustees Act (Chapter 331 Laws of Malta) were given the force of law in virtue of Act XI of 2014 which was enacted on the 25th of April 2014.

A number of amendments have been introduced to the Trust and Trustees Act, with the scope of enhancing Malta’s competitiveness within the international trust industry whilst also ensuring a high level of scrutiny of trustees and their integrity and devolving greater powers onto the Malta Financial Services Authority (MFSA).

New Amendments

The newly introduced amendments include the following which are of note:

  • The introduction of the concept of “Family Trusts” and of trustee companies set up to act as trustee exclusively in relation to such family trusts;
  • The creation of the office of “Enforcer” in relation to trusts set up for a charitable purpose;
  • An amendment to the perpetuity period of Trusts, which can now be set up for 125 years;
  • The introduction of specific circumstances when a Settlor may reserve powers under the terms of a trust without the trust being considered a sham, despite the settlor having retained control over the trust assets;
  • Streamlining of the winding up process of trust companies;
  • An amendment to clarify that (because rights of a beneficiary are personal to him), creditors, spouses, heirs or legatees of a beneficiary cannot advance a claim with regard to a beneficial entitlement unless expressly provided for in the terms of the trust;
  • Granting power to the MFSA to appoint a person to assume control of the assets or the business of a trustee, where necessary;
  • Clarification relating to the disclaiming of interest in a trust, rendering such disclaimer irrevocable, irrespective of whether the beneficiary has received benefit or otherwise;
  • The introduction of a requirement for trustees and mandatories to maintain professional indemnity insurance cover at all times, and the laying down of the conditions under which persons intending to act as mandatories or trustees may be authorised to act as such;
  • The introduction of a Eur15,000 minimum capital threshold for trust companies; and
  • The introduction of a duty on auditors of trust companies to report on certain material issues or facts relating to the trustee.

These changes represent a marked improvement in Malta’s trust legislation and are certain to strengthen Malta’s trust offering internationally.