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CSB Group assists clients with the setting up of trusts in Malta. CSB Trustees & Fiduciaries Limited (a member of the CSB Group) is a fully licensed trustee company recognised under the Trusts and Trustees Act and licensed by the Malta Financial Services Authority (MFSA) to act as trustee of trusts, administrator of foundations and provide fiduciary services.
Through our multi-disciplinary approach to business, we also provide comprehensive tax and legal guidance and support in respect of all trust and fiduciary related matters.
The inception of Trust Law in Malta
Trusts were fully absorbed into the Maltese legal system as a separate and distinct legal institute (available to all persons generally and in respect of property of any description) by virtue of the Trusts and Trustees Act, 2004. The Trusts and Trustees Act is largely modelled on the Jersey trusts law which itself represents a much acclaimed attempt at the codification of the English law of trusts. The 2014 amendments to the Trust and Trustees Act marked an improvement in Malta’s trust legislation and are certain to strengthen Malta’s Trust offering internationally.
What does a ‘Trust’ truly mean?
Maltese Trusts are mainly regulated by the Trusts and Trustees Act, Chapter 331 of the Laws of Malta. The Act provides for the creation of trusts and for the mandatory licensing and supervision of Trustees. Article 3 of the Act describes a Trust as follows:
“A trust exists where a person (called a trustee) holds, as owner or has vested in him property under an obligation to deal with that property for the benefit of persons (called the beneficiaries), whether or not yet ascertained or in existence which is not for the benefit only of the trustee, or for a charitable purpose, or for both such benefit and purpose aforesaid.”
In terms of the Malta Trusts and Trustees Act, a trust may be constituted in any manner. Trusts are typically created by instrument in writing (including by a will) but a Trust may also come into existence by oral declaration or by operation of law or judicial decision.
A trust deed is the document setting up the Trust and includes all 3 of the Settlor, Trustee and beneficiary.
Essential Features of a Trust
A Trust can be tailor made to one’s desires, however, as a common denominator, a Trust would have the following criteria:
- A Trust is an obligation created by the Settlor;
- The Settlor may create such an obligation either by transferring assets to the Trustee or by declaring himself that he holds assets on trust for the benefit of beneficiaries. The creation can either be done during the lifetime of a Settlor or even after one’s death through a disposition in the will;
- The Trustee has to hold the assets put on trust for the benefit of the beneficiaries or else until it achieves the purpose for which the assets were put on trust;
- Assets put on trust can take any form (it can be a painting, shares in a company, money, immovable property etc..)
- The Trustee would become the owner of the assets held on trust, however, such assets, would be segregated and separate from the personal assets of the Trustee and from any other property held by the Trustee under any other trust.
In relation to the last point, it is worth noting that Maltese law and the Trustee Code of Ethics, which is binding on trustees in Malta, places emphasis on the proper and effective segregation of trust property. Accordingly, personal creditors of the trustee are denied access to the property comprised in the trust fund and, furthermore, that fund would not form part of the trustee’s personal estate upon his insolvency or bankruptcy, nor of his estate upon his death. Nevertheless, the trust is not a legal entity and has no legal personality (such as a company or a foundation). As a result, the trust property is managed via the legal personality of the trustee.
Duration of a Trust
A Malta trust may exist for a maximum of 125 years, further to amendments introduced in 2014, which extended the period of validity from 100 to 125 years, to keep up with international trends in the trust industry. This limit does not, however, apply in respect of a trust created for a charitable purpose or a unit trust or a qualifying retirement scheme set up as a trust.
Key Players of a Trust
- The settlor who settles property on trust and transfers title over that property to the trustee – typically (but not necessarily) ceasing to have any active role in the trust thereafter.
- The trustee who acquires the property settled on trust and holds the same on trust for the beneficiary/ies or for one or more charitable purposes and in accordance with the terms of the trust and the requirements of law.
- The beneficiary/ies having an entitlement to benefit under the trust and whose rights in relation to the property settled on trust are generally dependent upon the terms and nature of the trust. A beneficiary of a Malta trust is entitled to sell, charge, transfer or otherwise deal with his interest in the trust in any manner –subject, of course, to the terms of the trust.
- The protector who may be appointed and who may be vested with certain supervisory powers.
Benefits of setting up a Trust
There are various reasons why one would opt to set up a Maltese trust, some of which would be the following:
- To prevent the property of a deceased person from vesting absolutely in his adult children who would then be completely free to dissipate the property as they wish;
- To preserve and generate family wealth in a tax efficient manner, avoiding the division of the assets into smaller and less effective shares in each generation;
- An individual can decide to consolidate his/her estate into a trust, whereby it shall be administered and managed by the Trustee for the benefit of the beneficiaries;
- The assets of the trust would be segregated from the personal assets of the Trustee, hence, there is a further layer of protection against insolvency or bankruptcy;
- Tax transparency on income distributed to the beneficiaries;
- A trust deed can be tailor made to one’s desires;
- The settlor’s creditors shall have no recourse against the property set on trust.
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Back in 2015 CSB Trustees & Fiduciaries Limited has been entrusted with the project to set up a security trust for us. Their knowledge and experience within the sector made this project easier for us all. The team is meticulous, attentive and always available whenever assistance is required from our end. We would definitely recommend them for their stellar service.
Malta Properties Company Plc
We have been using the services of CSB Group in their remit as security trustees for our recent bond issue. We have found CSB to be highly efficient and effective in their work. We will not hesitate to use their services in the future and would recommend them to any of our clients and partners seeking similar services.
We have appointed CSB Trustees & Fiduciaries Limited to be the Security Trustee for a bond issued by our company; Stivala Group Finance p.l.c. The team that we worked closely with, was efficient, reliable, and knowledgeable and we couldn’t be more satisfied with the service provided. The team always made itself available even when provided with a short notice. We are glad we have engaged their services and we would definitely recommend them.
Stivala Group Finance p.l.c.
Tum Finance plc engaged CSB Trustees & Fiduciaries Limited to be the Security Trustee for a bond we recently issued. We have closely worked with a team of professionals and are pleased to give our testimonial in this regard. For sure we will request their services in the future. We definitely recommend CSB Trustees & Fiduciaries Limited to be the team that will be always there when you need them for the best advice and satisfaction. You made it so simple Thank you!
Tum Finance plc
We at MIDI plc have engaged the services of CSB Group on a trusteeship basis to serve a fundamental role in our secured bond issue. Their team has always been accommodating, well-prepared and have always ensured that our requirements are met in a most timely and efficient fashion. Their services have indeed exceeded our expectations. CSB Group were identified due to their knowledge and expertise in fiduciary obligations, amongst other qualities.
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