The Trust and Trustees Act of the Laws of Malta defines a Malta Family Trust as a trust that has been created to hold property settled by a settlor or settlers for family members or underage family dependents to cater for future needs that are definite and determinable.
The Act (Chapter 331, Laws of Malta) does not preclude discretionary trusts being set up for family members or dependents which are ascertainable, but not yet definite.
In May 2016, the Malta Financial Services Authority issued specific guidelines and rules which regulate the Trustees of Malta Family Trusts, which are also known as the Private Trust Company.
So, in simple terms, what is a Malta Family Trust? The answer to that question is that a Malta Family Trust is a deposit system whereby a family member puts a sum of money or property into an account (which may be added to). The family member loses ownership of the settled trust property once it is settled in the trust.
The trust property is looked after by a registered third party, known as a trustee, until the family beneficiary comes of age, or the term of the trust period comes to an end.
Understanding the definitions of a Malta Family Trust
To understand what a Malta family trust is and see how they could work to serve your family’s needs, you need to first understand the applicable definitions.
The most important party in the setting up of a trust is the settlor. Without their intention to set up the fund, there can be no trust.
The settlor must pass an agreed sum of money (can be recurringly added to over time) to be looked after by the trustee on behalf of the future beneficiaries.
The trustee can be defined as the person who manages the trust once it is set up, until the date when the beneficiaries come of age (or another pre-determined date).
The beneficiary is the person(s) who will receive the contents of the fund, as determined by the initial trust fund agreement.
Rules and requirements of a Malta Family Trust
The rules which regulate Family Trusts in Malta apply to trustees of Malta trusts which are established according to article 43B of the Trust and Trustees Act.
When registration of the trust is complete, the trustee shall commence activities within 12 months. If this does not materialise, the MFSA may cancel or withdraw registration.
Every trustee in Malta is expected to have regard to the MFSA Code as amended from time to time.
Trustees must comply with the MFSA in terms of keeping all necessary documents, records and accounts ready for inspection to monitor for compliance with the relevant rules and regulations.
The trustee must also keep documents for a period of ten years after the trust has terminated.
A registered trustee shall also ensure that all submissions required in terms of these Rules and any other submissions which the MFSA may request are submitted in a timely manner.
The trustee may also be set up as a company and be registered in accordance with the Malta Companies Act as a limited liability company.
The trustee must also retain the records relating to the administration of a family trust for a period of not less than 10 years from the date of termination of the trust or trusteeship, whichever occurs earlier.