It was way back in 2009 that the Malta Financial Services Authority (MFSA) launched a process to review Maltese trusts law. This process has now crossed the finishing line, with the enactment of the Trusts and Trustees (Amendment) Act on 25 April 2014.
At the opening address of the STEP International Conference entitled ‘Global Business in a Challenging Environment’ which was held in Malta last March, and at which Boston was represented, Finance Minister Prof. Edward Scicluna stated that: “the amendments are aimed at achieving a balance between making Malta a more attractive trust domicile through the introduction of new features such as the concept of family trusts, whilst ensuring that the necessary safeguards are in place through the reinforcement of the relevant regulatory regime.”
Private Trust Company for Family Offices
Indeed, one of the key amendments is the introduction – for the first time in Malta – of the concept of the private trust company for family offices, which is exempt from the general requirement to be licenced. The new law defines a ‘family trust’ as “a trust created to hold property settled by the settlor or settlors for the present and future needs of family members and family dependants.” It permits a trustee setting up a company for the purposes of acting as trustee to specific settlors in respect of family trusts to dispense with the usual requirement for authorisation by the MFSA. Instead, such trustee will only be required to apply for registration with the MFSA. For this simple registration procedure to apply, the trustee must not otherwise hold himself out as trustee to the public, must not habitually act as trustee and must not act as trustee in relation to more than five settlors.
The rationale for the simplified authorisation procedure is that family trusts tend to revolve around the requirements of a particular family rather than offering services to the public. Such trusts create potentially attractive opportunities for private individuals, families and family offices to partake in a bespoke trust solution to safeguard family assets and preserve wealth.
Enforcer for Charitable Trust
Another noteworthy amendment has been the introduction of the office of the enforcer in the case of charitable trusts. Essentially, the role of the enforcer is to ensure that the trustees administer the trust in accordance with the terms of the trust deed and to promote the purposes of the trust. Furthermore, in specific circumstances the settlor has been granted the possibility of reserving powers to appoint, add or remove trustees, protectors or beneficiaries and to appoint an investment adviser or investment manager.
Perpetuity Period Extended
The perpetuity period of Maltese trusts has now been extended from 100 years to 125 years, bringing them in line with trusts governed by English law. The MFSA has been granted express powers to take certain actions in relation to trustees so as to safeguard the public. The amendments also introduce an express duty on trustees to avoid conflicts of interest, highlighting the significance which Maltese law ascribes to the integrity of the office of trustee. Also, potential legal actions against trustees are no longer time-barred!
All in all, this represents a further enhancement of the Maltese trusts framework, providing even greater certainty, flexibility, peace of mind as well as some interesting international planning opportunities within a highly regarded onshore EU jurisdiction.
For further information about Maltese trusts, please contact Rachael Kelly at email@example.com or Chris Borg at firstname.lastname@example.org