The Malta Trust

Discretionary Trusts are the most commonly used because they provide the most flexibility. The trustees of a discretionary trust are given wide powers as to how the trust fund may be invested and who and when beneficiaries may benefit, and how much. No one beneficiary has an absolute right to benefit because this decision lies in the hands of the trustees. Whilst not binding on the trustees, the settlor may provide a note of his or her wishes, which the trustees may use as guidance when exercising their powers.

Historically, in order for a trust to be valid it required there to be identifiable beneficiaries. An exception to this rule has allowed trusts to be set up in favour of charitable purposes.

The Trust & Trustees Act requires the document establishing the trust to state the charitable purpose or purposes for which the trust has been created and the 2014 amendments to the Trust & Trustees Act allows for the appointment of an enforcer, whose role is to enforce the terms of the trust. The enforcer cannot also be the trustee.

Life Interest or Fixed Interest Trusts can be created to provide income, capital or other benefits to a specific beneficiary, either during their lifetime or until a certain event occurs (e.g. marriage or reaching a certain age). The trustees then distribute the trust fund to the settlor’s chosen beneficiaries. The trustees have no discretion over the distribution of trust assets.

Accumulation and Maintenance Trusts – This type of trust is used where a settlor wishes to provide for a beneficiary to receive the trust fund at a certain age; for example, when grandchildren reach the age of 18.