Have you ever heard of a Trust?

The Trust is a fiduciary obligation in the Common Law and is governed by the different systems that belong to this system in a more or less uniform manner. In Civil Law countries, such as Italy, the Trust is recognized by the Hague Convention, but it remains a foreign entity both in a legal and cultural context.

Malta is a hybrid legal system of Civil Law, with relevant elements of Common Law, for example regarding its corporate domain and precisely on the regulation of the Trust, and has the advantage of adapting its Civil Code to the Trust Institute, governed principally by the Trust and Trustee Act. It is considered to be an instrument that is well-placed in the system, well-regulated and cannot be used to cover illicit transactions, or else leading to its nullity. This is a particularly suitable legal instrument for the management and protection of assets.

With a Trust, a Settlor transfers the ownership of any transferable asset (property, company shares, rights, etc.) to a trustee for the benefit of one or more defined or determinable beneficiaries or classes of beneficiaries (e.g.: heirs, creditors, attendants of a certain meeting, unborn children, etc.).

The Trust is not a legal entity and has no legal personality. The Trust is the name given to the institution described above (transfer of ownership from the settlor to the trustee for the benefit a person other than that of the trustee, the beneficiary), so it would be more appropriate to discuss the “management of trusted assets” rather than “the creation of a Trust”, as well as “trustee duties” rather than “Trust’s activity”.

What are the possible uses of a Trust? By way of example, a Trust can be used for the following purposes:

•        Asset allocation.

•        Protection of creditors and debtors (provided not contra legem and not subject to revocation).

•        Successions (provided not contra legem) and generational heritance.

•        Maintaining a company participation over time (participation does not dilute and the trustee votes in a block).

•        Resolving divorce issues (spouses can create a Trust for the benefit of their heirs or that person out of the two, who wins the dispute over the contingent assets should they pursue the divorce process).

•        Protection of incapable, minor, prodigious, sick, ludopathic and similar subjects.

•        Guarantees (e.g.: mortgage) easily accessible.

The person who will handle the assets is the trustee who, according to Maltese law, is a regulated entity with strict reporting obligations, professionalism and segregation of his or her assets from those transferred to him in Trust.

If you are interested in this institution, please feel free to contact us for more information about the possibilities of use, the applicable legislation, and an assessment of whether or not it is appropriate to address and use this instrument for your purposes at hand.

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