Trusts
A trust is an obligation which binds a person or persons (called the ‘trustees’) to deal with property over which they have control (called ‘the trust property’) for the benefit of persons (called the beneficiaries) or for a charitable purpose in accordance with the terms of the trust. A trust may come into existence by an instrument in writing including by a will. A unilateral declaration of trust is also possible. A trust may also come into existence by oral declaration, with the exception of a unit trust which must be created by a written instrument. Also in the case of an inter-vivos trust, the trust must be created by notarial trust deed. A trust may also come into existence by operation of law or by a judicial decision. A trust may continue until the 100th anniversary of the date on which it came into existence, and, unless sooner terminated, shall terminate. This limit does not apply to a trust for a charitable purpose or to a unit trust.
There are three main types of trusts. These are express trusts, implied or resulting trusts and constructive trusts. Express trusts are declared by the settlor. In an express trust, the intention to set up the trust is clearly and openly expressed. Implied trusts are trusts arising from the unexpressed but presumed intention of the settlor, which intention is presumed from his words or actions. Implied trusts are also resulting trusts since the property will return to the person setting up the trust. Constructive trusts arise by operation of law and are in no way dependent on the intention of the settlor. They are imposed by operation of law in situations where not to do so would mean one party’s unjust enrichment.
Trusts are considered to be transparent for tax purposes, in the sense that income attributable to a trust is not charged to tax in the hands of the trustee if it is distributed to a beneficiary. Also, when all the beneficiaries of a trust are not resident in Malta and when all the income attributable to a trust does not arise in Malta, there is no tax impact under Maltese tax law. Other laws and regulations may have an impact on the taxation of trusts and trustees. Malta is also a signatory to a number of Double Tax Treaties that may apply in the circumstances.
Mifsud & Mifsud Advocates is actively involved in providing Trust law advice and Trust related services to its local and international clients in different economic sectors. For further information on Trust Law and Practice please contact us.
