In virtue of the powers conferred by Article 57 (1) of the Trusts and Trustees Act, Chapter 331 of the Laws of Malta (hereinafter referred to as ‘the Act’), the Minister of Finance, acting on the advice of the Malta Financial Services Authority (hereinafter referred to as ‘the MFSA’), has recently promulgated the Trusts and Trustees Act (Protected Disability Trusts) Regulations (hereinafter referred to as ‘the Regulations’).
The Regulations were promulgated in virtue of Legal Notice 324 of 2016 and published on the Government Gazette on the 7th of October 2016.
Purpose
The purpose of the Regulations is to regulate the establishment and administration of Trusts formed for the benefit of Beneficiaries at least one of whom is a person with disability, where:
(a) the person with disability benefits exclusively from the Trust assets; or
(b) the parents of the person with disability are the preferred Beneficiaries during their lifetime, and following their demise, the person with disability shall be the sole Beneficiary under the Trust.
Such trusts are to be known as Protected Disability Trusts.
A ‘Protected Disability Trust’ shall:
(a) need to be set up by a family member of the person with disability; and
(b) be for the benefit of a Beneficiary who is a person with disability, as explained hereunder; and
(c) is notified to the MFSA.
Definitions
A ‘person with disability’ shall mean:
(a) a person, being over compulsory school age, who, by reason of injury, disease, congenital deformity or other physical or mental incapacity, is substantially handicapped in obtaining or keeping employment or in undertaking work on his own account, of a kind which apart from that injury, disease, deformity or incapacity would be suited to his age, experience and qualifications; or
(b) a qualified person with a disability as defined in the Equal Opportunities (Persons with Disability) Act; or
(c) a child certified to be suffering from physical and, or mental disability by the Medical Panel responsible to establish whether a child would be deemed eligible for a Disabled Child Allowance.
The Trustee
During the lifetime of the person with disability, the Trustee shall act and administer the Trust assets in the paramount interest of such person with disability, and where the Trust assets include immovable property which constitutes the primary place of residence of the person with disability, such immovable property shall not be disposed of while the person with disability is still alive, except with:
(a) the prior written consent of the Protector; and
(b) confirmation from the Court that such disposal is in the interest of such person with disability.
A Protected Disability Trust shall have as its Trustee:
(a) a duly authorised Professional Trustee, who is either not remunerated or remunerated as explained hereunder; or
(b) a Private Trustee;
in accordance with the Act, and such Trustee shall not also be a Beneficiary under the same Trust.
Where a Professional Trustee is remunerated, the applicable fee shall be agreed upon with the Settlor and clearly set out in the Trust Instrument, and shall not exceed the amount of Euro 400 per year, or such other amount which shall reflect changes in the cost of living. The imposed fee shall be fixed for a period of 3 years, and any increase shall be proportionate to the increase in the index of inflation. This limit shall only apply in cases where the initial and additional settlement to the Trust do not cumulatively exceed the value of Euro 450,000.
The Trustee, in addition to the duties imposed on the Trustee under the Act and the Trust Instrument, shall have the following duties:
(a) open and maintain bank accounts in the name of the Trustee and by reference to the name of the Trust for holding cash relating to the Trust;
(b) seek to generate income from assets held on trust by investing monies in accordance with the Regulations or leasing property when deemed to be in the interest of the person with disability.
The Protector
When setting up a Protected Disability Trust, a Protector shall be appointed in all cases, and the Protector’s powers shall be exercisable and come into effect not later than the date when the person with disability becomes the sole Beneficiary. The Protector shall have no actual or potential interest in the present or future Trust assets. The Trustee shall obtain the consent of the Protector prior to the:
(a) resignation of the Trustee; and
(b) transfer of assets from the Trust.
Moreover, the Protector shall always be consulted before the Trustee takes decisions relating to:
(a) distribution of income or capital;
(b) the medical and educational needs and the care of the person with disability.
Mamo TCV Advocates
Mamo TCV Advocates regularly provides professional and tailor-made assistance in the setting up, structuring and management of trusts in Malta and provides ongoing advisory services to both local and overseas clients. The firm delivers an efficient and specialised service, recognising the needs and requirements of both international and national business-oriented transactions.
In-House Licensed Trust Company – TCV Management and Trust Services Limited
TCV Management and Trust Services Limited is our in-house licensed trust company, which is duly authorised in terms of the Trusts and Trustees Act, Chapter 331 of the Laws of Malta, to act as a licensed trustee and offer fiduciary services, with the authority to receive and hold property on trust, to manage trusts, and to act as a qualified person.
Disclaimer
This document does not purport to give legal, financial or tax advice. Should you require further information or legal assistance, please do not hesitate to contact Dr.Veronica Grixti or Dr. Joe Borg Bartolo.