• September 2015
    Written by Dr Mark Bencini B.A., M.A. (Fin. Serv.), LL.D., Dip. Tax.

    All characters in this article may very well be fictional, but the benefits and legal matters described below are nothing other than real.

    • It is 8:15 am and all preparations are under way for the Dawson family to spend their third day house hunting in Malta. John and the family had already seen several candidate properties for the buying but Etienne, their real estate agent, wanted to show them a few more before they make up their mind. 

      John's mobile phone rings. Mr Jones, his father in law is calling. John wonders whether all is fine with him back home and answers. 'Good morning John, it's David, I spoke to Anna yesterday and she told me that you and the family are in Malta with the intention of buying a property there.' 'Hi Mr Jones, yes we are all excited. We have spent the last couple of days house hunting and we have seen some exquisite properties with views of the Mediterranean Sea.' John Replies. 'John, I have an important surprise for Anna that I need you to keep from her for a few days until my arrival on the island.' John listens carefully at what Mr Jones has to reveal. 'The lawyer in Malta to whom I had 
  • referred you some years ago when you were intent on setting up a corporate structure for you international business exploits, is also a licensed trustee. When I was visiting the island some years back, I immediately saw the investment potential of buying immovable property there so I found a pretty sea view apartment and purchased it. My desire was to leave the property as a gift for Anna on my demise and wished that it would be a surprise. Fortunately, I was able to place the property in trust with our lawyer for Anna's benefit once I go and visit greener pastures.' Jack is left without words. Mr Jones always has an ace up his sleeve. 

    Mr Jones goes on explaining that notwithstanding the fact that Malta is founded under principles of civil law, some years back, Malta has sought to incorporate the institute of trusts into its legal system. Nowadays, trusts form an integral part of Maltese society. The Maltese have taken great initiative to ensure that Trusts are properly regulated by introducing a system whereby all trustees are required to be licensed by the Malta Financial Services Authority. Indeed, trustees are required to adhere to rigorous standards of practice and regularly undergo reviews by the Authority in order to ensure the proper administration of trusts and compliance with anti-money laundering standard and procedures. 

    The trust had been created within a few days and since Mr Jones wanted the property to be rented out and serve as an independent source of income, he opted for a discretionary trust wherein his trustee would manage the property for his and his wife's benefit and once they pass away, they would be replaced by Anna as the sole beneficiary. Trusts are transparent from a Maltese fiscal point of view and thus, this structure did not trigger additional or unnecessary taxes. 

    John listened attentively to the wealth of information that Mr Jones shared with him. His parents in law had utilized the secrecy afforded to Maltese Trusts in a formidable manner to ensure that Anna would discover the trust once she would replace them as beneficiary. They also appointed some of their siblings as Trust Protectors, since they wished to be cautious and ensure that the trust was completely fool proof, seeing that they were not in Malta often. 

    Anna's plan to come to Malta and purchase her own property was going to trigger an undesired coincidence. This caused Mr Jones to take the decision to fly to Malta and somewhat anticipate the surprise by introducing her to the property immediately. All logistics were planned with John and two days later Anna was taken by the estate agent to Mr Jones' apartment under the pretense that she was going to visit 'an apartment that she could not resist acquiring'. 

    Anna walks into the apartment and to her complete disbelief she finds her parents standing in front of her. Within a few minutes all is explained and Anna discovers that she is the future beneficiary of an exquisite property in Malta. The bubbly is brought out and popped. It's time to celebrate. The above is a fictional story that includes true facts about the benefits enjoyed through the involvement of trusts in one's estate planning.
  • This Article was first published in Il-Bizzilla, AirMalta's in-flight magazine.