Trusts & Foundations in Malta 2024 | Griffiths + Associates

Trusts and Foundations in Malta

Griffiths + Associates has vast experience in setting up of private foundations, trusts, associations, charity and voluntary organisations in Malta and provide private foundation administration services via a specific license granted by the Malta Financial Services Authority to one of the directors of the firm, Peter Griffiths.

Set up a private Foundation or Trust in Malta

You provide the vision, we take care of everything else. Here is all you need to do:

  1. Choose a name – you can name your Organisation after your family, the charitable purpose, or something generic that inspires you;
  2. Complete the brief set-up questionnaire and go through the due diligence process apart from other things, who will fund the foundation and where the organisation’s activities will reside;
  3. Fund your Organisation.

We will handle all the paperwork and filings – our experts will guide you every step of the way:

A trust is set up whereby a settlor is transferring the legal title of certain assets to a trustee who is holding such assets for the benefit of one or more persons, hence creating a legal obligation between the trustee and the settlor.

Trusts can take various forms, and the drafting of a trust deed is a very important aspect to this contractual obligation whereby the responsibilities of the trustee are clearly outlined together with various provisions on the manner in which the trust is to be administered and operated.

Private Foundations are set up via a public deed, whereby a Deed of Foundation is drawn up and signed by the Founder or Founders who is/are setting up the Foundation for the benefits of one or more persons (beneficiaries).

The creation of a Foundation is sanctioned by the Registry of Legal Persons, which is the government-appointed body which is responsible for the regulation and authorisation of private foundations.

A new private foundation is endowed with separate juridical personality, which makes it a distinct legal person.

There exists also the possibility of setting up cells within a private foundation, which is a novel feature in Maltese law which allows the assets of each cell to be separate patrimonies at law. Each cell could be set up with separate beneficiary, and may be endowed with separate cellular assets within the terms of the Deed of Foundation.

Associations, charitable trusts and voluntary organisations can be established for any lawful purpose.

A main feature is non-profit making: brought to life by voluntary and complimentary concessions and the organisation’s activities are backed and financed, at least partially, by such concessions performed voluntarily.

Complete authority is exercised by voluntary administrators.

Another important feature for charity and voluntary organisations is any individual can become a member of the organisation or take part in its affairs.

Foundations VS Trusts

Although most people in Malta have heard of both foundations and trusts, which are both available to private citizens; the majority of people don’t fully understand what the two distinct types of institutions offer.

In order to get the best out of these and to decide which is best for you, it is, therefore, sensible to understand what sets them apart from one another.

The Difference Between A Trust And A Foundation

A trust is a business relationship established through private writing.

It consists of a trustee who holds the assets and has control over them in order to benefit all of the trust’s beneficiaries.

Normally, the trustee is a professionally active business involved in trustee-related services and the management of assets that are legally owned by the aforementioned Trustee. 

A foundation, however, is an organisation.

This can be seen as being a legal entity that can independently operate and is owned by itself.

While it shares the characteristics of a company, it acts in a similar way to a trust.

A foundation in Malta requires a separate personality for legal services after successfully registering through the Registrar for Legal Persons. 

Both foundations and trusts in Malta are not permitted to exist for more than 125 years. 

How are Trusts and Foundations Formed?

It is a settlor that forms a trust, passing the property’s ownership to a trustee, who does not have any involvement in the trust property administration.

That being said, he or she is still allowed to write letters outlining his wishes to the trustee, who can take them on board when using his powers with relation to the trust property. 

The founder is the individual who forms a foundation via a public deed that has been written up by an official notary.

Compared to a settler of a trust, a founder of a foundation does have a considerable amount of administrative control over the foundation.

When a trust has been created, there is always a transfer of property or money involved.

There is not a minimum capital amount though that the settler has to transfer to the trustee.

With a Malta foundation though, the minimum amount of either property or money must equate to 1,164.69 euros.

This should be transferred to ensure the foundation has been legally established.

Who Runs A Trust And Foundation?

With a trust in Malta, it is the trustee that holds the money or property in their own name and has control over the management of it on behalf of the trust’s beneficiaries.

The beneficiaries can hold the trustee responsible for any actions that are taken and as such, they should use skill and care when they do anything for or with the trust. 

With a foundation, the administrators run it and they carry out things regarding it on behalf of the beneficiaries.

That is the case at least when speaking about a private-owned foundation.

A purpose foundation in Malta, however, the assets are administered with a specific purpose, the reason why the foundation was established.

Administrators and trustees alike are both subjected to the fiduciary obligations.

When taking actions on behalf of the trust, a fiduciary is subjected to duties of loyalty, accountability, honesty and care and must not let his personal interests conflict with their duties.

The trustee of a trust must ensure that he keeps the trust’s assets separate from his or her own assets.

Under these circumstances, any claims made by creditors against trustee would not involve the assets of the trust, while their own assets would not be involved in any claims by creditors made against the trust. 

What’s The Situation In Malta?

As a foundation in Malta has its own unique personality and patrimony, it would be considered in the same way as a limited liability company would – foundation creditors would have no recourse on the administrator’s assets. 

The beneficiary and their benefit from a foundation and a trust are personal to them and because of this, they may enforce things.

When a beneficiary dies, however, this benefit is lost and it does not pass to any heirs they have.

Foundations and trusts are also alike in the fact that beneficiaries are not allowed to instruct either an administrator or trustee on how they should manage the money or property in questions. 

They do, however, have enforcement powers they can use against the administrators or trustees. 

Perhaps one of the most important differences between a Malta foundation and trust although a public deed must be registered to create a foundation, there does not have to be an instrument of trust registered at all.

When trusts and foundations are established for private beneficiaries, confidentiality is obviously important and although a foundation needs to be registered to be officially valid, a limited amount of information is held.

As has been hopefully explained enough, there are evident similarities between trusts and foundations, but there are also crucial differences that should be considered when choosing one or the other.

The choice of which would be best for any individual client will depend greatly on the type of institute they feel most comfortable with, in conjunction with what they need and wish to get from setting up either a foundation or trust.

For more information contact us:

Our company’s mission – to provide quality financial services to our esteemed local and international clients, keeping their needs at the centre of our ethos; going the extra mile to efficiently and effectively assist them in growing and fulfilling their business and personal needs.

Peter Griffiths – Managing and Tax Director
Peter Griffiths
Managing and Tax Director, Griffiths + Associates