Funds and Foundations

Trust

A trust is a legally binding arrangement whereby a person (the settlor) transfers assets to another person (the trustee) who takes legal title to the trust assets. The trustee holds the trust assets for the benefit of other persons (the beneficiaries, which may include the settlor), or for a specified purpose.

There are many forms of trust that have been developed over time, some of the most common forms are:

• Accumulation and maintenance trusts
• Discretionary trusts
• Fixed interest in possession trusts
• Revocable trusts

Uses of a Trust
Trusts are used for a variety of reasons due to their flexible and confidential nature:

Preservation of wealth
The vesting of the legal title of the assets in the trustee prevents the ownership of the assets being diluted, when assets are distributed from the original owner to the second and then to the third generation. At the same time individuals can continue to benefit from the assets, such as a family business.

Circumvention of forced heirship laws
By divesting assets during the lifetime of the settlor, the trust will not form part of his estate upon his death, avoiding forced heirship rules which may apply under laws in the settlor’s country of residence. Local advice should always be taken and assets settled into the trust should not be located in the jurisdiction with the forced heirship laws.

Succession planning
As the settlor no longer owns the assets, the need to obtain probate or similar formalities on his death can be avoided.
A trust is therefore an efficient vehicle for transferring the benefit of assets, such as property, through successive generations and provides a useful tax and financial planning tool for settlors.

Asset of protection
Malta offers a secure and stable political environment in which to hold assets and protect them from strategic risk. In addition a trust can offer protection from creditors or other parties in the country of domicile or residence of the settlor.

Confidentiality
On the settlement of assets into a trust, those assets cease to form part of the estate of the settlor. The legal title passes to the trustee, whilst the rights to future enjoyment are passed to the beneficiaries.

Tax Advisory

Luxury Business Limited provides sound tax advise to any company independent of its size. In addition to advising our clients, we are often retained by other law firms to provide tax advice to their clients.

Our major areas of our practice include: corporate tax, personal taxation, property tax, e-commerce tax, international tax, employee tax and value added tax.