A trust has several benefits some of which are described hereunder. A trust is used whenever the Settlor, who is the original owner of the property to be settled on Trust, deems that the property would be better placed in the hands of a third party, namely the Trustee, for the benefit of the Beneficiary.
All types of assets can be placed on trust, including immovable property, jewellery, works of art, cash, securities and investments, to mention but a few.
1. Preservation of Wealth
People use a trust to segregate property which they want to keep away from their creditors, or from their other personal wealth. Since in a Trust the property is held in the name of the Trustee, the creditors of the Settlor are not in a position to attack the Trust property to recover debts from the Settlor. This protection from potential liabilities is a great advantage of trusts.
A Trust can be designed to protect family wealth. Whilst allowing the children to enjoy income from the capital, the capital will rest in the hands of the Trustee thus preventing the children from selling or otherwise alienating the family assets.
In this case, the settlors settle family property and investment under trust for the benefit of the ultimate beneficiary.
Estate planning trusts can prevent the dissipation of family wealth. An example is when the Settlor wants children to enjoy the trust property without them having direct ownership with the possibility that they could alienate it due to lack of maturity or for any other reason. A trust can help wealthy parents give income to their children in accordance with their requirements.
The Settlor can use a trust to prevent assets being classified as joint property during marriage, or any other type of personal relationship.
2. Protection of Family Members
Some members of the family need more protection than others, especially if they have special needs or suffer from a condition which prevents them from taking care of themselves. A Trust ensures that these children will have protection during their life, even after the death of their parents.
Another benefit which the Settlor may avail of relates to the privacy of ownership, since it is only the Settlor and the Trustee who will be aware of the Ultimate Beneficiary Owner’s identity.
Lastly, trusts under the Malta jurisdiction are not listed in a centralised register. This adds to the confidentiality of the trust structure.