It is fair to say that trusts and related powers have evolved and continue to develop so as to enable property or asset owners to accomplish objectives that they wish to achieve, which would otherwise be less successful or involve a higher legal or practical risk, be it a matter of simple property or the more contemporary substance of intellectual property assets. Originating in medieval circumstances with the primary goal of retaining property in the family, trusts have proved themselves very useful for modern family and commercial applications.

Trusts are increasingly being used in sophisticated legal structures because of their unique splitting of ownership (itself then modified into a hybrid of legal control with custodian-like obligations) from the rights, advantages and restrictions of beneficiaries whose rights of property enjoyment are determined either directly by the trust or according to a discretion set out by the trust instrument.

a) Trust Design
The Instrument of trust should be prepared in this context of long-term estate planning, even doubling as an actual will, providing for future family needs, (education provisions recommended), involving the scrutiny of trusted advisors, employees, friends, or associates. These elements can also be structured to combine a Company and a Trust, interacting is such a way as to secure the continuity of business interests, independent management, and protection against dissipation of company assets or goodwill, all on the basis of the legal and functional ‘Distancing & separation’ between the Settlor (client), control, tax liability, and intelligently structured tax neutral benefits.

b) Role of Settlor, Trustees, Advisor, Protector
The Settlor is free to specify asset management and distribution objectives and conditions, in his/her letter of wishes as guiding recommendations to the Trustees, who then have the discretion to implement according to the trust terms and in their assessment of the best interests of the beneficiaries. The Settlor should:
Prepare: (a) letter of wishes if required, (b) Initial Trust deed (before a notary), (c) nominate a Protector where required; and (d) Effect valid transfer into trust of initial trust funds or property. Review any necessary amendments to the trust documentation as mutually approved upon by the client’s advisors and the protector from time to time, and provide the trustees with an updated letter of wishes, if and when appropriate. Correspond with the investment or financial advisor, protector and trustees as needed, with regard to any aspect of our administration and record keeping, focusing always on the best interests of the beneficiaries.

c) Unfettered Trustee Discretion
Under Maltese law, Trustees must exercise the highest standard of care and attention in carrying out their duties, and nevertheless remain personally liable for their actions. As trustees licensed by the Malta Financial Services Authority, we draw upon our diverse legal, management and software expertise to design and administer personal and private banking solutions. We exercise our discretionary powers as licensed trustees free from any Settlor interference except for situations where it is clearly demonstrated by the Settlor, Beneficiary, Advisor or Protector, that our interpretation or implementation of the deed or letter of wishes is inaccurate in terms of probable prejudice to the interests of the beneficiary. The balance of prudent stewardship and optimum asset development, is best achieved by engagement of independent financial advisors, mandated to make recommendations to the trustees, or act as investment managers, on the basis of clear and comprehensive contracts of service. As a matter of policy we do not provide investment services, but recommend independent financial intermediaries according to the client’s individual priorities and preferences.

d) Use of Independent business development experts
It is imperative that the Settlor divest himself/herself of the prospective Trust Funds, be they funds, shares, property or any other assets (including Intellectual property rights & income streams) in a legal sense and equally important is the actual cessation of control over such property. One of the cardinal benefits of using a trust is that upon legal and documented transfer of property into the trust, the Settlor will also have relieved himself of any tax liability attaching to the ownership or benefit of such assets, transferring this first to the trustees and then in turn to the beneficiaries when trust income is eventually remitted to them.

e) Intellectual Property Trusts
To format, develop and protect a client’s unique proprietary ideas, an intellectual property trust should be established. This trust can own the relevant patents, trademarks, and other intellectual property and function as licensor of the client’s specific business method, image, franchise or patent. Under this framework, the trust licenses these intellectual property rights to Maltese or other companies and then collects royalties and commissions based on the rights licensed. It is important to note that unlike a company, a trust does not have to present public audited accounts, and all records are strictly confidential.