Who is a Trustee?
The Trust and Trustees Act defines a trustee as a person who holds the trust property for the benefit of the beneficiaries. A trustee may either be a natural person or a juridical person, the objects of which include acting as a trustee.
The first trustee is appointed by the settlor through the trust deed. Trustees may then be appointed during the trust period according to the terms of the trust deed.
No person is obliged to accept an appointment as a trustee. However, if any person so appointed does any act or thing in relation to the trust property that is consistent with the status of a trustee of that property, such person shall be deemed to have accepted the appointment as trustee.
Requirement of Authorisation
Any person receiving property upon trust or accepting to act as a trustee of a trust and who (a) receives or is entitled to remuneration for so acting, (b) does so on a regular and habitual basis, or (c) holds himself out to be a trustee, shall require authorisation from the MFSA.
Duties of the Trustee
General Duties
The Trustees shall carry out and administer the trust according to the trust deed, ensure that the trust property is vested in them or is under their control and safeguard the trust property from loss or damage.
Duty to Separate Property
Trustees are obliged to keep trust property distinct and separate from their own personal property as well as from any other property held by them for any other trust.
Duty to Draw Up Inventory
Upon appointment, the trustee is to draw up an inventory and shall declare that the inventory includes all trust property of which the trustee is aware.
Duty to Keep Records
Trustees are obliged to keep accurate accounts and records of their trusteeship and shall continue to hold such records for a period of not less than ten years from the date of termination of the trust or the trusteeship. They are also to disclose and provide a copy of such accounts and records to any beneficiary upon a request by any such beneficiary.
Duty to Provide Information
Trustees are to provide full and accurate information as to the state and amount of the trust property within a reasonable time to the settlor, protector or beneficiary upon receiving such a request in writing.
Fiduciary Obligations
The Trustee owes fiduciary obligations to the beneficiaries of the trust. In particular, trustees shall act with prudence, diligence and the attention of a bonus paterfamilias; act in utmost good faith; and avoid any conflict of interest.
Duty to Register Property in his Capacity as Trustee (Disclosure)
The trustee must register property or documents of title relating to property in his capacity as trustee or in any other manner to ensure that the existence of the trust is disclosed.
Duty to Hold Property for the Settlor upon Revocation of the Trust
Upon the revocation of the trust, the trustee is obliged to hold the trust property in trust for the settlor absolutely. Where a trust is partly revoked, the trustee shall hold the property affected by such partial revocation for the settlor.
Duty to Distribute Property upon the Termination of the Trust
Upon the termination of the trust, the trustee shall distribute the property of the trust to the persons entitled thereto within a reasonable time.
Powers of the Trustee
General Power
The Trustee has the full power to administer, employ or dispose of the trust property in accordance with the trust deed and law; sue in respect of the trust; and to act in all matters concerning the trust.
The trustee shall, in relation to the trust property, have all the powers of a natural person having the absolute title to such property.
Power to Accept Additional Property
The trustee may accept the settlement of any additional property under the same terms of the trust.
Power to Appoint, Add or Exclude Beneficiaries
Trustees may be given the power to appoint, add or exclude persons as beneficiaries of the trust under the trust deed or by any other instrument in writing signed by the settlor.
A trustee may also be granted the discretion as to which beneficiaries are to benefit, the quantity of any benefit, at what time and in what manner beneficiaries are to benefit.
Power to Appoint, Add or Remove Trustees, Protectors, Investment Advisers, or Investment Managers
Trustees, thought the trust deed, may be given the power to appoint, add or remove trustees, protectors, investment advisers or investment managers.
Power to Delegate Powers
A trustee may delegate his powers if permitted under the trust deed or by the court. Furthermore, unless expressly prohibited by the trust deed, a trustee may (a) delegate the management of trust property to and employ investment managers and (b) employ
accountants, advocates, investment advisers and other professional agents to act in relation to any affairs of the trust.
Remuneration
A trustee shall not be entitled to remuneration for services rendered unless expressly authorised by the trust deed or by consent in writing of all the beneficiaries. However, a trustee may reimburse himself for any expenses incurred in connection with the trust.
Prohibited Functions
The trustee is prohibited from (a) directly or indirectly profiting from the trusteeship, (b) causing or permitting any other person to profit directly or indirectly from the trusteeship, (c) entering into any transaction related to trust property on his own account, (d) entering into any transaction related to trust property with a person related to him, or (e) entering into any transaction related to trust property that may give rise to a conflict of interest.
Liability of Trustee
A trustee committing a breach of trust shall be liable for (a) the loss of depreciation in value of the trust property resulting from the breach, and (b) the profit, if any, which would have accrued to the trust if there had been no such breach.
However, the court may relieve the trustee from liability arising from a breach of trust where it is satisfied that the trustee has acted honestly and reasonably and therefore, ought to be excused in the circumstances.
Resignation and Removal of Trustees
A trustee may resign by notice in writing to his co-trustees, or in the case of there being no other trustees, by notice in writing to the beneficiaries. If there are no beneficiaries to whom notice can be given, a trustee may resign by notice in writing to the settlor or the trustee’s duly appointed successor.
Upon ceasing to be a trustee, the trustee shall surrender trust property in his possession or control. In doing so, the trustee shall concur in executing all documents necessary for the vesting of the trust assets in or under the control of the new trustee.
For more information please do no hesitate to contact us on info@premier-fiduciary.com.mt
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