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Ganado Child Trust

 
 
Product Review : A Trust for your Child by Ganado Trustees
A Trust for your Child:
Family Estate Planning made simple 
 
 
 
 
The trust is a relatively new concept in Malta. Did you know you could set one up for your children, so that assets like cash, financial investments or immovable property are held for them until they become adults? 
 
What is a Trust?
A “trust” arises where ownership of property is transferred by a person, “the settlor” to another person, “the trustee” to be managed for the benefit of yet another person, “the beneficiary”.

What is a Minor’s Trust?
It is designed around the needs of your children. It enables you to protect your kids’ interests and allows you to save gradually ensuring that the funds will be available for them when they need them.

So what is the purpose of the trust?
Always the best interest of your child. It seeks to protect your child’s funds for his or her use, more specifically for the education, health or support. It encourages savings for the child’s future assisting you in this exercise and making it less burdensome going forward.
 
How do I set up a Trust?
Very easy ! Contact a trustee who will provide you with the service and a standard minor’s trust document. Once you have had time to read and understand the document you need only put a few Euros into the trust to begin with.

Is it a complicated document?
Not at all. The Trust document is written in simple terms, which makes it easy for us all to understand and apply. It contains details of your child as the sole beneficiary of the funds held in trust and outlines the purpose of the trust as per your instructions.

Are Minor’s trusts expensive?
On the contrary - very affordable! All due to the demand which lead to a standardised product; however still with a personal touch.

Are Trusts Confidential?
Most certainly. All details including the names of the minor beneficiary and the amounts held in trust are held in full confidence. Trusts are not public documents, they are private arrangements known only to the parents and the trustee. Even the minor may be kept unaware of its existence until the parents wish otherwise.

Can we add money or property?
Yes. A minor’s trust will typically receive monies annually usually around the birthday, Christmas, graduations and other important moments in your child’s life. The process is simple and only requires a call or bank transfer to the trustee.

Can a Trustee be Trusted?
Professional Trustees are authorized and regulated by Malta Financial Services Authority (MFSA). The property settled in Trust is not part of the trustee’s estate; it is a separate patrimony and not available for the trustee’s personal creditors, spouses or heirs.
 
In conclusion, setting up a Trust for your Child is a natural development and is complementary to simply saving. The Trust offers you that security against life’s unexpected events as it gives you the comfort that the efforts and sacrifices of savings for your child’s future are protected. Trusts for children are second nature to parents in the UK and this trend is finally breaking through in the local family culture as our generation of parents appreciate the concept of building their family estates in Trust, simply by starting with a Trust for their Child. 
 
 

 
 
So why do parents set up a trust for their child?
 
• To protect the interests of the child until they reach a certain age
Parents often utilise a trust as a means to transfer property to their child once their son or daughter has reached a certain age usually addressing a specific need predicted to arise at that stage in their life. 
 
• To cater for unexpected events within families
A trust documents and enables legal implementation of the parents’ wishes which assets are to be transferred to their child. This is particularly relevant in situations where the parents are no longer able to provide such instructions, as in the case of accident or serious illness.
 
• To avoid trust property getting caught up in inheritance issues.
In the case of death of the parents, the property settled in trust for the benefit of the child is effectively outside the testator’s patrimony and avoids all the issues and procedures arising on inheritance. 
 
• To preserve family wealth and assets against spendthrift children.
When a child is not sufficiently responsible, the trust may be used to hold the assets for the use and enjoyment of the child. Since they are not legally owned by the child, the assets will not be subject to a creditor’s claims arising from the child’s actions. Furthermore, the child will not be able to sell them or otherwise dispose of them.
 
• To protect against parents’ future creditor claims
As the assets are no longer legally owned by the parents, these are therefore protected from the parents’ future liabilities which may arise.
 
• Use and enjoyment
Assets settled in trust may have a number of beneficiaries besides the child including the parents themselves. This means that although the asset is no longer legally owned by the parents they will be the beneficiaries of the asset during their lifetime. This type of arrangement is commonly carried out with immovable property which is initially used by the parents and only after their death is it transferred to their child. The parents will have what is called a life interest similar to a usufruct, but much more protective of the parent or the surviving spouse.
 
• To consolidate and allow for effective management of assets.
The consolidation of assets in a trust and the potential use of professional advisors in the respective sector seeks to achieve the best possible returns for the benefit of the child, rather than having a segmented and unprofessionally administered portfolio. Parents often feel incompetent to deal with it and this is the best way of entrusting the management of assets to competent professionals with suitable protection.
 
 
How it all started…
The noble origin of the trust Trusts date back to medieval times when knights sought to protect and preserve their estates during the lengthy absence in wars and would transfer the legal ownership of their estate to a third party, such as a close friend, under an agreement that ownership would be transferred back to the knight upon his return.
 
If he died it would be transferred to his wife and children. This transfer of legal title empowered the transferee to manage the estate effectively and to enforce the rights of the estate against all parties while the knight was away but always left the beneficial interest with the knight and his family.
 

For more information how to set up a trust for your child/ren, please contact Ganado Trustees & Fiduciaries Ltd. - Albert Cilia tel 21235406 or acilia@ganadoadvocates.com.
 


Trusts in Malta are governed by the Trusts and Trustees Act (Cap.331 Laws of Malta) which created the framework that enables residents and non-residents alike to set up various types of trusts in Malta.
 




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