In analysing the duties of the trustee, it is fundamental to refer to article 21 of the Trusts and Trustees Act (Chapter 331 of the Laws of Malta) (the “TTA”) which lays down the fundamental duties of the trustee.
Article 21(1) of the TTA reflects Article 1124A of the Civil Code, the former which states that a trustee must exercise his duties with prudence, diligence, as a bonus paterfamilias, with utmost good faith, and avoiding any conflicts of interest. This lays out the fiduciary nature of the duties of the trustee.
In performing his obligations as a trustee, the trustee must ensure that the trust property is vested in him or is under his control and shall reasonably safeguard the property of the trust from any loss or damage. Furthermore, upon accepting his appointment, the trustee must draw up (in writing) an inventory of the trust property, declaring that such inventory includes all the trust property the trustee is aware of. Importantly, the trustee must keep the trust property distinct and separate from his own property or from any other property held by him under any other trust or title.
The trustee is also obliged to keep accurate accounts and records of the trusteeship and must generally disclose such accounts and records upon the request of the beneficiaries to such beneficiaries and provide a copy of such accounts within a reasonable time from the request. Generally, there should be:
- Safe custody records;
- Document files;
- Correspondence files;
- The minutes of trustee meetings (to include resolutions);
- Investment records; and
- Trust accounts.
The law obliges the trustee to keep such accounts and records for a period of not less than ten years from the date of the termination of the trust or the trusteeship, whichever event occurs first.
The Act also provided for certain prohibitions on the trustee. The trustee shall not:
- Profit, directly or indirectly, from the trusteeship;
- Cause or permit another person to profit, directly or indirectly, from the trusteeship;
- Enter into any transaction related to trust property on his own account;
- Enter into any transaction related to trust property with a person related to him or with a partner in any partnership; or
- Generally enter into any transaction related to trust property that may give rise to a conflict of interest.
Article 29 of the TTA further specifies that a trustee is obliged to provide information within a reasonable time from when he receives a request to that effect in writing. He must carry out this duty to the best of his abilities and may do so at the expense of the trust.
Feel free to contact us should you require any further assistance on the above.
