Dr Paul DeBattista 15 March 2017 1 Setting up of a Protected - - PowerPoint PPT Presentation

15 March 2017 Dr Paul DeBattista 1

Setting up of a Protected Disability Trust

15 March 2017 Dr Paul DeBattista 2

Applicable Legislation

15 March 2017 Dr Paul DeBattista 3

Chapter 331 –Trust andTrustees Act Legal Notice 324 of 2016 – Trusts and

Trustees Act (Protected Disability Trusts) Regulations, 2016

Reasons for setting up a Trust

15 March 2017 Dr Paul DeBattista 4

to support a disabled person who cannot manage his property

• r money, so that his needs are looked after, even when the

parents (usually) are not able to help him

to make sure that any own or inherited assets of the disabled

person are administered in the best interest of the disabled person by a professional person

Fiscal Incentives

Protected Disability Trusts Regulations

15 March 2017 Dr Paul DeBattista 5

To

regulate the setting up and administration of trusts formed for the benefit of beneficiaries at least one of whom is a person with disability

Eligibility Criteria

15 March 2017 Dr Paul DeBattista 6

Is set up by a family member of the person with

disability

Is set, exclusively but not necessarily, for the

benefit of the disabled person

Good to know

15 March 2017 Dr Paul DeBattista 7

It is important that the purpose and the benefits that

the disabled person will be entitled to get from the setting up of such a Protected Disability Trust, be clearly specified and written in the trust instrument

On the demise of the disabled person, the trust will

be closed

Beneficiaries

15 March 2017 Dr Paul DeBattista 8

 Person with disability benefits exclusively from the

trust assets

 The parents of the disabled person will be the

preferred beneficiary during their lifetime

 Following the demise of parents, disabled person

shall be the sole beneficiary under the trust

Trust Assets

15 March 2017 Dr Paul DeBattista 9

LiquidAssets (cash) Primary place of residence of disabled person

(cannot be disposed of while disabled person is still alive, except with the prior written consent of protector and confirmation from Court)

Other immovable property

Who qualifies as a person with disability

15 March 2017 Dr Paul DeBattista 10

A person over the compulsory school age, who as a result

• f the disability (physically or mentally) cannot enter or be

retained in employment

A person qualifying as a disabled individual as defined in

the Equal Opportunities (Persons with Disabilities) Act

A child certified, by a Medical Panel as stipulated under

the Social Security Act, as suffering from physical or metal disability

Who qualifies as a family member

15 March 2017 Dr Paul DeBattista 11

The parents (including step-parents and adoptive parents) The spouse A partner in civil partnership A son, daughter, brother or sister aged eighteen years or over Uncle or aunt

Administration of the Protected Disability Trust

15 March 2017 Dr Paul DeBattista 12

ProfessionalTrustee; or PrivateTrustee, provided that:

• He is not beneficial or has any other interest in the trust assets
• Should follow the obligations and responsibilities under this Act
• He is to undergo adequate training to execute his duties (within one year

from being appointed)

• A professional trustee is to be appointed (by settlor or protector) as co-

trustee

Criteria for eligibility to be a Trustee

15 March 2017 Dr Paul DeBattista 13

A person of good reputation possessing experience and qualifications in

financial, accounting or legal services and approved by the MFSA as being fit and proper to carry out the duties of a trustee

Role of the protector (1)

15 March 2017 Dr Paul DeBattista 14

Giving written consent to trustee to dispose of the residential property

while the disabled person is still alive (but also confirmation from Court)

Give consent for trustee to transfer assets from the trust Consulted before trustee exercises discretion and takes decisions related

to distribution of income or capital

Consulted before the trustee takes decisions relating to the medical and

educational needs and the care of the person with disability

Role of the protector (2)

15 March 2017 Dr Paul DeBattista 15

Consent for a trustee or a co-trustee prior to resignation Has the power to remove a trustee and appointing a new trustee On giving consent to transfer of any assets from the trust, protector is be

sure that this is being done in the best interest of the disabled person. In case of uncertainty, the direction from Courts is to be sought

Main Obligations of the trustee (1)

15 March 2017 Dr Paul DeBattista 16

Open and maintain bank accounts on behalf of the

disabled person

Seek to generate income from assets held by investing

liquid assets or leasing of immovable property

The type of investment should be one of a conservative

investment portfolio

The investment shall be predominantly in regulated

markets

Main Obligations of the trustee (2)

15 March 2017 Dr Paul DeBattista 17

The investment portfolio should be as diversified as

possible

No more than 10% of the assets shall be invested with any

entity

No more than 10% shall be invested in securities which are

not traded on a market (Stock Exchange)

No more than 50% of the property assets shall be kept on

deposit with any one body

Main Obligations of the trustee (3)

15 March 2017 Dr Paul DeBattista 18

The trustee shall maintain a balance between generation

• f income and the preservation of capital, while generating

sufficient proceeds to meet the expenditure requirements

• f the beneficiaries in accordance with the provisions of

the trust instrument

Remuneration to be paid to trustee

15 March 2017 Dr Paul DeBattista 19

 A trustee can opt not to ask for any remuneration (although he is entitled to such

remuneration)

 The annual remuneration to be paid shall not exceed € 400 (important to include

the applicable fee in the trust instrument)

 The fee agreed is fixed for three years  Any increase in the fee shall be proportionate to the increase in the index of

inflation

 This fee is applicable where the cumulative nominal assets do not exceed the value

• f € 450,000

Supervision on the trustee

15 March 2017 Dr Paul DeBattista 20

The trustee is obliged to notify the Malta Financial Services Authority

(MFSA) of the Protected DisabilityTrust which is set up

Among the details which are communicated to MFSA, there will be a

complete and detailed declaration regarding the nature and value of assets held in the trust

A copy of the signed trust instrument is also deposited with MFSA Any other information requested by MFSA MFSA can cancel or suspend a trustee to continue to act as a trustee on

serious breech of law and non-adherence to relevant regulations

Fiscal Incentives (1)

15 March 2017 Dr Paul DeBattista 21

No donation tax is due on the transfer of any immovable property:

• where the transferee is a trust, which has as a lifetime beneficiary,

either initially or immediately subsequent to the life interest of the settlors or transferors, a person who is on the Register of Persons with Disability kept by the National Commission Persons with Disability set up in terms of the Equal Opportunities (Persons with Disability) Act

Fiscal Incentives (2)

15 March 2017 Dr Paul DeBattista 22

No Capital Gains Tax is due on the transfer of any immovable

property:

• where the transferor is a trust, which has as a lifetime beneficiary, a

person who is on the Register of Persons with Disability kept by the National Commission Persons with Disability set up in terms of the Equal Opportunities (Persons with Disability) Act, provided that the trustee

• r

administrator submits a declaration to the Commissioner that the proceeds are for the sole benefit of that beneficiary during his lifetime

Fiscal Incentives (3)

15 March 2017 Dr Paul DeBattista 23

No duty on transfer is due by the heirs on the transfer of

the immovable property which was the residence of the parents of the disabled person and in which the disabled person resided during his lifetime up to his death

Thank You

15 March 2017 Dr Paul DeBattista 24