Choosing the best strategy : a comparative analysis of trusts, foundations and wills as estate planning or management mechanisms under Maltese law

Abstract

Estate planning is the accumulation, conservation and distribution of an estate in the manner that most efficiently and effectively accomplishes a client’s objectives. Thoughts about estate planning generally revolve around how an estate devolves after a person’s death. This is however a wider concept and involves managing an estate during a person’s lifetime to provide for his own future and the changing circumstances of his life. This should be every person’s primary estate planning goal and its importance comes to the fore when a person loses his mental capacity and therefore his ability to plan his estate. Other common estate planning goals are providing for a loved one including a vulnerable person or a particular purpose. Maltese law provides a variety of estate planning mechanisms by virtue of which an estate planner may reach such goals. This thesis focuses on three such mechanisms: the will, the trust and the foundation and analyses the distinctive features of each. Special emphasis is given to whether the mechanism gives rise to separate legal personality, what supervision may be exercised over the mechanism chosen, the level of confidentiality which each structure offers and the flexibility afforded to the planner. This last feature is especially important because an estate plan is not static but must be reviewed and changed depending on a person’s changing circumstances. This analysis is undertaken with a view to answer the central questions: Is there one ideal estate planning mechanism which invariably meets every estate planner’s goals? Is one mechanism sufficient or is a combination necessary?