Trustee discretion as distinct from that of the fiduciary

Abstract

The incorporation of trust and fiduciary law into Malta’s legal system was a crucial step in maintaining its status as a thriving financial centre. The premise of any fiduciary relationship arising out of the provisions of Articles 1124A and 1124B of the Maltese Civil Code is that fiduciaries are expected to act with a higher level of diligence when carrying out their duties as the ultimate aim of the relationship is to benefit another person and not themselves. Trustees are deemed to be the highest level fiduciaries because of the nature of their office and therefore, their obligations are even further amplified to reflect this. The focus of this thesis is to create awareness as to the status of these two concepts under Maltese law today as being two distinct notions. Fiduciary obligations attach to many different kinds of relationships, that of the trustee and the beneficiaries being one of them, and effectively govern the manner in which these relationships are carried out. Throughout the thesis, emphasise is consistently drawn to the one of the most unique features of trust law; the transfer of ownership to the trustees and the implications this brings about. In light of this, the discussion on the extent to which trustees may exercise their own discretion over the management and the administration of the trust merits commentary, as well as the methods used to keep this in check and prevent its abuse. The aim of this study is to dispel the ambiguity that surrounds this area of legal practice in the hope of creating more awareness on the nature of trust law in Malta and establishing the reasons behind why trusts and fiduciary obligations are still not utilised to the best of their abilities.