Bloomsbury Professional Online - Planning and Administration of Offshore and Onshore Trusts (Malaysia)

Introduction

Trust law in Malaysia is governed principally by the Trustee Act 1949 and customary practices. The Malaysian courts will also apply the rules of equity, except where other provisions have been made by written law in Malaysia.

No special form of words is necessary to create a trust so long as that intention is clearly shown or can be inferred. However, the formalities for the declaration of a trust must be complied with in order for the trust to be valid and enforceable. Therefore, the trust must be properly constituted, and the trust property must be properly vested in the trustee. There must also be certainty of intention to create a trust, certainty of subject matter and certainty as to objects of the trust. The terms of the trust must also not infringe the rules against perpetuity and inalienability. A trustee may also be a beneficiary, in which case benefits from the trust property can accrue in his favour to the extent of his beneficial interest under the trust.

There are basically three main types of trust – fixed trusts, discretionary trusts and unit trusts. Different types of trusts can be created to fulfil various purposes, for instance to enable property to be held for people who are mentally handicapped or minors, or to enable the beneficial ownership of property to be kept confidential. A trust can also be created to hold property in succession or to protect the trust property from beneficiaries who are incapable of managing their own affairs. A testamentary trust takes effect after death and must comply with the formal requirements of a valid will, in contrast with an inter vivos trust, which may take effect immediately upon being set up.

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