Foundations and trusts have been used to avoid or address problems in two main areas; family wealth conservation and asset protection. Settlors from civil law countries normally choose a foundation, whereas settlors from common law countries normally choose a trust. So the choice is based more on the familiarity with the legal system than a decision made for legal or rational reasons.

• A foundation or trust may be set up to make regular payments or for the distribution of assets to members of a family to grant education, maintenance or housing
• If children (or grandchildren) are young, there is a risk that they will receive or inherit too much too soon. Thus, a foundation can be used to hold assets until the children (or grandchildren) are older and wiser
• A foundation or trust can be used to preserve an art collection for posterity
• A foundation or trust can be used to support a friend or an aged dependent to ensure that care is continued after the settlor’s death. On the death of the dependent, the funds can be returned to the family
• A foundation or trust could be used to support a family member who may be handicapped, may have an unstable marriage, may be bankrupt, or there could be other reasons that may cause them to be incapable of managing their own affairs
• A foundation or trust can be used to provide for the support of the settlor. Only the board members of the foundation can deal with the assets as previously instructed

• The settlement of the trust is a legal act, by means of which a person, the settlor, transfers assets to a person, the trustee. The trustee will manage or dispose of them in favour of the beneficiaries. The settlor may be one of the beneficiaries
• The trustee is often a natural person or a firm or trust company engaged professionally in the business of managing assets. These assets are legally under the ownership of the entrusted trustee but subject to conditions which are usually set out in a trust deed or within the guidelines of a letter of intent
• The setting up of a Maltese foundation and the registration of the foundation with the public registry or the deposition of the foundation documents grants independent legal personality to the Maltese foundation and, as a consequence, the foundation may purchase and hold assets of any kind and may enter into any agreement in its own name
• It is the foundation itself that owns the assets, which are managed by the foundation council or board of governors. The assets of trust are under the ownership and control of the trustee
• The foundation council has the function and duty to fulfill the objects and purposes of a foundation
• The foundation may be used within a legal structure or as a vehicle for the ownership of any assets, moveable or real estate
• The control and administration of the assets, given in trust, are in the sole power of the trustee. Such a trustee is usually a trust company, managed by a Board of Directors, and ultimately supervised by the Court. In the Maltese foundation, this power of control and administration is in the hands of a foundation council or board of governors. However, both the Maltese foundation and the equitable trust can have a protector or advisory board which may protect the interests of the beneficiaries and advises the foundation council or trustee. Most of the discretionary foundations do have such a protector
• The trust allows the appointment of one or more trustees without a minimum or maximum, which is the same with the foundation
• The trust may be set up with a foreign proper law whereas a Maltese foundation is always set up according to Maltese law
• The foundation provides provisions limiting legal claims against the founder and is therefore often used for asset protection
• The foundation and likewise the trust are often used to substitute for wills. However, trusts and foundations may be challenged by heirs based on their reserved legal portion
• It is very common that the trust has the settlor’s name and is used to execute commercial transactions such as purchases of real estate, administration of assets, investments and entering into international agreements
• The foundation is widely used as a confidential vehicle to protect the interests of the settlor and may be formed as a family foundation, a philanthropic/charitable or ecclesiastical foundation or as a mixed type and is often also used as a holding entity
• One of the main advantages of a foundation is that it may not be subject to the rules against perpetuities and accumulations. These rules would apply to a trust, unless a foreign proper law is applicable