Malta’s €43,000 Dilemma: To Give or Not to Give?

Imagine this: you’re a Maltese parent, sitting at your kitchen table in Msida, sipping on a strong coffee, and your father drops a bombshell. “I want to give your daughter €43,000 when she turns 18.” What would you say?

This isn’t a hypothetical scenario for our Hot Malta readers. It’s a real-life dilemma that’s been making waves on local forums and social media. So, let’s look the heart of this generational wealth debate, explore the cultural and financial aspects at play, and see what Malta’s experts have to say.

In Malta, the tradition of ‘tieħde’ – giving children money or gifts on special occasions – is deeply ingrained. But is €43,000 a reasonable tieħde for an 18th birthday? “It’s not unheard of, especially among wealthy families,” says Dr. Joseph Aquilina, a sociologist at the University of Malta. “But it’s certainly at the higher end of the scale.”

Some argue that such a substantial gift could set the child up for life. Others worry it could lead to a life of entitlement or poor financial decisions. “It’s a double-edged sword,” says Dr. Aquilina. “It can provide opportunities, but it can also create expectations that aren’t healthy.”

Financial advisor and author of ‘Money Smart’ book, Mario Borg, weighs in: “Giving a large sum of money at 18 is like giving a teenager the keys to a Ferrari. It’s a lot of responsibility, and they might not be ready for it.”

Borg suggests alternatives like setting up a trust fund, investing the money on the child’s behalf, or using it to fund education or a first home. “The key is to make the child understand the value of money and the importance of financial responsibility,” he says.

But what if the child wants to start their own business? Malta’s entrepreneurial ecosystem is booming, with initiatives like Startup Malta and the Malta Enterprise scheme encouraging young entrepreneurs. A €43,000 boost could be just the catalyst they need.

There’s another aspect to consider: the legal and emotional burden of such a large gift. “If not managed properly, it could lead to family disputes or even legal issues,” warns lawyer Dr. Anne Marie Vella. “It’s crucial to have a clear, legally binding agreement in place.”

if the child is under 18, the money would need to be held in trust. The Trusts and Trustees Act provides the legal framework for this, but it’s a complex process that requires professional advice.