Monaco

2. Sources of law

a. Trust creation and administration

As a consequence of the civil system, the concept of trusts is not enshrined in local law, except in the special circumstances of Law 214 described below. Although the courts have occasionally addressed disputes involving trusts in Monaco, their treatment shows some inconsistency. This is similar to other civil law jurisdictions’ attempts to come to terms with what is still an alien notion. Monaco has adhered to the Hague Convention on the Law Applicable to Trusts and on their Recognition, 1 July 1985, and the Convention came into force in Monaco on 1 September 2008.

b. Property, estate, and probate

Estates are governed by the Civil Code rules of intestacy or by will. In the case of the latter, complex special heirship rules must be observed as a matter of public policy. There is an overall prohibition against agreements with regard to future inheritance, except in relation to marriage contracts. This provision can be invoked to strike down a trust that does not conform to the special rules of Law 214.

c. Taxation

Monaco levies no inheritance tax on estates as between direct ascendants, descendants and spouses. In other cases, rates vary to a maximum of 16 per cent between non-related persons. Tax is levied only on assets located in Monaco at the date of death, whatever the domicile, residence, or nationality of the deceased.

d. Renvoi

While Monaco situs real property will invariably be dealt with under the inheritance law of the Principality, Monaco operates the principle of applying ‘national’ law in relation to movable assets and, depending on individual countries’ reciprocal approach or otherwise under private international law, this can often result in a deceased’s country of origin having jurisdiction over such assets, or the operation of renvoi, resulting in the application of Monegasque domestic law in respect of an individual’s worldwide movable estate.


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© 2011 Society of Trust & Estate Practitioners