Monaco is a civil, not common law, jurisdiction. The impact of this on estate planning can be significant for an expat living in Monaco as it means a regime of ‘forced heirship’ applies.
Broadly speaking, a testator cannot deprive their blood relatives of inheriting at least a portion of their estate. Interestingly, this does not extend to any obligation on a testator to leave assets to a spouse. This means the estate of a person living in Monaco could go to heirs the deceased does not wish to benefit and can cause unexpected tax issues. However there are ways to plan for greater flexibility, depending upon nationality.
With the exception of Law 214, which introduced the concept of a trust to Monaco in 1936 and which remains a useful estate planning tool, there had been few significant changes in laws relating to estate matters in Monaco until the introduction in July 2017 of a new Code on Private International Law.
This Code is wide ranging, covering many areas including marriage, divorce, adoption, contract and conflict matters. Insofar as the Code relates to succession matters it reflects (although, not precisely) many of the provisions of the EU Succession Directive.
A significant consequence of the Code is now, like in many European countries, a resident of Monaco may opt for the law of their nationality to determine who should inherit their estate on death. This gives those whose nationality allows it – such as the British – greater testamentary freedom.
When planning for those who are either already living in Monaco or considering a move there, it is crucial to note the provisions of the 2017 Code automatically apply to any person who has been issued with a Monaco Residence Card.
This automatic application can be rebutted but only where it can be shown one’s domicile is elsewhere. For Monaco purposes, ‘domicile’ means the deceased’s principal place of residence or where they are principally established. Unlike in Anglo-Saxon jurisdictions, there are no concepts of domicile of ‘origin’ or ‘choice’ in Monaco.
Another important point about the Code is it introduced a unitary approach to the assets of a deceased. Historically, Monaco applied a distinction between moveable and immoveable assets depending on their location. This schismatic approach is no longer taken and the provisions of the 2017 Code apply to all the assets of the deceased whether moveable (eg, jewellery) or immoveable (mainly real estate) and wherever in the world they may be located.
The Code is thus not restricted to dealing with only those assets located in Monaco, so we strongly recommend all Monaco Residence Card holders who have not already done so should review their estate planning arrangements accordingly, to ensure where possible there are no unwelcome consequences of the new Monaco rules.
Following the introduction of the Code there are essentially four options for a foreign national resident in Monaco:
- Do nothing – and let the estate fall into the normal rules of Monaco intestacy
- Draft a will subject to the usual Monaco succession law (including the forced heirship provisions)
- Draft a will importing the law of nationality (eg, the relevant UK law for a British expat)
- Draft a will trust under the Law 214 of 1936
It is beyond the scope of this brief introductory article to discuss the potential advantages and pitfalls of each of these. Suffice to say the circumstances of each individual are unique, and their situation will require a detailed analysis of the options to determine which will best suit their requirements and wishes.
No action should be taken on the basis of this note, nor should it be construed as amounting to tax, legal or VAT advice. Suitable, specific and professional advice should always be obtained in respect on any particular issue.