Law 1448, adopted on 28 June 2017 by the National Council complements the existing provisions and consolidates the entirety of Monegasque private international law into a single instrument.
The systematisation effect of this law makes it possible to offer Monegasque nationals and residents a stable, long term legal framework suitable to situations that involve ever more considerations of foreign origin.
The new law imposes, in terms of inheritance, the principle of the unicity of the law applicable to inheritance proceedings opened in Monaco, whatever the place and the nature of the assets in question.
It also introduces the concept of professio juris, which allows the testator to “choose” to submit their estate to their own country’s law on the day he or she exercises that choice, rather than to the law of his or her Monegasque place of residence. Therefore, foreigners residing in Monaco who are nationals of countries where domestic law does not recognise the reserved portion of an estate, may now preclude the application of such provisions, in Monegasque law.
However, the effect of such a choice is limited insofar as it cannot deprive an heir of the reserved portion guaranteed by the law of the country whose nationality the deceased had at the time of death, nor can it result in the application of the reserve to the inheritance of a person whose national law does not recognise this regime at the time of his or her death.
In the absence of a deliberate choice or specific testamentary provision (including under the terms of Law 214 concerning the recognition of foreign trusts), the whole of their estate nevertheless remains subject to Monegasque law.
The question of the interest of a trust under Law 214 therefore remains as relevant as ever, as it has so many benefits.
Law 214 in fact allows people whose national law allows the creation of trusts, to de facto preclude the application of the Monegasque rules of public order to the disposition of their assets (while living or because of their death) and thus avoid the constraints of the reserved portion, which continue to exist under the provisions of the new law, by setting up a trust subject to their national laws.
Furthermore, this long term inheritance planning vehicle offers the creator (the deceased) and his or her family and heirs adequate protection of the assets, rules of governance, and the possibilities of planning for their private lives and estate.
Another lasting benefit is that a Law 214 trust can be used to optimise inheritance tax. Indeed, the only duties that the creation, transfer or functioning of these trusts give rise to are proportional registration duties of between 1.3 and 1.7% , whatever the family relationship. In other words, highly tax efficient if the beneficiary of the trust has no direct family ties with the deceased.