1. Understanding the Applicable Succession Rules
First, it is important to understand the succession rules that will apply. In Monaco, the Private International Law Code provides that the law applicable to a person’s succession is that of their domicile at the time of death, unless they have chosen their national law and this choice has been expressly stated in a disposition upon death. Without an express choice of law, a Monegasque resident, even if of foreign nationality, will have Monegasque law applied to their succession. Similarly, a foreign will may have some of its provisions challenged under Monegasque law.
Furthermore, Article 63.2 of the Private International Law Code specifies that, regardless of the law applicable to a succession, “it cannot have the effect of depriving an heir of the reserved portion guaranteed by the law of the State of which the deceased was a national at the time of death, nor of applying the reserved portion to the succession of a person whose national law at the time of death does not recognize this regime.” This article tends to make the reserved portion a special category subject to the national law of the deceased, which must be taken into account when drafting a will and in cases of multiple nationalities.
2. Properly Assessing Your Estate
Before drafting a will, it is important to make a complete inventory of your estate. This includes not only real estate and personal property, but also bank accounts, investments, and any other assets such as paintings, jewelry, cars, and cryptocurrencies. An accurate assessment will allow the testator to determine the distribution of their assets and avoid any ambiguity. It is also important not to forget to take debts and financial obligations into account, as these must be settled before the estate is distributed.
3. Evaluating Succession Taxes
Inheritance tax applies only to assets located in the Principality or which are taxed there, regardless of the domicile, residence or nationality of the deceased or donor and of the heirs or donees and is levied according to the relationship between the deceased and the heir.
Inheritance tax in Monaco is characterized by total exemption for direct descendants (between parents and children or grandparents and grandchildren) and between spouses, as well as moderate taxation in other situations, ranging from 4% (partners) to 16% (non-relatives).
International successions can give rise to complex situations in terms of inheritance tax. While the application of Monegasque inheritance tax is conditional on the location of the estate assets, the Principality of Monaco has unfortunately only signed one bilateral tax treaty with France to avoid double taxation in inheritance matters, and this has only limited application. The large number of foreign nationals in the Principality may therefore give rise to cases of double taxation if the transfer is not anticipated. Finally, the determination of the tax residence of the deceased or the heirs may also have an impact.
4. Ensuring Compliance with Formal Requirements
A will must comply with certain formal requirements to be valid. In Monaco, there are several types of wills: holographic, authentic, and mystic. The holographic will, for example, must be entirely written, dated, and signed by the testator. The authentic will is drawn up by a notary in the presence of four witnesses or by two notaries and two witnesses. The mystic will can be written by the testator or another person; the document is then sealed by a notary in the presence of four witnesses.
To take into account dispositions upon death drafted abroad, the Private International Law Code offers several connecting factors to make them valid, in terms of form, in the Principality.
It is thus important to choose the type of will that best suits the testator’s situation and to strictly comply with legal requirements. Any error in form could result in the will being declared null and void.
5. Regularly Reviewing Your Will
It is important to regularly review a will to ensure it still reflects the testator’s wishes. Events such as marriages, divorces, births, or deaths may require changes. It is also important to reread a will regularly and update it according to changes in the testator’s personal and financial situation, such as acquiring or selling assets. If changes are made, the same formal requirements as for the initial drafting must be observed. Finally, it is useful for the testator to inform their relatives of the existence and location of the will to avoid any confusion or difficulty after their death.
