Foreign law trusts: inheritance and gift taxes are reformed!

Foreign law trusts: inheritance and gift taxes are reformed!

By Audrey Michelot, counsel.

On July 27th, the National Council passed the Bill Nr. 1049, containing various economic and legal provisions.

The adoption of this bill entails changes in various areas of the law, in particular with regards to transfers – free of charge – during the lifetime (inter vivos gift) or upon death (inheritance).

Thus, transfers during lifetime or upon death of assets located in Monaco endowed within a trust under foreign law are now subject to inheritance and gift tax, depending on the relationship between the settlor and the beneficiary.

This reform concerns only trusts governed by foreign law which are not subject to Law Nr. 214 of February 27th, 1936, revising Law Nr. 207 of July 12th, 1935, on trusts, as amended, provided that they are neither set up in nor transferred to Monaco.

The tax will be assessed on the net fair market value of the asset on the day of the transfer.

The identity of the beneficiary and the relationship with the settlor will have to be evidenced by official documents, according to the law governing the trust.

The adoption of Bill Nr. 1049 should make transfers in this context more attractive.

Gordon S. Blair Law Firm has set up a specific team to inform you about the practical consequences of these new provisions and advise you on their implementation.