Monaco: Types of Company
The concept of a trust in Monaco can be best understood in terms of its historical development. As a civil law jurisdiction the Principality enforced its internal laws governing strict heirship rules on any dispositions made by Monegasque residents. Consequently some British and United States nationals residing in Monaco appealed to the Government to be allowed to use the vehicle of a trust so as to be able to have the same flexibility to dispose of their assets on death as existed under the laws of common law jurisdictions of which they were nationals.
Law 214 was passed with a view to allowing foreigners resident in Monaco to set up trusts governed by their own national law. The law was not passed to create a body of Monegasque trust law or introduce the concept of a trust into Monaco. Unless Monegasque law makes express provision for a legal issue to be governed by its internal law (e.g. appointment of trustees) the courts of Monaco will apply the principles of the foreign proper law governing the trust as specified in the trust deed.
Monaco law also allows for a trust to be administered from but not registered in Monaco.
Monaco is not a good jurisdiction in which to form a trust since the key characteristics of a Law 214 Trust do not compare favorably with other offshore jurisdictions:
- Settlors must be residents of Monaco; thus a Monaco trust has little relevance to offshore financial planning;
- The trust deed must be registered with the result that information relating to the beneficiaries, settlors and property settled under the trust are easily verifiable matters.
In most offshore common law jurisdictions the converse applies. For further information on the legal structure of Monagesque trusts see Law of Offshore.
See Offshore Legal and Tax Regimes for details of the taxation regime for Monaco trusts.