In December 2019, the Monaco legislature passed a new law, Law n°1481. The new law has changed the legal concept of what constitutes a ‘family couple’ in Monaco without offending the principles of Catholicism, which is protected by the Constitution as the Principality’s religion.
The legislation grants to both heterosexual and homosexual couples the right manage their legal relationship within the framework of a ‘communal life agreement’ (‘contrat de vie commune’) which can be supplemented by a separate property agreement (‘convention d’organisation patrimoniale’), and wills by the parties and can extend to the adoption children.
The Communal Life Agreement
The requirements for couples wishing to enter a communal agreement are modest. The parties must be aged at least 18yrs and one must be either a Monaco national or Monaco resident, with the agreement being prepared by a Monaco notary.
An individuals who is married or already bound by the terms of an existing civil contract, cannot enter a new communal agreement until divorce or the termination of the earlier contract. The rule applies regardless of whether the marriage or civil contract is Monegasque or foreign; the aim is to prevent communal agreements being misused to facilitate polygamy. Furthermore, the couple must not enter a communal agreement with the intention of:
- seeking disguised adoption or the guardianship of a child,
- facilitating inheritance, or,
- undermining Monaco public policy and morals.
The general law of civil contracts applies regardless of the terms the parties agree, thus an individual will continue to enjoy the use and disposal of their personal property, otherwise the property is considered to be the equal joint ownership of the couple.
The contract will be dissolved should the couple marry, on the mutual declaration of termination or death.
Patrimonial Agreement
As a supplement to the communal agreement, the parties may take the opportunity to agree the ownership of assets under a Patrimonial Agreement (accord patrimonial). However, such an agreement is limited, as it cannot seek to adopt the respective rights and duties of married couples, which are founded on a different institutional basis.
Wills
The legislation maintains the legal position that a civil partner is not automatically a legal heir should the other party die intestate. In the event of intestacy the survivor has no right to inherit, only a right under the general law to remain in the joint accommodation for a year following the other party’s death should the property be held in the sole name of the deceased.
The parties are free to dispose of their estate by Will, subject only to Monaco’s heirship rules. Disposition to the survivor will be subject to inheritance tax at the rate of 4%; a reduction to the usual rate of 16%. The 4% tax rate will also apply to lifetime gifts between the parties, unless the community agreement is terminated within 10 years of the making of the gift. In such circumstances the gift will be taxed retrospectively at the usual rate of 16%.
Adoption
Under the new legislation, parties to a communal agreement now have the opportunity to adopt a child. As required for all adoptions, application is made to the court of first instance to establish whether the adoption is in the best interests of the child, the material consents have been obtained and the other statutory requirements have been met.
Where the adoptive parents are civil partners the court will also verify that their communal agreement does not seek to undermine parental authority.
Foreign Civil Contracts
As the EU Regulation (EU) 2016/1104, Monaco legislation includes corresponding provisions on the recognition of foreign communal agreements. While such agreements are recognised the rights and obligations cannot be more extensive than those rights granted under Monaco law.
The new laws are a step forward for Monaco. Civil partners now have greater rights than before with the addition of a right of adoption, more favourable taxation of lifetime gifts and inheritance and the provision of reciprocal obligations of support and maintenance during the couple’s lifetime and on death.
For more information, please contact us at consulting@rosemont.mc
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With credits to Peter Brigham, Simon Huxford, Guillaume Luce, Damien Concé and Naira Ayvazyan