Monaco: The Restitution Of The Fruits Of Reducible Donations

WHY CLAIM IT IN THE YEAR OF THE DONOR'S DEATH?

In the Principality of Monaco, following the example of the Latin countries, the mechanism of the hereditary reserve, which represents the share of the inheritance goods and rights which the law ensures, devolves free of charges to certain heirs known as reservataires, if they are called to the succession and if they accept it.

The part of the property and rights of succession which is not reserved by law and which the deceased may dispose of freely by means of gifts, is called the freely disposable portion, the gifts being the property given by the deceased by donation or by will.

The reserve is the fraction of property and inheritance rights which the deceased may dispose of freely and free of charge in the presence of heirs subject to the reserve, who may be descendants or ascendants.

The freely disposable portion is the fraction of property which the deceased may dispose of freely and free of charge. Its rate is determined by Articles 780 and 781 of the Civil Code.

The reserve and the freely disposable portion are complementary and form the totality of the estate: the reserve is none other than the estate itself reduced by the available portion if it has been disposed of.

The reserve is intended, on the one hand, to protect the immediate family by limiting the gifts that may be made to persons outside the family and, on the other hand, to ensure a minimum equality between the heirs by preventing one of them from benefiting beyond a certain amount.

The principle of reduction of excessive gifts

The protection of the reserve is not ensured by the nullity of gifts exceeding the available share, but by their reduction.

Indeed, Article 787 of the Civil Code provides that:

Consequently, when the estate is opened, the heirs with rights of retention whose rights have been affected, may request compensation.

In order to determine whether the gifts granted by the deceased have affected the reserve, it is necessary to reconstitute the deceased's assets fictitiously as they would have been if the deceased had not given anything.

Therefore, this fictitious patrimony, called the "mass for calculating the freely disposable portion" is obtained by :

• Counting all the assets existing at the time of death;
• Deducting the debts of the deceased;
• Reintegrating fictitiously all the assets given by the deceased.

The application of the rate defined in articles 780 and 781 of the Civil Code, to this calculation mass, allows to know the amount of the available share.

Thus, if the value of the goods donated by the deceased is higher than the available share, the heir who has not received the minimum guaranteed by law, i.e. the hereditary reserve, has the right to request the reduction of the gifts granted.

The obligation for the donee to return the fruits exceeding the available portion of the estate

Since the opening of the succession, the property subject to the above reduction may have produced income (rent, interest, dividends, etc.), more generally referred to as fruits, which may produce particularly large sums, especially in the case of a gift of company shares or stocks.

However, the Latin maxim "Fructus augent hereditatem", translated as "The fruits increase the estate", requires the donee who is the beneficiary of a donation exceeding the freely available part of the estate to return the fruits produced by the property received.

Thus, Article 795 of the Civil Code provides that:

Consequently, the fruits that have accrued since the date of death must be returned to the estate if the reduction is requested in the year of death; otherwise, they will remain with the donee until the request for reduction is made.

It is therefore important to claim back the fruits received by the beneficiary concerned as soon as possible, and in any case within the year of death.

The courts of the Principality of Monaco have had occasion to grant such requests insofar as they were made in the year of the donor's death, as in a judgment of the Court of First Instance of 18 January 2001, or in a judgment of the Court of Appeal of 20 April 2021.

However, in order to prevent the beneficiary from claiming that the application was made out of time, it will be necessary to respect the forms required for such an application.

In this regard, a decision of the Court of Appeal dated 3 June 2014, confirmed by the Court of Revision, dated 26 March 2015, has provided an essential clarification.

In this case, the request having been made in the year of the death but by a bailiff's act, the beneficiaries argued that the request made by means of "a simple notification by extra-judicial act" was insufficient and that only a "judicial request for reduction", i.e. a writ before the Court of First Instance, should be taken into account.

To this question, the Monaco Court of Appeal replied that Article 795 of the Civil Code does not require that the request for restitution of the fruits be made by writ of summons and that, consequently, the request made in the year of the death by a bailiff's deed had to be granted.

Thus, the request for restitution of the fruits of the property subject to reduction may be made by a writ of bailiff.

For the sake of completeness, it should be noted that a decision of the neighbouring country, where until the law of 23 June 2006, which came into force on 1 January 2007, a text identical to article 795 of the Monegasque Civil Code existed, has accepted the validity of a request for reduction formulated by means of several letters (Court of Appeal of Orléans, 20 January 2014).

As this is a decision from a neighbouring country, and moreover one given by a Court of Appeal and not by the Court of Cassation, its scope in the Principality of Monaco remains limited.

In short, it is easy to understand that the simple failure to comply with a one-year time limit, which is very short period when it comes to the estate, can cause the heir with the right to reserve, i.e. the one protected by law, to lose considerable sums.

It is therefore in the interest of the layman to seek the assistance of counsels specialised in this field, who will be able to appreciate all the subtleties and formulate the necessary requests.

Originally published 22 June 2023.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.