AVOIDANCE OF FORCED HEIRSHIP RULES

Some countries, especially civil law jurisdictions, impose limits on how a deceased’s estate is to be distributed upon his death. The Act contains some interesting provisions to prevent a trust from being attacked on the basis of forced heirship rules.
 

Section 7(6) of the Trust Act provides that the transfer or disposition on trust of property situated outside Mauritius, which if it had taken place in Mauritius would constitute a valid transfer or disposition of the property under the Act, shall not be declared void or invalid merely by reason that it contravenes the applicable law of the transfer or disposition, or the law of the transferor’s domicile or nationality.
 

Section 8(4) provides that notwithstanding any enactment, where a non-citizen transfers or disposes of property on trust, the transfer or disposition shall not be set aside, avoided, or otherwise declared invalid or ineffective by virtue of any rule or law of his domicile or nationality relating to inheritance or succession or any rule or law of a similar nature, or any rule or law restricting the right of a person to dispose of his property during his lifetime so as to preserve such property for distribution at his death, or any rule or law having similar effect.

Section 11(5) provides that notwithstanding any rule or law relating to enforcement of judgments given by the court of another jurisdiction, where the law of Mauritius is the proper law of a trust, the Court shall not vary it or set it aside or recognise the validity of any claim against the trust property pursuant to the law of another jurisdiction or the order of a court of another Jurisdiction in respect of:
 

• the personal and proprietary consequences of marriage or the dissolution of marriage;
• succession rights (whether testate or intestate) including the fixed shares of spouses, ascendants and descendants or relatives; or
• the claim of creditors in an insolvency. Therefore where the trust’s assets are not situated in the jurisdiction which has forced heirship rules, the combined effect of these provisions would prevent the trust from being attacked. However, where the assets are situated in the jurisdiction with forced heirship rules, then a settlor must be careful in the way the trust is structured as some jurisdictions can exceptionally disregard a trust in the event that the heirs deprived establish that the avoidance of forced heirship was precisely the intention for the setting-up of the trust.