MAURITIUS Law and Practice Contributed by: Johanne Hague, Ashwin Mudhoo, Medina Torabally and Yushrah Bayjou, CMS Prism in association with CMS
tion to each heir will be made by an independent and objective party (ie, the trustee). Having an independ - ent party who is not linked to the family to make the distribution is always better than letting the heirs do this among themselves. The clear advantage of this option is that instructions given to the trustee will not include a reference to spe - cific amounts, which will grant the trustee flexibility to make distributions based on the reserved portions determined at the time of death of a spouse. The only disadvantage of this option is that it is more costly, as there are expenses involved in the creation and maintenance of the trust. 4.3 Transfer of Partial Interest There are no taxes on capital gains in Mauritius. Transfer taxes are normally levied on the fair value of the real estate that is being transferred. This fair value is not adjusted to take into account a lack of market - ability and control. Further, transfer taxes do not apply to transfer of prop - erty as part of a succession. The majority of wealth disputes relate to forced heir - ship disputes and the reserved portions of heirs. Many citizens are not aware of how the forced heirship rules apply. Traditionally, Mauritian families tend to invest in immovable property and pass it on to their heirs, rather than structure their wealth through trusts or foundations. As a result, the majority of disputes relate to the division of these immovable properties or the division of the estate of the parents between siblings. Disputes regarding the division of estates also relate to the interpretation and/or application of wills, which often were not drafted before a notary and did not take into account forced heirship rules. These disputes almost inevitably come before the Supreme Court of 5. Wealth Disputes 5.1 Trends Driving Disputes
Mauritius by way of complaint with summons. These proceedings are, in general, lengthy. On the other hand, to date, there have been very few disputes in Mauritius in relation to trusts or founda - tions established in Mauritius. This may be because the legislation relating to trusts and foundations is still fairly recent and because families setting up trusts and foundations are typically of high net worth/ultra high net worth and have taken specialist advice prior to setting up their structures, thereby minimising the risk of future disputes. 5.2 Mechanism for Compensation In view of the nature of the types of disputes (which tend to concern the application of the forced heirship rules), the damages usually awarded to the parties are compensatory. The assets are usually sold and the proceeds of the sale divided according to the provi - sions of the forced heirship rules. There is usually no compensation in kind, but rather economic compen - sation in Mauritius. 6. Roles and Responsibilities of Fiduciaries 6.1 Prevalence of Corporate Fiduciaries Trusts It is mandatory under the Trusts Act 2001 to have a qualified trustee, which can be a licensed individual or a management company as corporate trustee. Management companies and private trustees are reg - ulated and licensed by the Financial Services Com - mission and are subject to a number of rules and regulations. Under the Trusts Act 2001, a trustee has the posi - tive duty, in the exercise of their functions, to observe utmost good faith and to act with due diligence, with care and prudence, and to the best of their ability and skill. The trustee must also administer the trust and exercise their functions strictly in accordance with the terms of the trust and only in the interest of the ben- eficiaries or in fulfilment of the purpose of the trust. Under the Trusts Act 2001, a trustee has the duty to act impartially. In cases where there is more than one
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