El Usufruct for life It is a right to use and enjoy a property throughout the life of the person who owns it. This right confers on the usufructuary the right to use, inhabit and enjoy the assets, including the income and fruits that may be produced, without having full ownership thereof. It is also a legal figure that is often used in estate and succession planning. Finally, note that it is an effective way to protect and transmit wealth through generations.
The life usufruct is a personal right and cannot be transferred to other people. Although it can be transmitted by succession in the event of the death of the usufructuary. It is also important to note that the beneficial owner cannot damage the property or make permanent changes to it without the consent of the full owner.
It is a real right that limits the full domain of the owner in favor of who has been constituted as usufructuary. It is used quite frequently in cases of inheritance and death of the elderly.
The art. 467 of the Civil Code provides that: «The usufruct gives the right to enjoy the property of others with the obligation to preserve its form and substance, unless the title of its constitution or the law authorizes otherwise.«.
Therefore, it constitutes a real right that limits the full domain of the owner against the usufructuary, which holds powers over the property on which the usufruct has been established.
Contents
Advantages of Life Usufruct
The Lifetime Usufruct has different advantages, among which we highlight the following:
- Estate planning: The Life Usufruct can be an effective tool for succession planning and long-term heritage protection.
- wealth protection: It also allows people to protect and pass on their wealth to their descendants without having to relinquish control and enjoyment of their assets.
- Flexibility: It is also a very flexible figure that can be adapted to the individual needs and objectives of each person.
- Tax reduction: In some cases, the Life Usufruct can help reduce the tax burden on the succession. Since taxes are usually lower on usufruct rights than on freehold ownership.
- Protection against property loss: In other cases, it is an effective way to protect property against loss or seizure in case of economic or legal problems.
Features
These are some of the most important characteristics of the Life Usufruct
- Duration: The Lifetime Usufruct lasts the life of the usufructuary.
- Right of use and enjoyment: The usufructuary has the right to use, inhabit and enjoy the assets subject to the usufruct, including the income and fruits that may be produced.
- not owned: The usufructuary is not the full owner of the assets, but only has the right to use and enjoy them during his life.
- Limitations: The usufructuary cannot damage the property or make permanent changes to it without the consent of the full owner.
- personal right: It is a personal right and cannot be transferred to other people.
- transmission by succession: It can be transmitted by succession in case of death of the usufructuary.
- Responsibilities: The usufructuary has the responsibility of conserving and maintaining the assets subject to the usufruct in good condition and to replace them in case of deterioration or loss.
Finally, it is important to note that the laws and regulations on the Life Usufruct vary from one country to another. Therefore it is important to consult with a lawyer or financial adviser to find out the specifics in your jurisdiction. In addition to evaluating the specific advantages in your particular situation, to ensure that you comply with all applicable laws and regulations.
The owner of the property maintains the bare ownership. He can perform the following acts, as long as they do not alter the form or substance of the property or harm the usufructuary:
- Sale or alienation (article 489 of the Civil Code).
- Mortgage, according to article 107 of the Mortgage Law.
- Carrying out works and improvements that do not reduce the value of the property or harm the right of the usufructuary (article 503 of the Civil Code).
- Imposition of easements.
- Inspection of the state of the property assigned in usufruct.
The lifetime usufruct is a widely used solution to resolve hereditary issues in advance. It can be constituted by the owner of a property in favor of his spouse or his children, avoiding at the moment the economic burdens as heirs.
Constitution of the life usufruct
Life usufruct arises from the division of the freehold of a thing into two rights: bare ownership, which is legal ownership, and usufruct, which is the right to enjoy it.
From the point of view of duration, it is, along with temporary, one of the three possible types of usufruct. If no term is specified, it is assumed that the usufruct is for life.
The life usufruct can be established in different ways:
- On movable or immovable property, the latter case being the most common. Also on a right, as long as it is not very personal and non-transferable.
- By manifestation of will inter vivos or by prescription. That is, by the passage of time, by will or by law.
- On the total or part of the fruits of the good.
- In favor of one or more natural persons.
- Simultaneously or successively.
- In pure form or under some condition.
- In favor of a son, the property becomes inherited entirely by the son of the deceased owner.
- On inheritance, when it is constituted on all the assets that compose it.
Tax regime
If we are talking about real estate, the tax regime of the usufruct is related to the moment and manner of its creation. It affects both the owner and the usufructuary.
If it is constituted inter vivos, which is the most common case, the usufruct must be taxed according to personal income tax (Income Tax for Individuals).
Valuation of the right of life usufruct
The usufructuary must pay an imputation of real estate income each year. Article 26 of Law 29/1987 of December 18, 1987, on Inheritance and Donations Tax establishes that in lifetime usufructs it is estimated that the value is equal to 70% of the total value of the asset when the usufructuary is less than 20 years old ( 19 years). This percentage decreases as the age of the beneficiary increases, at a rate of 1% for each year older, up to a limit of 10% of the total value.
You should also analyze the Tax on Patrimonial Transmissions which is in charge of the Autonomous Communities.
The formula to apply is:
The usufruct value (U)= 90 – (e+1), or in U = 89 – e, where e is the age of the usufructuary.
The Law refers to the usufructuary who has not reached 20 years of age. Therefore, to obtain the value of a usufruct, it is necessary to check in how many units the age of the usufructuary exceeds 19 and in those units it is necessary to reduce 70%.
Applying this formula, the minimum value of the usufruct (10%) is reached when the usufructuary is 79 years old.
Rights and obligations of the life usufructuary
Understanding the right of usufruct as a lifetime assignment of an asset, whether movable or immovable, the usufructuary is subject by law to the following rights and obligations.
- You are not required to use the property transferred in usufruct, but you have the right to receive the fruits of the thing transferred in usufruct.
For example, if you inherit a home in usufruct, you are not required to live in it. And, if you inherit a farm with vines, you can keep the grapes. - You cannot assign the right of usufruct, and you have to carry out and assume the cost of ordinary improvements and repairs for the maintenance of the property.
For example, if you inherit a house for life that was in perfect condition to be inhabited, you must keep it that way. - You can carry out works and improvements, as long as they do not affect the form or substance of the property.
For example, if you inherit a one-story home in usufruct for life, you cannot build another story on top of it.
As reflected in the Civil Code, usufruct is the "right to enjoy the property of others with the obligation to preserve its form and substance, unless the title of its constitution or the law authorizes otherwise."
This right is quite common in the field of family home inheritance. although usufruct can also be established over money or shares in a company. The usufructuary must comply with some obligations such as those related to the conservation of the property, but at the same time, he has a certain freedom to be able to dispose of it as he wishes, since its enjoyment under this modality is considered part of the full ownership of the property. good. In this sense, the owner would have bare ownership that, together with the usufruct, would form full ownership.
Therefore, the usufruct limits the total domain of the owner in favor of assigning a part to another beneficiary. The latter, like the owner, has a series of powers that allow him to dispose of the property on which the usufruct has been established, but he cannot dispose of 100 percent of it. The latter prevents the usufructuary from selling the asset or reducing its value, for which the owner's consent is required.
Universal and lifetime usufruct
In the field of succession law, usufruct is a widely applied concept, especially in its modality of universal lifetime usufruct, also known as widowed usufruct. This type of usufruct is characteristic in the so-called wills "one for each other”, where both spouses grant this right to each other. This right is stipulated in article 813 of the Civil Code.
The widow's usufruct must inevitably be for life, guaranteeing the surviving spouse the right to enjoy the assets despite deciding to remarry. This type of usufruct, however, frees the beneficiary from some obligations that are normally imposed on universal usufructuaries, such as creating an inventory of assets or providing a guarantee.
The universal lifetime usufruct of the widowed spouse is defined as the right granted by law or the will of the testator, over all his assets in favor of the surviving spouse. Commonly, the so-called "caution socini”, which allows compensation to the other heirs because the spouse who receives the universal and life usufruct accesses the entire hereditary patrimony instead of the third that would legally correspond to him.
In this sense, the "caution socini» has the objective of assigning to the other heirs more than what would correspond to them as legitimate, with the purpose of respecting the universal and lifetime usufruct.
In contrast to the lifetime usufruct, we find the temporary usufruct, which, as its name indicates, is limited in time. The usufructuary of this type of usufruct can only enjoy the property during a specific period, after which the usufruct is extinguished.
On the contrary, in the case of life usufruct, the right is transferred to the usufructuary throughout his life. It only expires with his death. This type of usufruct is common when a person grants their spouse the right to access all or part of their assets, being the modality mostly used in inheritances.
Termination of life usufruct
The life usufruct can be extinguished for different reasons. Among them we highlight the following:
- Death of the usufructuary. Once the usufruct is finished, the bare owner becomes full owner of the property. It is accredited by presenting the death certificate before the Property Registry, for the cancellation of the usufruct right. On this occasion, the extinction of the usufruct is considered by unification in the same person, of the usufructuary and bare owner. However, we must take into account the legitimate portion of the heirs.
- Waiver of the usufructuary.
- Total loss of the thing object of the usufruct.
