Usufruct is a legal concept that allows a person to enjoy and benefit from an asset that belongs to someone else. In the field of inheritance, this right assumes special importance, as it helps ensure the well-being of the surviving spouse or another designated person, while safeguarding the protection of the family’s estate. At GM Tax Consultancy, we have a team of lawyers and advisors specialising in inheritances who will guide you through each step of the process so that your decisions fit your needs and current regulations.
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What is usufruct?
Usufruct is the right to use and benefit from someone else’s property, without being its owner. The usufructuary, that is, the person granted this right, may take advantage of the income and profits the asset generates, such as rent or interest, but cannot dispose of it through a sale without the consent of the bare owner (the title holder). This separation of rights creates a scenario in which the asset is divided into two distinct elements: the right to use and enjoy, and the bare ownership.
Implications of usufruct in an inheritance
When an inheritance includes a usufruct, it establishes that one or more heirs may enjoy the asset without becoming its immediate owners. This is particularly common in the case of homes, where it is intended, for example, that the surviving spouse continues to live in the property or receive the rental income from it. The main implications are:
- Limitations on disposal of the asset: The usufructuary cannot sell the asset without affecting the usufruct, which means any sale transaction must take this situation into account.
- Division of rights: The rights of use and enjoyment are separated from the ownership rights, which can affect the valuation of the estate when dividing it among heirs.
- Maintenance obligations: The usufructuary must keep the asset in good condition, carrying out necessary routine repairs, while extraordinary repairs fall to the bare owner.
- Impact on estate management: The coexistence of usufruct and bare ownership can generate conflicts in the administration and management of the asset, making proper legal advice essential.
These aspects are essential for effective estate planning and to avoid disputes that may lead to litigation.
Ways of establishing usufruct
There are three main ways in which usufruct may be established in an inheritance:
- By law: Legislation can grant usufruct, as in the case of a surviving spouse, who is entitled to part of the estate as their legal share. Spanish law establishes specific percentages depending on whether there are descendants or ascendants.
- By will: The testator may stipulate in their will that certain assets are transferred in usufruct to a person of their choice. This allows the distribution of assets to be personalised according to their wishes.
- By contract: Although less common in succession, the parties may agree by contract to establish a usufruct, subject to the conditions agreed.
Each of these methods has particular implications for estate planning, making it crucial to clearly define the scope and duration of the usufruct to avoid future misunderstandings.
Rights and obligations of the usufructuary
The usufructuary enjoys certain rights over the property, but also assumes responsibilities for its maintenance:
- Rights: They may use the asset and enjoy all the income and profits it generates, such as rental income. They may also make improvements that do not alter the essence of the asset, without obliging the owner to compensate them.
- Obligations: They must care for the property, carrying out routine repairs and informing the owner about the need for extraordinary interventions. At the end of the usufruct, the property must be returned in a similar condition to when it was granted, except for natural wear and tear from use.
This balance between rights and duties ensures both parties can benefit from the property without one party excessively interfering with the rights of the other.
Types of usufruct by origin and duration
We have a detailed article on the types of usufruct if you need to explore the subject further (link). Usufruct in inheritance can be classified according to two main criteria:
- By origin:
- Legal usufruct: Established by law, commonly in the case of a surviving spouse. The law defines different percentages of usufruct depending on whether there are children, ascendants, or the family situation of the deceased.
- Voluntary usufruct: Established by the testator’s will, allowing them to designate whomever they wish to enjoy the usufruct.
- By duration:
- Lifetime usufruct: Maintained throughout the life of the usufructuary and extinguished upon their death.
- Temporary usufruct: Has a set duration or is conditional on certain events. In this case, the value of the usufruct is calculated based on the number of years remaining until its expiry.
These distinctions are essential to determine the value of the usufruct and for proper succession planning.
How the value of usufruct is calculated
Determining the value of usufruct is essential both for selling the asset and for fair distribution in an inheritance. The method varies depending on the type of usufruct:
- Lifetime usufruct: It is calculated by considering the usufructuary’s age and the value of the asset. The formula subtracts the usufructuary’s age from a base number (such as 89) to obtain the percentage applied to the value (with a minimum of 10% and a maximum of 70%).
- Example: Imagine a 60-year-old usufructuary with a property valued at €200,000. Applying the formula (89 – 60 = 29), 29% of €200,000 equals €58,000, representing the value of the usufruct.
- Temporary usufruct: A fixed percentage is applied for each full year of usufruct (2% per year), with a maximum of 70%.
- Example: Suppose a property valued at €100,000 is subject to a temporary usufruct of 4 years. The calculation would be 4 years x 2% = 8%, which translates to €8,000 as the value of the usufruct.
It is important to note that these calculations must comply with legal limits, avoiding percentages lower than the minimum or higher than the maximum established by law.
To conclude.
Usufruct in inheritance is a legal tool that balances the right to enjoy assets with the need to protect the estate for future generations. Both the usufructuary and the bare owner must understand their rights and obligations so that coexistence and asset management proceed smoothly. At GM Tax Consultancy, we offer comprehensive advice on inheritances and estate planning. Our team of specialists in law, taxation, and accounting is ready to help you structure your legacy in a way that protects both your interests and those of your loved ones. If you would like more information or need personalised advice, please do not hesitate to contact us.
Reviewed by Gerard Valldeperes Vilanova
