What is life usufruct?

The life usufruct is a real right that grants a person (called usufructuary) the power to enjoy and use another's property throughout your lifeHowever, ownership of said asset is not affected, but remains in the hands of another person known as the bare owner.

This right allows you to use the property as if it were your own, obtaining the fruits and benefits it may offer, but It does not grant the possibility of disposing of the property permanently (sell, donate, or transfer). In turn, the usufructuary has the obligation to preserve the property and return it to the bare owner once the usufruct ends, usually after the owner's death.

This type of usufruct is commonly used in estate planning situations, especially in inheritances and donationsThis is a very useful tool for protecting the rights of beneficiaries while maintaining the ownership of an asset intact.

Main features of life usufruct

Being a more specific type of right, it has several characteristics that differentiate it from other forms of usufruct, some of the most relevant being the following:

• Duration limited to the life of the usufructuaryUnlike other types of usufruct, which can be temporary or indefinite, this one only lasts as long as the usufructuary is alive. Once the usufructuary dies, the right expires, and the property reverts completely to the bare owner.
• Right to enjoy the goodThe beneficiary has the right to use the property as if it were his own, which includes enjoying its fruits. This includes renting out property in the case of regular apartments, harvesting crops on properties dedicated to this type of work, etc.
• Obligation to preserve the property: As we have previously mentioned, although the usufructuary may enjoy the property, he or she also has a legal obligation to preserve it in its original condition. He or she may not damage it or make substantial modifications without the consent of the bare owner.
• May not be transferred or sold: The usufructuary does not have the capacity to sell the property or transfer the usufruct to another person, since the right will expire upon his or her death.

If you would like to know more details about the characteristics of usufruct in general, you can find more information in our post about usufruct. Also, since all these procedures can be complicated or tedious, you always have the option of Contact Aun Más Vida for advice in the process of sale of the bare property.

We also recommend you take a look at our Main post on bare ownership to get a more general view of the product. All this material can help you better understand how to manage both property rights in complex situations.

Constitution of the life usufruct

Another of the most confusing aspects of this process is the establishment of a life usufruct, which can be carried out in various ways. Below, we explain the most common ones:

1. By act of the owner's will: The full owner of a property may decide to establish a life usufruct over it in favor of a person, either during his or her lifetime or posthumously through a will. In this case, it would be granted as a life right.
2. By testamentary succession: In many cases, it is established through inheritance. If the testator wishes to ensure a person's well-being, they can grant them the usufruct of their assets during their lifetime. Consequently, the property will pass to another heir upon the death of the usufructuary.
3. For sale of bare ownership: A life usufruct can also be established when the bare ownership of an asset is sold. In this case, the seller continues to enjoy the life usufruct for as long as he or she lives, but ownership of the asset will pass to another person, usually an investor.

What taxes must be paid for life usufruct?

Of course, the legal aspects of any procedure of this nature must always be taken into account. In addition to the rights already discussed, life usufruct also entails a series of tax obligations.

These are taxes that can vary depending on different characteristics, but that always will affect both the usufructuary and the bare ownerBelow, we list the three most common types of taxes:

1. Income tax: The usufructuary must declare the income generated by the usufructuary, such as rent, product sales, or investment returns. This income is considered income and must be subject to the corresponding tax.
2. Wealth tax: If the usufruct is valued as an asset in the usufructuary's estate, the usufructuary must include it in his or her estate tax return.
3. Inheritance and gift tax: If the life usufruct is transferred by inheritance or donation, the beneficiary must pay the corresponding tax on the value of the usufruct received, which is calculated based on the usufructuary's life expectancy.

How is the value of a life usufruct calculated?

To know the value of the life usufruct it is necessary to take into account various factors such as age of the usufructuary, the duration of the usufruct and the value of the property. In general, the value is established based on actuarial tables that determine the beneficiary's life expectancy and the asset's market value. An example calculation would be as follows:

Let's imagine Pepe is 70 years old and the usufruct property is worth 100.000 euros. Using an actuarial table, it is determined that his life expectancy is 15 years, which means that The usufruct is valued based on that periodThe percentage assigned to the usufruct in this case could be, for example, 40% of the asset's value, i.e., €40.000. This calculation is crucial in inheritance and donation processes, as it determines the value of the usufruct at the time of the transfer of the right.

Termination of life usufruct

These situations, which depend on unforeseen factors, often raise questions, and the termination of a life usufruct is one of them. However, these are the most common causes:

• Death of the usufructuary: Since usufruct is for life, its duration is directly linked to the life of the usufructuary; once he or she dies, the right is extinguished.
• Property ConsolidationIf the usufructuary acquires full ownership of the property, the usufruct no longer exists. This can occur if the usufructuary purchases the bare ownership of the property from the bare owner.
• Loss of propertyIf the property in question is destroyed or lost for reasons beyond the control of the usufructuary, the right will also be extinguished, since the property over which it can be exercised no longer exists.

Differences between life usufruct and other types of usufruct

There are several forms of usufruct, and it is important to understand the differences between the life estate and the most important ones:

temporary usufruct

As its name suggests, unlike life usufruct, which lasts only as long as the usufructuary is alive, temporary usufruct has a previously stipulated duration.

Universal usufruct

Universal usufruct grants the usufructuary the right to enjoy all of a person's property, not just a specific asset, as in life usufruct. This type of usufruct is broader and can be applied in inheritance situations.

Common applications of life usufruct in inheritances and donations

The life usufruct is a widely used tool in the field of inheritances and donations, especially for protect the most vulnerable family members without losing control over propertySome common examples of its application are:

• Surviving Spouse ProtectionIn the context of an inheritance, a testator may grant a life estate to his or her spouse to ensure that he or she can live in the family property until his or her death, while the property ultimately goes to the children or heirs.
• Estate planningParents can transfer bare ownership of their home to their children, but retain the life usufruct to continue living there while they are alive.

In short, life estate usufruct is a legal concept that allows individuals to enjoy another person's property during their lifetime. This has numerous applications in inheritance and gift planning, ensuring both the well-being of the usufructuaries and the protection of the heirs' property.