WE FREQUENTLY receive queries in our office from clients who want to donate property to their children as a gift but they would still like to be able to keep the use of it during their life time.
Another common question is about the possibility of helping their children to buy a property in Spain but, again, allowing the parents to have the right to use it.
In these cases, it is fundamental to understand the concept of USUFRUCTO – since it is absolutely possible to make a donation of property and reserve the right to use it, or to buy a property with our children and acquire its use.
In Spanish law this is known as the bare ownership, that is the right of ownership strictly speaking without its possession, nor its use.
The usufruct is defined in the Spanish Civil Code, in its article 467 as: the right to enjoy the property of others with the obligation to preserve its form and substance.
The holder of the usufruct or usufructo, called the usufructuary, has the right to use the thing, to receive all the fruits of it, to lease it to another person, and to transfer this usufruct right.
But the contracts signed by the usufructuary will be terminated at the end of its term: for example, the beneficiary of a lifetime usufruct, upon death means all the contracts signed will end, and the owner, will recover the full ownership of the property, that means the bare ownership and the usufruct.
The usufruct, for example on a property, could be set out in law in some cases, and in most cases by the will or agreement of the owners. It could be on just a part or the whole property, in favour of one or more people, and could be limited in time.
It is common in some wills, to appoint as heirs the children or descendants – either because it is usually tax efficient or for any other reason – and leave the‘usufruct to the spouse – in order to make sure that although the children will inherit the property, the spouse will be able to use it, including renting it, usually until their death.
And it is important to know how the right of usufruct works and understand that sometimes it can be very useful to simplify an inheritance, to protect the rights of use of a specific person to make sure they will have the continued right to use a property.
If you have any doubts about this, about the legal, tax implications of the usufruct, contact us and we will help you.
The information provided in this article is not intended to be legal advice, but merely conveys general information related to legal issues.
Carlos Baos (Lawyer)
Spanish Law firm solicitor attorney barrister.
Alicante, Denia, Costa Blanca Marina Alta
White & Baos 2016 – All rights reserved