Life usufruct: what it is – Dictionary of Economics

Life usufruct definition

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 authorize otherwise.”

Therefore, it constitutes a real right that limits the full domain of the owner against the usufructuary, who has powers over the property on which the usufruct has been established.

The lifetime usufruct entitles the usufructuary (owner in favor of whom it is constituted) to use an asset until the moment of his death.

Valuation of the lifetime usufruct right

Article 26 of Law 29/1987 of December 18, 1987, on Inheritance and Gift Tax establishes that in life usufructs, the value is estimated to be equal to 70% of the total value of the asset when the usufructuary is less than 20 years old ( 19 years). This percentage is reduced as age increases, in the proportion of 1% less for each additional year, with a minimum limit of 10% of the total value.

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 the age of 20; Then, 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.

Example

Doña Lucía, married in a marital economic regime of community property with Manuel, 45 years old, died in Madrid in the year n without a will, leaving her daughter Sandra as the only heir.

His inheritance consists of a house valued at 200,000 euros.

Don Manuel will inherit the usufruct of one third over half of the property (100,000/3) of his wife’s property in accordance with civil law.

The lifetime usufruct value attributed to Manuel will be:

89-45 (age of the usufructuary)=44% (therefore the value of the bare property is 56%).

Therefore Don Manuel inherits 44% of 33,333 (100,000/3)= 14,665 euros

Raul del Cacho Cruz, Professor of Tax Law at EAE Business School