The usufruct for life is a joint interest in a property that allows the party that owns the usufruct, known as usufructuary, to use and enjoy the property for life. The interest of the usufructuary ends immediately after his death and the property is transferred to the designated owner in the deed or in the testament. The lifetime usufructs, in their majority, are constituted as tools of patrimonial planning, with the purpose of avoiding the process of succession, or like tools of planning of the health insurance, to protect the home of an old patient.
Understand what is the purpose of a lifetime usufruct. Typically, lifetime usufruct refers to a property-related transaction, such as a house, in which the owner sells or delivers the property to his children (or someone else) but maintains the right to live in the home until his or her death.
The person who sells the house but maintains an interest in life is called the usufructuary.
The person (or persons) who receives the house after the death of the usufructuary is called the joint owner.
Analyze the benefits of lifelong usufruct. There are several reasons why a person constitutes a lifetime usufruct. These include:
- The owner wants to prevent their children from going through the process of succession. By constituting a lifetime usufruct, this procedure is avoided and, upon the death of the usufructuary, the joint owner immediately becomes the owner of the property.
- The right to increase the tax base is obtained. This means that when the government calculates the taxes on the patrimony, it will be considered the value of the property at the date of the death of the usufructuary and not the value that it had when it acquired it. Normally, since its acquisition, the value of the property increases considerably and, consequently, the tax owed at the time of its sale is much higher. By constituting a lifetime usufruct, a father could significantly reduce the capital gain on which his son must pay taxes.
- Lifetime usufruct can also be useful to meet the requirements for access to a health care program, such as Medicaid (in the United States), which limits the amount of assets you can own if you want help paying for a nursing home. The legal rules regarding certain medical assistance programs are very complicated and it is better to contact a lawyer specialized in trusts and estate planning or a specialist in laws related to the elderly to help you make this decision.
Consider the disadvantages of a lifetime usufruct. Before constituting a lifetime usufruct, it is important that you understand and evaluate its drawbacks to the possible benefits. These drawbacks could include:
- It is very difficult to sell a property subject to a lifetime usufruct. Although you retain the right to live in your home, when you establish a lifetime usufruct, you renounce the right to sell or mortgage it without the consent of all the owner nodes. If they reject the sale agreement, you cannot sell the property.
- The legal problems of the property owner could affect the property. Since the owner knots have legal interests in the property, in case of financial problems, a levy could be imposed on the property while the usufructuary is still alive. Although claims can affect property, the usufructuary cannot be forced to abandon it.
- The lifetime usufruct can affect your ability to receive a subsidy to pay for a geriatric residence or home care. If you constitute a lifetime usufruct, you may have limitations, or be ineligible, to receive government assistance through health care programs for up to five years.
Hire a lawyer. The states have different rules related to lifelong usufruct and there are complicated consequences, such as the possibility of being ineligible for medical assistance programs, which could affect you significantly. If you are considering constituting a lifetime usufruct, talk to a lawyer, so you can understand all the risks and the benefits. There are several ways to find a lawyer, which include:
- References from a friend or relative. If someone you know has hired a lawyer specializing in trusts and estate planning or in laws relating to seniors, you can ask if I would recommend it. The recommendation of a person of confidence who has had personal experience with the lawyer is a good starting point.
- The local or state bar associations. Often, these institutions provide the referral service of lawyers within your area. Through the bar associations, you can check if a complaint has been filed against your potential lawyer. The United States Bar Association (ABA) has compiled a list of resources, divided by states, that can direct you to lawyer reference sites, as well as contact information for state bar associations.
Write the deed of life usufruct. It is possible that each state has different requirements so that a lifetime usufruct is valid. You must locate the state codes to review the corresponding law and look for the phrase “lifetime usufruct”. In general, for a lifetime usufruct deed, the following is needed:
- The date on which the deed was written.
- The name of the parties that constitute the usufruct for life and its addresses.
- The name of the usufructuary and his address.
- The address and legal description of the property subject to the lifetime usufruct.
- A statement that makes an express reservation of the lifetime usufruct. For example, the statement could say “The usufruct for life over the property described above is expressly reserved for the usufructuary and his assignees. During the natural life of the usufructuary, he will enjoy the ownership, possession and use of the property, as well as the income, income and utilities that it produces. “
- A notary must certify both the document and the signatures of all parties.
It constitutes a lifetime usufruct by testament. You can also constitute a usufruct for life by testament, which means granting a life interest on your property to a part once you die. For example, if you have remarried but you want the property ultimately to pass to your children, not to the relatives of your new spouse, you can grant the latter a lifetime usufruct and after his death, the property will go directly to your parents. children.
- You must clearly state that the property will go to one of the parties for the rest of your life and then be transferred to the other party, when the first beneficiary dies. This must constitute a lifetime usufruct.
- It is best to talk with a lawyer to make sure that the phrasing, both will and the lifetime usufruct, meets the legal requirements of the state for this type of documents.
Registers the usufruct for life by writing. If you constitute a lifetime usufruct through a deed, you must register it to be valid. You must locate the registry office of the town or city where the property is located, usually in the cadastral office of the locality (keep in mind that this could be different in your country).
- Perform a search on the Internet with the name of your town or city and the phrase “record a deed”. Through this search you will get the contact information of the cadastral office.
- Call the registry office and find out what steps you should follow to properly record a life usufruct deed.
Understand the obligations and rights under the lifetime usufruct
Keep the property. Since the usufructuary has the exclusive lifetime use of the property, he also has obligations as a result of said usufruct. Your essential obligation is to maintain ownership. In general, the usufructuary must:
- make the necessary repairs in the house;
- maintain property insurance;
- pay all property taxes; Y
- pay mortgage fees.
Perceive the benefits of the property. The usufructuary has the right to receive all the income and profits generated by the property. If you rent the property, you have the power to collect the rent and the profits.
Sell the interests. Unlike the usufructuary, who cannot sell the remaining property or interest, the owner may be allowed to sell his remaining interest in the property, even before the lifetime usufruct ends.
- In general, the possibility of selling the remaining interest during the lifetime of the usufruct for life must be exposed in the legal document that constitutes the lifetime usufruct.
- In addition, the owner knots can sell the property with the authorization of the usufructuary.