SENSIBLE INFORMATION
USUFRUCT AND FIDEICOMMISSUM EXPLAINED
By Debbie Jacobs, Senior Estate Administrator- Independent Executor & Trust.
WHAT IS A USUFRUCT?
A usufruct grants the holder( of the usufruct) a right of use over property for a defined period, but not ownership. The ownership resides with the ultimate owner and their interest is known as the bare dominium. A responsibility is placed on the usufructuary( person to whom the usufruct is granted) to preserve the property for the ultimate owner.
Example: A husband leaves his fixed property( the bare dominium) to his son, with a usufruct to his wife.
In this example, the wife will be able to reside upon the property, or to receive the rental from the property while she resides elsewhere. She still has a responsibility to maintain the property for the son, as well as pay the rates and taxes.
One of the most popular reasons for usufructs is to protect both the usufructuary and bare dominium holder as he or she cannot alienate the property without the consent of the bare dominium holder. An example would be a wife leaving her property to her husband with usufruct to her mother who has been living with them to ensure that the mother will not be left destitute if there is not an amicable relationship between the husband and his motherin-law.
WHAT IS A FIDEICOMMISSUM?
A fideicommissum is whereby a benefit, usually fixed property, is bequeathed to one person( fiduciary) subject to the condition that on the occurrence of a specified event or the fulfilment of a specified condition, usually the death of the fiduciary, that the inheritance, or part thereof, is to pass on to another person.
The difference between a usufruct and a fideicommissum is that, with a usufruct, the first beneficiary is not the owner of the property. He or she simply has the right to use and enjoy it, and the second beneficiary is always the owner, whereas with a fideicommissum, the first beneficiary owns the property for a period of time before the second beneficiary becomes the next owner.
Example: You leave your farm to your child, subject to the condition that when he or she dies, the farm will go to his or her child. When that child dies, the farm belongs to the next generation. It is important to note that a fideicommissum limits the transfer of immovable property to three generations. The third generation thus acquires this immovable property free of such restrictions.
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sensible finance Mar17