Here in Louisiana, we have a unique form of property ownership known as a Usufruct. A usufruct is an ownership right in property that allows the owner to “use” and profit from the property, however a usufruct cannot determine what happens to property after termination of the usufruct right. Usufructs are seen most often between spouses when one spouse passes away. With a usufruct, the surviving spouse has the right to use the deceased spouses property for the remainder of their lives or until they get remarried depending on the circumstances. After the surviving spouse dies, the property subject to usufruct then passes automatically to individuals known as the “naked owners” (children of the deceased are most often the naked owners of property subject to usufruct).
A usufruct can be left to a surviving spouse as a part of your will or it may be through intestacy if you pass away without a will. Depending on the wording of your will or the nature of the usufruct, the usufruct could be very broad or very limited. When a usufruct is broad, the person holding the usufruct right has full discretion and power to sell, donate, or otherwise dispose of property subject to usufruct without any approval by the naked owners, however the value of property sold must ultimately pass to the naked owners upon termination of the usufruct. When a usufruct is narrow, the rights of the usufructury are really limited to only the right to use and profit off of property, and sometime a person holding a usufruct must post security for the naked owners to ensure that they will not waste the assets subject to usufruct. Under limited usufructs, to sell or dispose of property subject to usufruct, the usufruct holder must get approval from the naked owners.
After the usufruct has terminated, the person holding the usufruct or their estate is accountable to the naked owners for the value of the property subject to usufruct. The determination of this value varies depending on the type of property.
If you are interested in learning more about your usufruct rights I encourage you to read more of my posts regarding usufruct or you can call me at (504) 274-1980 or email firstname.lastname@example.org.
- Chris Kane, Louisiana Estate Planning Attorney with The Rabalais Law Firm