Creating limited rights to property in your Will
Understanding the meaning and consequences of limited rights
August 08, 2024
Provisions are often included in Wills without a clear understanding of their meaning and consequences. An example would be the creation of usufructs and fideicommissums. These terms may sound complicated however, they are simple to understand. This article aims to explain what usufructs and fideicommissums are and sets out a few key features and examples.
Fideicommissum
Involves leaving an asset (for example, an immovable property) to one person (“A”), subject to the asset being transferred to another person (“B”) upon the occurrence of a certain event, usually upon A’s death.
Key features:
- A becomes the owner of the property however, this ownership is subject to the condition that ownership is transferred to B once the fideicommissum comes to an end.
- The fideicommissum is inserted into the title deed as a condition when the property is transferred to A.
- A must maintain the property and pay the rates and taxes for the duration of the fideicommissum.
- A can only sell the property if this is provided for in the Will. A and B could decide together to sell the property or mortgage it.
- A is entitled to compensation for any permanent improvements made to the property by him or her that are necessary or useful.
- If B dies before the fideicommissum ends, then A will become the unconditional owner of the property, unless otherwise provided in the Will.
Additional note: You can also create a fideicommissum over your entire estate. For example, you could leave your estate to A, subject to the condition that whatever remains of your estate upon A’s death, shall go to B.
Usufruct
Involves leaving an asset (for example, an immovable property) to one person (“B”), subject to another person (“A”) having the right to use, control and possess the property until the occurrence of a certain event, usually until A’s death.
Key features:
- A has the right to possess, control, use and enjoy the property and to enjoy the fruits of the property (e.g. rental income) however, A will never become the owner of the property.
- A cannot sell the property. A and B can decide together to sell the property, or B can sell the property on his or her own, but the sale will be subject to the usufruct in favour of A.
- A cannot mortgage the property.
- A must use the property in a proper manner and maintain it. A must also pay the rates and taxes for the duration of the usufruct, unless otherwise provided in the Will.
- A is not entitled to claim for improvements made by him or her to the property in the absence of special circumstances.
- If B dies before the usufruct ends, A does not become the owner of the property. In such an instance, provision can be made in the Will for the substitution of B with another beneficiary.
The above explanations and key features should be kept in mind when including a usufruct or fideicommissum in your Will so that you can make an informed decision regarding these limited rights. Should you require any further information on the above or assistance with the drafting of your Will, please get in touch with us.