What happens to the usufruct if the bare owner or the usufructuary dies?

Question

José Manuel Alburquerque · Accepted Answer

If the usufructuary dies, the lifetime usufruct comes to an end and is not inherited. The bare owner becomes the full owner. They normally then have to pay the “impuesto de sucesiones”, the Spanish inheritance tax, on the part they did not pay tax on when they inherited, although it often comes to little or nothing. If the bare owner dies first, their bare ownership passes to their heirs, who will have to wait until the usufructuary dies. The usufruct carries on unchanged. If the usufructuary dies The usufruct is extinguished. The usufructuary's heirs receive nothing from it, although they do inherit the rest of what he or she owned. The bare owner recovers the use of the asset and the income from it. If it is a property, it is advisable to have the usufruct cancelled at the “Registro de la Propiedad”, the Land Registry, with the death certificate and proof of having filed the inheritance tax return. For inheritance tax purposes, the bare owner paid tax only on the bare ownership on inheriting. Now they pay tax on the usufruct that is added to it, at the value it had when the first person died and not at today's value. The rules in force at that time apply, together with the part of their kinship allowance that they did not use up. Sometimes it comes to little or nothing. The return is filed within six months of the usufructuary's death. If the bare owner dies Their bare ownership forms part of their estate and passes to their heirs. The heirs pay inheritance tax on it, according to the usufructuary's age at that time. The usufructuary carries on using the asset and collecting the income from it until their death. The new bare owners cannot evict them or force them to sell. When the usufructuary dies, the new bare owners acquire full ownership and then pay inheritance tax on the usufruct part, also within the following six months. The calculation has its own rules and it is advisable to take advice on it. If it is sold beforehand If the usufructuary and the bare owners sell together, each receives an amount according to the value of their right and the usufruct comes to an end. Each pays income tax on their own gain. The inheritance tax outstanding on the usufruct is no longer payable. On the other hand, if the usufructuary renounces the usufruct or sells it to the bare owners, tax does have to be paid and it is advisable to work it out beforehand.