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The responsibilities that come with a usufruct

Personal Finance

The word “usufruct” may have popped up in property-related issues you have dealt with or read about. What is this strange-sounding thing?

Essentially, a usufruct is the right to use a property you don’t own. Adrian Goslett, the chief executive of Re/Max Southern Africa, explains it thus: a usufruct is the legal right given by the owner of a property to another person to use the property for a certain period, usually for the remainder of that person’s life.

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The person who holds the usufruct, known as the usufructuary, has the right to make use of the property and enjoy its profits and benefits, provided the property is not damaged or altered in any way, Goslett says. At the end of the stipulated period, the usufructuary must relinquish the property to the owner.

He says a usufruct would typically come into play when a man dies and leaves his home to his children but stipulates in his will that his wife has use of the property and its contents for the rest of her life or until she remarries. While the property is transferred into the name of the children, the usufruct is registered against the new title deed in favour of the widow.

“During the prescribed period, the usufructuary is not obliged to live in the house. She may let out the property and gain a rental income from it, provided the rental term doesn’t exceed that of the usufruct.”

Although the children are the owners of the property, Goslett says that, while the usufruct is in effect, they have no authority regarding how the property is used. However, they do have the right to protect their interests if they believe that the usufructuary is abusing the property in a way that reduces its value.

The children are, however, responsible for maintaining the property in a habitable state and paying for repairs. “Depending on their age or financial status, this could be a massive burden,” Goslett says. “Ideally, provision should be made in the will to cover expenses such as maintenance, insurance and rates.

“A usufruct is a way to ensure a surviving spouse such as a widow has a roof over her head and is looked after for the rest of her life. That said, those who are looking at adding a usufruct to their will should consult a professional tax consultant or financial adviser to fully understand its implications,” he says.

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