The English word usufruct derives from the Latin roots usus and fructus, from verbs meaning to possess and to have the benefit of, respectively.
A usufruct is a right given by an owner to someone else to use the owner’s property for a limited time, usually for a person’s lifetime. The holder of a usufruct, known as a usufructuary, has the right to use (usus) the property and enjoy its fruits (fructus), but does not acquire ownership of the property, known as the bare dominium.
An example of a usufruct is where a husband leaves his home to his children but directs that his wife has the use of the house and the furniture in it for her lifetime (or some other period, e.g. until she remarries). In this example, on his death the property will be transferred into the name of the children and the usufruct is simultaneously registered against the new title deeds in favour of his surviving spouse.
The wife has the right to use and enjoy the property. She can even let it out and earn the rental income, but she cannot sell it or leave it to someone else in her will. She must ensure that the property is maintained and is not damaged in any way. The husband should leave enough money, possibly in a separate account, to ensure that the property is maintained and that his wife has enough money to pay for the rates and other property expenses.
Often, a usufruct is created to reduce the amount that the testator’s estate will have to pay in estate duty. While the children become the owners of the property, the estate duty liability is greatly reduced because the usufruct, which needs to be valued, passes to the surviving spouse free of estate duty, while the bare dominium is no longer the full value of the property but the difference between the property value and the value of the usufruct.