Usufruct and Inheritance

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13 Responses to “Usufruct and Inheritance”

1. urufish on June 25th, 2007 1:35 pm

   A superbly researched piece.. the examples are clear.. I had no idea any state was based on roman code.. great work..

   In the case of disinheritance, (far more common in the north, than here), where you want to bequeath a property to the church or some other non profit/not for profit organization, this is the preferred mechanism I’ve been told.

2. Brazzie on June 25th, 2007 1:49 pm

   Thanks Irv. This is as dry of a subject as it gets, and I doubt it will interest many readers. But I thought it was important enough that it was worth running the risk of putting a few people to sleep.

3. urufish on June 25th, 2007 2:42 pm

   Isn’t there a rule like this. The more important something is, the less interesting it is.. until the sh.. hits the fan.
   I would have laughed this off in 1983, when I bought the house on the hill. Now, that most of my assets are here and I have a daughter of marriagable age, it’s not a laughing matter any more.

4. fama on June 26th, 2007 9:46 pm

   Hi Brazzie and others,

   My father is a retired lawyer and I grew up listening about nuda propiedad (naked properties) and all that. It was commonly used in my family and was never a problem. There was even an instance in which the usufructuary wasn’t blood related and not really interested in using it and we bought the person out.
   Anyway, what I actually wanted to let you know is that my father mentioned to me inheritance will be determined by the law of the state in which you were married. If you were not married in Uruguay, Uruguayan inheritance law won’t necessary apply to you.
   Also, if you are married in Uruguay, unless you have done a separation of assets (something like a standard prenup) everything acquired during the marriage (considered common property) is divided in half. So, your house will go 50% to the surviving spouse and 50% to the children.
   But I also need to add here the disclaimer that I am not a lawyer and may have misunderstood, after all, who listen to his/her father?

5. roberto on June 26th, 2007 9:47 pm

   If the couple live in one house jointly owned and one spouse dies, the surviving spouse has the right to live in the house untill he/she dies, this is automatic, nothing needs to be done. The other inheritors cannot sell this house. If the couple owned other houses, those other houses are treated different.

6. Brazzie on June 27th, 2007 6:45 am

   Fama, thank you for the additional info. It would be interesting to get confirmation about the applicability of the inheritance law. My understanding is that all UY assets fall under UY law. I’ll need to confirm this.

   Roberto, you are right, that protection exists, but is not airtight. If the spouse has other assets, he/she can be evicted from the home.

7. urufish on June 27th, 2007 10:26 am

   Brazzie, all Uruguayan assets fall under Uruguayan law. For instance, bank accounts, cars, properties, even stocks. I prefer to think of it under Uruguayan jurisdiction. Sort of the same, but not quite.

   I think when Roberto refers to other houses, he means those for which usufruct hasn’t been used. You can use usufruct on as many properties as you want to. Although I’ve never heard of it being done, perhaps you can use it on automobiles also. That would be neat.

   It would be interesting to see if you could apply it to investments (held in Uruguay). One could argue the ‘usage’ of the money means the issuer intended for the recipient to receive the benefit of the interest or appreciation of the ‘asset’. To me, that would allow a Uruguayan husband (this is a macho country), to ensure his wife could live the remainder of her life out comfortably keeping the income they had when he was alive.
   Practically speaking, if that isn’t so, and children are entitled to 50% of the survivor’s estate (under Uruguayan jurisdiction), that’s probably why Uruguayans (with significant financial assets) keep them outside the country.

8. fama on June 27th, 2007 10:21 pm

   All, thank you for all the clarifications. I just called my father for further explanations about how a marriage performed in another country could affect inheritance and this is what he told me.
   He has been retired for more than 10 years so he may not be up to date with the latest changes in inheritance law but he says that each circumstance is different and need to be looked separately.

   For simple cases such as a coule married in Uruguay with children and properties in the country, he pretty much described the inheritance prospect the same way Brazzie and Urufish have been describing in their comprehensive articles and notes.

   His point is that even though the assets in Uruguay fall under Uruguayan laws, a particular circumstance such as a property of a couple married in the US with children in the US and a possible will in the US may be taken into account during a litigation and needs to be reviewed under International laws. So, basically his take on the topic is that law is not a mathematical thing and for every law there is an interpretation and exceptions that may apply to cases where international laws may collide.

   And for that, like in any other country, there are mechanisms to take care of the loved ones you think will not be fairly treated by Uruguayans inheritance law, by taking certain provisions while you are still alive.

9. fama on June 28th, 2007 10:15 am

   And I forgot the simplest reason why the place of marriage may matter when it comes to property.

   When you get married in Uruguay, you get 2 choices when it comes to assets:
   1) Do nothing. You and your spouse become a ¨sociedad conyugal de bienes¨ where everything acquired after marriage (with some exceptions, such as inherited assets or assets acquired before marriage)is equally owned regardless of the name in the title of the asset.
   2) Opt out by filing ¨separación de bienes¨

   So, my father´s opinion is that at the time of ¨sucesión¨ or divorce of a couple married outside Uruguay, the marriage laws of the place where the marriage took place, may be analyzed to see whether the marriage has ¨sociedad conyugal¨ or ¨separación de bienes¨ when it comes to distribute properties and assets.

   He never had any case like this during his years in practice but he says he doubts Uruguayan law will force any foreign marriage under ¨sociedad conyugal¨but again he advices to seek a lawyer´s opinion for every particular case.

10. Brazzie on June 28th, 2007 10:36 am

    Thanks Fama for the great info. I think this discussion is very important.

    I now realize that there are enough complexities related to this issue that one should consult with a lawyer in Uruguay to make adequate plans to cover one’s particular situation.

    I think this is complex enough that it may require a lot of thinking and planning, before springing into action.

11. moustach on July 6th, 2007 11:27 am

    When we discuss assets does UY law divide between real (houses and land) and personal property (everything else including stocks bonds)?

    Personal property are normally things found in the will because they do not require titles or ownership. Most disputes after death occur over ownership issues thus sometimes relegating a spouse to a child’s part or a division of the property by some formula.
    The usufruct would be a “life estate” under common law.
    moustach

12. Brazzie on July 6th, 2007 11:43 am

    I read a good part of the Inheritance rules in the Codigo Civil Uruguayo and I saw no distinction between the two concepts (other than a provision that allows the spouse to automatically keep the main life residence in usufruct, provided he/she does not have other assets).

    If I understood it correctly, even if you placed the property in the name of your spouse, 50% of it would still be considered an asset of the deceased spouse. However, this is not true if you marry in Uruguay with an explicit declaration of separation of assets, which is not the default. I don’t think this can be done after you are already married in Uruguay.

    If any reader has more details on this subject, please chime in.

13. urufish on July 9th, 2007 10:30 pm

    I’ll have a go at this again…

    Although there was discussion earlier about the ‘possibilities’ of a marriage outside the country affecting the disposition of those assets upon death, it’s not likely, (as in NO).

    Why? Because at least one of the expats spent considerable time investigating this specific issue with well respected experts here. The short answer… the Uruguay inheritance laws apply, no ifs, ands buts..

    That doesn’t mean one (or more) could spend a considerable sum of money filing challenges… but the bottom line, as expressed by current experts on this matter is as stated above. No.

    You either use Usufruct to protect the surviving spouse’s usage of those assets during her/his remaining lifetime OR you use a more inventive/creative solution to ‘disinherit’ one or more beneficiaries.

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