Here's an example that came through our office recently: Dad died leaving Mom the lifetime usufruct of his estate, and Dad named their four children as naked owners. Dad's estate included a home. After Dad died, Daughter quit her job to move in with, and take care of, Mom. Mom now wants Daughter to own the home when Mom dies.
In the past, it would have been impossible for Mom to structure her estate so that Daughter would own the home when Mom dies. Now - if Dad's Will is structured right - Mom can.
New Louisiana Law Permits Usufructuary To Donate Real Estate and Investments Over Which He or She Has Usufruct
Based on a new Louisiana Law that took effect on July 2, 2010, a usufructuary can donate assets over which he or she has a usufruct, but only if that right is expressly granted.
If, in the above example, Dad had written a Will which provided that not only did Mom have the usufruct, but she also had the right to donate assets over which she had a usufruct, then Mom could have donated the home to Daughter during Mom's lifetime.
This is a major change to the law. All married couples and others who have bequeathed a usufruct in their Will should consider re-writing your Will.
Not only does this power allow Mom to donate assets over which she has a usufruct, but this power may enable Mom to do some much needed federal estate tax planning, and also long term care nursing home Medicaid planning after Dad's death.
What Happens If a Usufructuary Donates Assets Subject to Usufruct?
If a thing subject to usufruct is donated by the usufructuary, the usufructuary is required to pay the naked owners at the termination of the usufruct the value of the thing as of the time of the donation.
In the above example, let's say the home was worth $200,000 at the time Mom donated it to Daughter (they should get it appraised at the time of donation), then when Mom dies, Mom's estate owes the four naked owners $200,000 - regardless of the value of the home at the time that Mom dies.
When you work with us to establish your family's legacy, we will be asking you whether you want your spouse (or other usufructuary) to have this control over your assets when you are gone. I predict that most new Last Wills will include this language since most married couples want their surviving spouse to have "control" over assets they leave to their spouse.
Note that your existing Last Will is not going give your spouse this powerful authority to donate, because it is a new concept just enacted this year. If you want your spouse to be able to donate assets subject to usufruct, then you must write a new Will (or amend your old one) to EXPRESSLY include this power to donate.
We currently serve Louisiana residents through our Baton Rouge, Mandeville, and New Orleans offices. If you are married and you'd like your spouse to have the authority to donate assets over which he or she has a usufruct, then let us know. It's easier to set up than you think and it may be the most important legal document you ever sign.
Paul A. Rabalais, President, The Rabalais Law Firm