Understanding dismemberment

The principle behind dismemberment is splitting full ownership of an asset between two distinct parties enjoying usufruct and bare ownership. Usufruct gives its holder the right to benefit from the asset and receive income from it, such as rent from real estate or dividends from shares. The “usufruitier” also has the right to sell or rent the property to a third party. Bare ownership refers to the property and the right to dispose of the asset at the end of the usufruct period. During this period, the bare owner can neither use the property nor receive income from it. However, once the usufruct period expires, full ownership is transferred to him/her.

Common scenarios

Dismemberment of properties to optimize heritage management. For example, a parent can transfer bare ownership of a residence to his children while retaining usufruct. This enables him to continue living in the property or benefiting from rent while preparing for its transmission to the heirs. Dismemberment of a SCPI (“Société Civile de Placement Immobilier” or Property Investment Company) to optimize taxation: the investor can acquire bare ownership of shares in the SCPI, with the management firm entrusted with finding a counterpart (to acquire the usufruct). This enables the investor to reduce the tax he pays on income from a property as compared to a full ownership investment, and he will recover usufruct depending on the duration of the dismemberment he has chosen.

Advantages of property dismemberment: Optimization of the tax burden, by separating usufruct from bare ownership, dismemberment allows one to share out income and charges between the parties advantageously in terms of taxation: to facilitate transmission by offering an efficient solution for planning the handing down of heritage: diversification of investment strategies, as dismemberment can in fact be applied to various types of assets; real estate, securities or shares in companies.

In conclusion, asset dismemberment is a heritage strategy both flexible and efficient, offering advantages in terms of both taxation and heritage management.

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