Barnes reinvents the Viager!
Specialist in luxury real estate, Barnes reconciles through his innovative approach the principle of life annuity and the luxury real estate sector. Its life annuity expert teams are very attentive to seniors, and at the same time very aware of the expectations of buyers of prestigious properties. Until then, the traditional life annuity was of little interest to buyers of luxury real estate, due to the often very high amounts that the annuity could reach, paid to the seller until the end of his life. The life annuity sale, occupied or free, traditionally consists of a first payment called the bouquet, followed by monthly payments which constitute the life annuity. The principle is advantageous for both parties: the buyer benefits from a discount on the estimated price of the property, more or less significant according to the age of the seller, and particularly advantageous in the case of an occupied life annuity; the seller insures a life annuity, particularly advantageous in the case of a free life annuity, as well as a roof in the case of an occupied life annuity. In the case of a free life annuity, the buyer acquires full ownership upon signing, that is to say bare ownership and usufruct. In the case of an occupied life annuity, the seller retains the usufruct during his lifetime. It is around this concept that Barnes dusted off the traditional life annuity to offer an acquisition method adapted to prestigious real estate: by proposing a dismemberment, that is to say the sale of the bare ownership only and the possibility for the seller to keep the usufruct, but only through the payment of a bouquet and without annuity.
What does the dismemberment of property consist of?
A simple operation, the dismemberment in real estate consists in separating the bare ownership and the enjoyment of a property, that is to say to dissociate the attributes of full ownership. Specifically, the notion of property is made up of 3 elements:
- The right to use the property (by living in it for example): the usus
- The right to reap the fruits of the good (in particular by renting it): the fructus
- The right to dispose of the property (by selling it or passing it on to his heirs): abuse
The right to use the property and the right to profit from it are united in the double attribute called usufruct. The abuse corresponds to bare ownership.
Dismemberment consists of the distribution of the elements of full ownership between several people, one having the usufruct, or the right of use and fructus, the other having the abuse, or bare ownership. The dismemberment ends at the end of the usufruct, the beneficiary of the bare ownership becoming full owner. In the case of a life annuity sale, the usufruct ends on the death of the annuitant (seller of the property in annuity).
The different types of dismemberment purchase
The purchase in dismemberment of property can take several forms: the purchase in simple dismemberment, crossed, or even crossed via an SCI.
It facilitates the transmission of real estate in the sense that it can allow a child to acquire bare ownership of a property and his parents to acquire the usufruct. On the death of the parents, the heir thus receives full ownership tax free, that is to say without paying inheritance tax.
It is a type of purchase that particularly concerns couples who are not married: it allows them to each buy a share of bare ownership and a share of usufruct. On the death of one of the partners, the other retains his shares of usufruct and bare ownership: he therefore retains the enjoyment of the dwelling even if heirs receive the other share of bare ownership and usufruct.
Dismemberment via an SCI
The acquisition of a cross-dismembered property may also concern the partners of an SCI, who will then each be both bare owner and usufructuary of two separate parts of the property.
The advantages of dismemberment of property
The dismemberment of property can have several interests:
It allows both the protection of the surviving spouse and the transfer of their assets to their beneficiaries, while reducing inheritance taxes. When the usufruct expires, full ownership is in fact restored free of tax.
With the dismemberment of real estate, parents can retain the enjoyment of their property by giving their children bare ownership. This anticipation of the succession is fiscally advantageous since the value of the bare ownership corresponds only to a fraction of the price of the property. During their lifetime, during the dismemberment, the parents bear the charges and taxes and retain the enjoyment of the property, which they can live in or rent.
In the case of cross-dismemberment, this is to protect a surviving spouse or members of an SCI. Likewise, the heirs are not harmed by the mechanism and the re-establishment of full ownership upon the expiry of the usufruct is not subject to inheritance tax.
The dismemberment can also be used as part of a temporary gift of usufruct, in order to allow his heirs to derive rental income from a property.
In the case of a life annuity sale, the dismembered sale with conservation of the usufruct allows the seller to receive a sum of money and to continue to earn income from his property or to live in it.
The notion of quasi usufruct
The notion of quasi-usufruct only occurs in cases where the right of use relates to a consumable good, or more precisely consumable, that is to say where the right of use is inseparable from its consumption. These can be cash, commodities, agricultural crops, and sometimes securities. In these different cases, quasi-usufruct means the right to dispose of these assets, on condition that they are returned at the end of the usufruct in equal quantity and quality. The bare owner has a right of claim that he can assert at the end of the dismemberment against the quasi-usufructuary. In other words, if the quasi-usufructuary is free to use the assets of which he has the right of use, he also becomes a debtor of an identical value vis-à-vis the bare owner. In the case of a quasi-usufruct for life, it is the estate of the usufructuary who then owes the bare owner a debt of restitution. Conversely, we can say that the bare owner has a claim against the estate of the quasi-usufructuary.