Dismemberment of property: how to optimize transmission

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Henry Royal

Published on Jan 8, 2024
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The interest in the donation of bare ownership with usufruct reserve is essentially fiscal: the reduction of the taxable base for transfer duties. But is the dismemberment of ownership a source of tax savings if we consider taxation as a whole? The dismemberment of ownership is also a source of difficulties. The bare owner awaits (hopes?) the death of the usufructuary Uncertainty about the amount of income (no income for capitalization products; usufructuary of securities deprived of dividends from reserves) Taxation at the DMTG of abandonment or renunciation of fruits Loss of management powers (agreement of bare owners for the transfer of a dismembered property; Dutreil pact: powers of the usufructuary of securities limited to the allocation of profits) Sharing of liquidity in the event of sale, except unanimous agreement… Opposition of interests between usufructuary and bare owner (the usufructuary: income; the bare owner: capital gains), therefore risks of conflicts IFI: the usufructuary is liable on the full ownership, except exceptions. Transfer tax free of charge: the donation of the NP only erases the capital gain relating to this bare ownership; it does not erase the capital gain relating to the usufruct which is taxable in the event of a transfer for consideration (sale, contribution, etc.). Most of these disadvantages are avoided when the dismemberment of ownership concerns the shares of a civil company, the statutes of which will have been correctly drafted. It is a bad idea to resort to the dismemberment of ownership to organize the governance of the company. It is preferable to resort to preference shares.

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