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Aug 03, 2026
Louisiana usufruct law can become especially complicated when property is sold, exchanged, traded or donated. Who receives the proceeds—and how the transaction is documented—may determine whether the usufruct continues and what the usufructuary eventually owes the naked owners.
The Louisiana Third Circuit’s decision in Mitchell v. Succession of Margavio illustrates how these rules apply to real estate proceeds and depreciating assets such as vehicles.
For a general introduction to these property interests, see our article explaining usufruct and naked ownership in Louisiana.
If immovable property subject to a usufruct is sold, the usufruct continues in the proceeds only if the usufructuary directly receives those proceeds. If the naked owners collect the proceeds and then give the money to the usufructuary, it is considered a gift, not a continuation of the usufruct. For depreciating assets like cars, the naked owner cannot demand the full original value when the usufruct ends due to normal wear and tear and depreciation; both parties share in the depreciation.
Lessons From Mitchell v. Succession of Margavio
In Mitchell v. Succession of Margavio, 24-185 (La. App. 3 Cir. 11/27/24), 403 So.3d 73, a surviving spouse held a usufruct over her deceased husband’s share of former community property. Their children held the naked ownership.
The appeal addressed two transactions:
- The usufructuary and naked owners sold immovable property.
- The usufructuary traded one vehicle for another and later donated the replacement vehicle after it became worthless.
The court’s treatment of those transactions provides practical guidance for Louisiana families dealing with property subject to a usufruct.
What Happens to a Usufruct When Real Estate Is Sold?
Louisiana Civil Code Article 616 addresses the sale or exchange of property subject to a usufruct.
When the usufructuary and naked owners agree to sell nonconsumable property, the usufruct terminates as to the property sold. Subject to the parties’ agreement and Article 568.1, the usufruct may attach to money or other property received by the usufructuary.
That final point matters: who actually receives the proceeds?
In Margavio, the naked owner exercised control over her portion of the sale proceeds before turning the money over to her mother, the former usufructuary. The court concluded that the naked owner had obtained full ownership of those funds. Her later transfer to her mother was a gift—not a continuation of the original usufruct.
As a result, the mother’s usufruct did not attach to that naked owner’s share of the proceeds.
Why Closing and Disbursement Instructions Matter
If the parties want a usufruct to continue in the sale proceeds, they should address that issue before closing.
The act of sale, closing statement and disbursement instructions should clearly identify:
- The usufructuary and naked owners
- The property interests being sold
- Who will receive each portion of the proceeds
- Whether the parties intend the usufruct to continue in any proceeds
- Whether the parties have agreed to terminate or modify the usufruct
- How taxes and transaction expenses will be allocated
Article 616 provides that taxes and expenses resulting from the sale or exchange are paid from the proceeds. Those amounts are then deducted when calculating what the usufructuary may owe the naked owners at the termination of the usufruct.
The statute may cause a usufruct to attach by operation of law when its requirements are satisfied. Nevertheless, written instructions provide evidence of the parties’ intentions and reduce the risk of a later accounting dispute.
Avoid Accidentally Turning Proceeds Into a Gift
The distinction between a continuing usufruct and a gift can have significant consequences.
Suppose a closing agent distributes the naked owners’ shares directly to them. If one naked owner then decides that the surviving spouse needs the money more and turns it over, that transfer may be treated as a gift.
The naked owner should not assume that the money remains subject to the former usufruct. As Margavio demonstrates, receiving and controlling the proceeds can unite the rights of use, enjoyment and disposition in the naked owner. The original usufruct over that property has ended.
Families should decide what they intend before the proceeds are distributed—not years later when someone requests an accounting.
What Happens When a Usufructuary Trades a Vehicle?
Vehicles are nonconsumable corporeal movables that gradually lose value through use, wear and decay.
Under Louisiana Civil Code Article 568, a usufructuary may dispose of this type of depreciating movable if the usufructuary acts as a prudent administrator. If the usufructuary trades the vehicle for another vehicle, Article 568.1generally causes the usufruct to attach to the replacement property received.
If the replacement property is worth less than the property surrendered at the time of the exchange, the usufructuary may owe the difference to the naked owners when the usufruct terminates.
Therefore, the relevant comparison is not automatically the vehicle’s value when the usufruct first began. Instead, the parties may need evidence of the values of both vehicles at the time of the trade.
How Did Depreciation Affect the Vehicle Claim in Margavio?
In Margavio, the usufructuary traded a 1978 Mercury Marquis for a Peugeot. The usufruct then attached to the Peugeot.
The naked owner later sought the value of the original Mercury. However, she did not establish a difference between the value of the Mercury and the Peugeot at the time of the trade. Therefore, she could not recover the Mercury’s asserted original value merely because it had once been subject to the usufruct.
The Peugeot eventually became inoperable and was donated to a repair shop for parts. The evidence established that the vehicle had no value at the time of the donation. Because Article 568.1 measures the naked owner’s claim from a donation by the value of the donated property at that time, the court found no amount due for the worthless Peugeot.
The decision does not establish a general rule that the usufructuary and naked owners always “share” depreciation. Instead, it shows that normal wear, replacement property and value at the time of a particular transaction can determine what—if anything—is ultimately owed.
Can a Usufructuary Donate a Vehicle?
A usufructuary should not assume that the right to sell or trade a depreciating asset includes the right to give it away.
Article 568 states that the right to dispose of a nonconsumable thing does not include donation during the usufructuary’s lifetime unless that authority was expressly granted.
In addition, Article 568.1 provides that when a usufructuary donates property subject to the usufruct, the usufructuary must account to the naked owner at the termination of the usufruct for the property’s value at the time of the donation.
The authority to make the donation and the amount eventually owed are separate questions. Both should be evaluated before a usufructuary gives away property subject to another person’s naked ownership.
Records Can Determine the Outcome
Usufruct disputes often become accounting disputes. Families should preserve:
- Acts of sale
- Closing statements
- Disbursement instructions
- Cancelled checks and deposit records
- Vehicle purchase and trade-in documents
- Appraisals and valuation records
- Donation documents
- Repair records
- Written agreements between the usufructuary and naked owners
Without those records, a party may have difficulty proving who received sale proceeds, whether replacement property had a lower value or how much an asset was worth when it was donated.
For more information about ownership rights in a family home, see Naked Ownership: What Is It, and How Will It Affect My House?.
Field Law Can Help
Selling or exchanging property subject to a usufruct requires more than obtaining everyone’s signature. The transaction should reflect what the parties intend to happen to the usufruct, the proceeds and any replacement property.
Field Law helps usufructuaries, naked owners and Louisiana families evaluate their rights, document property transactions and address disputes arising during or after a succession. If you are planning to sell, exchange or distribute property subject to a usufruct, contact Field Law to schedule a consultation.
