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Naked ownership: What is it, and how will it affect my house?

When sitting down to address succession planning, you will probably wonder what you should do with your house. It might be the most important asset you own. In Louisiana, you have the option to use two legal concepts called usufruct and naked ownership to grant someone the right to use your home after you die. Once this person dies, ownership of the home passes to someone else.

Usufruct, usufructuaries and you

Louisiana has unique succession laws, particularly when it comes to real estate. When someone passes away and leaves a house, they do not have to leave it to one person outright. Instead, they have the option of allowing one or more people to reap the benefits of the house, including living in it and collecting rent on it, while naming another person to inherit the home once the first person dies.

This practice is called usufruct. A usufructuary is the person allowed to use the home. The person who inherits the home has naked ownership of it. Our state’s usufruct legislation means that you can let someone else use your house after you die while guaranteeing that they cannot sell it to someone else.

Usufruct in action

If you own a home, incorporating usufruct into your succession plan ensures that someone you care about can live in your house. Say, for instance, your elderly parent, sibling or spouse. When they pass away, naked ownership allows someone else – for example, one of your adult children – to inherit it. This arrangement makes sure that the usufructuary cannot sell the house or leave it to a beneficiary of their choosing. You retain control over who ends up with the deed in their name. It makes an excellent way to provide for someone you love while keeping your hard-won home within the family.