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Whether it is a matter of preparing an estate, protecting a spouse, or transferring an asset without immediately losing its use, usufruct occupies a central place in wealth management:

  • It is very often used as a tool for estate planning and for protecting the surviving spouse.
  • It allows the ownership of an asset (bare ownership) to be transferred to the heirs (often the children) while guaranteeing the surviving spouse (the usufructuary) the right to continue living in the family home or to receive the income generated by it.
  • The usufructuary has the right to use and enjoy the asset, but does not have the right to dispose of it freely without the consent of the bare owner.

What is usufruct?

In Swiss law, usufruct is a highly valued real right used to organize the holding or transfer of an asset. Its particular feature lies in the separation between the enjoyment of the asset and its ownership, making it possible to maintain a balance between the wishes of each party.


What is usufruct? (Art. 745 CC)

In accordance with Article 745 of the Swiss Civil Code, usufruct grants a person the right to use an asset and to collect its income, while another person holds the bare ownership.


The usufructuary may occupy the asset, rent it out, or derive income from capital. The bare owner, for their part, retains the substance of the asset, meaning its legal ownership and its long-term purpose. This allocation makes it possible to reconcile immediate enjoyment with future wealth transmission.


How is a right of usufruct established?

A usufruct may take several forms and be established in different ways:

  • by an inter vivos act, in particular through a donation or a contractual agreement;

  • by will, when a person wishes to grant the enjoyment of an asset without transferring ownership;

  • by legal succession, notably in favor of the surviving spouse, in accordance with the rules of the Civil Code;

  • by registration in the Land Register, when the right relates to real estate, in order to ensure its validity and enforceability.


The different types of assets concerned

Usufruct may apply to a wide variety of assets. It most commonly applies to the following categories:

  • real estate: apartments, houses, rental buildings;

  • movable property: vehicles, works of art, or collections;

  • capital: bank accounts, securities portfolios, or income-producing investments.


What are the rights and obligations of the usufructuary and the bare owner?

Each of the two parties plays a complementary role in order to ensure the proper preservation of the asset while allowing its use in accordance with Swiss law.


The rights of the usufructuary

The usufructuary benefits from a set of rights that constitute the very essence of usufruct:

  • enjoyment of the asset, meaning the possibility to live in it, use it, or organize its exploitation;

  • daily use, including adapting the asset to personal needs;

  • collection of income, for example rent in the case of a dwelling or interest derived from capital.

These rights must nevertheless respect the nature of the asset and must not compromise its preservation.


The obligations of the usufructuary

In return for these extensive rights, the usufructuary must assume several responsibilities:

  • routine maintenance of the asset, including ordinary repairs and preservation of its proper condition;

  • necessary insurance to cover the usual risks related to the asset;

  • payment of mortgage interest, when the real estate is encumbered by debt;

  • payment of current taxes, in particular those related to enjoyment or income generated;

  • major works, however, generally remain the responsibility of the bare owner.


The role and prerogatives of the bare owner

The bare owner retains the substance of the asset, meaning that they are its ultimate holder. However, they may neither freely dispose of it nor collect its income as long as the usufruct exists.


Their role mainly consists in ensuring the structural preservation of the asset, carrying out extraordinary works such as major renovations, and recovering full ownership upon the extinction of the usufruct.


What is the difference between usufruct and the right of residence?

Swiss usufruct is often compared to the right of residence. Although they may appear similar, they are based on distinct logics and involve very different wealth-related consequences.


Usufruct vs. right of residence: use and income

The fundamental difference between usufruct and the right of residence lies in the extent of the powers granted to the beneficiary over the real estate asset.

  • The usufructuary: the beneficiary enjoys a high degree of flexibility. They may not only use the asset personally as a residence, but also rent it out to a third party and collect rent (income). Usufruct therefore confers full economic control over the asset (without ownership).

  • The holder of the right of residence: the beneficiary has a much more restrictive and personal right. They may only occupy the dwelling for their own needs. They are prohibited from renting the asset to others or deriving any income from it.

In summary, usufruct offers greater flexibility by allowing personal use or income generation, whereas the right of residence is aimed solely at protecting housing and personal use.


Financial and tax consequences of each right

From a tax perspective, the usufructuary is required to declare the income received from the dwelling as taxable income.


The right of residence, being limited to personal use, generates no taxable rental income. Its economic value is also considered lower than that of usufruct.


For wealth tax purposes, this reduced value (based solely on the rental value of the property) helps limit the overall tax burden for the beneficiary.


In both cases, the precise tax treatment (calculation of the value of the right, wealth tax) depends strictly on cantonal tax scales.


When should usufruct or the right of residence be chosen in estate planning?

The choice between the two depends on the final objective you wish to achieve for the beneficiary.


When should usufruct be chosen?

You may choose usufruct if you wish to transfer ownership (bare ownership) to one person while guaranteeing another income or full freedom of use of the asset. This may, for example, involve protecting a surviving spouse so that they can choose to remain in the home or rent it out to supplement their retirement income.


When should the right of residence be chosen?

You may opt for the right of residence when you only wish to guarantee housing to someone until their death, without granting them any economic control or the right to collect rent.


For example, you may leave the ownership (bare ownership) of your chalet to your child, while granting a right of residence to your aunt so that she may live there free of charge until the end of her life, while ensuring that she cannot rent the chalet to third parties.


Usufruct and succession: how does it work?

Swiss usufruct makes it possible to avoid disadvantaging either the surviving spouse or the heirs, while securing the transfer of assets.


Protecting the surviving spouse

The spouse may receive the usufruct of a dwelling or part of the estate, while the children become bare owners. This approach guarantees housing for the surviving spouse, preserves the family assets, and facilitates the transition to full ownership for the heirs.


Donation with reservation of usufruct

Giving an asset while retaining usufruct allows you to transfer bare ownership during your lifetime. In this way, you retain enjoyment of the asset and its income, while gradually reducing the tax burden on your estate.


Extinction of usufruct and reconstitution of full ownership

Usufruct generally ends upon the death of the usufructuary. At that point, full ownership is automatically reconstituted in the hands of the bare owner, without any special formalities.