Family Business Succession: Usufruct and Bare Ownership in Limited Liability Company with Resitax

Planning Estate Succession in Family Businesses in Spain

The transfer of family assets, especially when it involves shares in a Limited Liability Company (SL), is a matter of concern for many business families. How can an orderly transition be ensured that benefits children without losing current economic control?

A key legal figure in Spain—the usufruct with reservation for parents and bare ownership (nuda propiedad) for children—offers a sophisticated and advantageous solution.

Thanks to this mechanism, succession can be planned, the tax burden optimized, and family interests efficiently protected. Below, its practical implications are explained in detail.

Usufruct and Bare Ownership in SL: Legal Keys and Application in the Family Business

In Spanish law, usufruct allows separating the use and enjoyment of an asset (such as the dividends from company shares) from its formal ownership (bare ownership).

Applied to SL shares, this means parents can donate the shares to their children (who become bare owners) while reserving the usufruct for themselves.

This way, parents maintain immediate economic control, while future ownership is transferred to their children, building an intergenerational bridge for both family and business assets.

This legal relationship is mainly governed by the Capital Companies Act (LSC) and the Spanish Civil Code.

Tax and Control Advantages in the Donation of Shares with Usufruct

Tax Optimization for Business Families in Spain

The future appreciation of the shares’ value benefits the bare owner (the child). This can reduce the tax burden in future asset transfers, optimizing long-term tax planning for the family.

Maintenance of Economic Control by the Parents

As usufructuaries, parents retain the right to receive dividends and other economic benefits generated by the shares during the usufruct period.

This ensures financial control is maintained while preparing for ownership transition.

Gradual and Efficient Asset Transition

This structure facilitates a gradual and controlled asset transfer. It allows for the incorporation of children into the family business while ensuring economic stability for the parents.

Distribution of Rights between Usufructuary and Bare Owner According to the LSC

Article 127 of the Capital Companies Act (LSC) outlines the distribution of rights:

Status of Partner/Shareholder: Belongs to the bare owner (child).
Right to Dividends: Assigned to the usufructuary (parents) and includes all distributed profits during the usufruct.
Voting Rights: Typically belong to the bare owner, but may be modified in the company’s bylaws.
Pre-emptive Subscription Rights: Assigned to the bare owner, though they may be regulated differently in the constitutive title of the usufruct.

This distribution seeks to maintain a fair balance between the parties involved.

Social Bylaws and Shareholders’ Agreements: Tools for Legal Protection

Although the LSC provides a general legal framework, social bylaws of the company allow for modifications in the assignment of rights. This is essential when adapting governance structures to meet specific family needs.

Specific protections and conflict resolution mechanisms can also be established in advance.

Additionally, shareholders’ agreements can complement bylaws through private arrangements between the usufructuary and bare owner. Proper drafting of these documents is crucial for the success of any estate planning strategy.

Liquidation of the Limited Company: Distribution between Bare Owner and Usufructuary

In the event of company dissolution and liquidation, the legal framework also governs the division between usufructuary and bare owner.

The bare owner is entitled to the liquidation proceeds.
The usufructuary may claim compensation if it can be shown that retained profits during the usufruct increased the company’s value.

This reflects the essence of usufruct: fruits belong to the usufructuary, but the value of the asset is reserved for the bare owner.

How to Implement the Usufruct–Bare Ownership Structure Successfully with Resitax

To implement this estate planning strategy with legal and tax efficiency, consider the following:

Constitutive Document of the Usufruct

It must be clearly and precisely drafted, detailing the rights and obligations of each party.

Adaptation of the Social Bylaws

It is essential to adjust the bylaws to reflect the usufruct structure and prevent future legal conflicts.

Analysis of Tax Implications

Both short- and long-term tax impacts must be assessed in the planning phase.

Integration into the Family Protocol

For maximum effectiveness, this legal structure should be integrated into a broader family business and estate planning framework.

Legal and tax guidance from professionals like Resitax ensures compliance, prevents errors, and allows for flexibility as laws or family circumstances evolve.

A Legal and Tax Strategy of High Value for Family Businesses

Donating SL shares with a reservation of usufruct is a highly effective legal tool for intergenerational wealth planning.

When structured correctly and implemented with professional support, this approach ensures the continuity of the family business and protects assets from future uncertainties.