An act of 22 May 2014 introduced a uniform framework for the conversion of usufruct into a sum of money or full ownership. The first conversion tables establish percentages for the valuation of the usufruct for men and women and have been set out in a Ministerial Decree of 22 December 2014. The new rules and tariffs apply as from 25 January 2015.
Conversion of the usufruct
Usufruct is the right to use goods belonging to another person and to profit from this. In return, the holder of a right of usufruct has the obligation to maintain the goods themselves. The beneficiary of the usufruct is entitled to the natural and civil fruits of the goods, such as interest generated on money, dividends on shares, the rental income of real estate, or crops in a field.
Often usufruct arises following demise. The Civil Code provides for the surviving spouse to benefit from usufruct of the entire inheritance, while the children become bare owners. In the case of legally cohabitating partners, the surviving partner also receives a right of usufruct (by virtue of the law), especially on the family home and the furniture.
Every now and then, the conversion of usufruct is requested, e.g. when the beneficiary prefers to obtain a sum of money/capital rather than continuing to use and profit from the goods. The capitalisation value of the usufruct then needs to be determined. Until recently, this valuation was done on the basis of criteria established by notarial and jurisprudential practice, such as the Ledoux tables or the Schryvers tables, at least in civil matters, as opposed to tax matters where other, legally established rates applied.
For all requests made as from 25 January 2015, the valuation of the usufruct will, as a general rule, be performed according to annually determined conversion tables set out by Ministerial Decree. The percentages set forth in those tables will apply to the sale value of the goods, while the sex of the beneficiary of the usufruct and his/her age at the time of the conversion request will be taken into account. This will, to some extent, reduce the past uncertainty, although discussions will still arise, e.g. regarding the market value of the goods.
It is important to stress that the parties' freedom of choice remains unaffected by the new conversion rules. Indeed, article 745sexies, §3 of the Civil Code (as amended by an act of 22 May 2014, published in the Official Gazette on 13 June 2014) clearly indicates that the new rules are not binding and that the parties are allowed to agree otherwise. The law also grants discretionary power to the judge in the event that the life expectancy of the beneficiary of the usufruct is clearly shorter than the life expectancy on which the statistical tables are based. This will, for instance, be relevant for a person suffering from a terminal illness. The judge will then be entitled to reject the requested conversion, or to determine other conditions under which the conversion will be granted.
The rates of the conversion tables
The first conversion tables were set out by Ministerial Decree of 22 December 2014 (Official Gazette 15 January 2015). New conversion tables should be published in the Official Gazette by the first of July each year.
The tables are drawn up with the assistance of the Royal Federation of Belgian Notaries, the Federal Planning Bureau and the Institute of Actuaries in Belgium.
New rules also apply to sale proceeds in the absence of agreement on the distribution
The new rules will also apply where the beneficiary of the usufruct and the bare owner(s) sell the good(s) together, in the absence of (prior) agreement on the division of the proceeds. However, here too, the parties remain free to agree otherwise.