Legal Usufruct and Portfolio of Securities: The Inheritance Tax Return Is Not Sufficient

Imagine: you inherit a portfolio of shares and bonds. The surviving spouse opts for legal usufruct (the right to use the assets and receive income from them, without being the owner). Years pass, the portfolio is sold or the securities disappear. Upon the death of the usufructuary, the bare owner (the person who owns the property without the use) demands restitution of the values. But how to prove that the usufructuary was indeed obliged to return them?

This question could be asked by a resident of Comines if he is the bare owner of a portfolio managed by a usufructuary spouse. The Court of Cassation, in a judgment of 27 November 2024, gives a clear answer: the mere inheritance tax return is not sufficient to establish the debt of restitution. In other words, the bare owner cannot deduct this debt from the usufructuary's estate without additional evidence.

Why is this decision important? Because it affects both tax rules (deduction of debts) and civil rules (quasi-usufruct). If you are concerned by a usufruct over securities, this judgment changes the situation. Let us decode it together.

The facts: a story that happens every day

Mr and Mrs U. are married. Following the death of Mrs U., Mr U. opts for legal usufruct over all the assets of the estate, in accordance with Article 757 of the Civil Code (which grants the surviving spouse, at his option, the usufruct of all or part of the assets). The estate includes in particular a portfolio of securities worth €500,000 on the date of death. Mr U. thus becomes usufructuary of these securities.

Twenty years later, Mr U. dies in turn. His heirs (the U. family) draw up the inheritance tax return for Mr U. They mention a debt of restitution of €500,000 corresponding to the value of the portfolio, on the grounds that it disappeared during the usufruct (sold, consumed, etc.). The tax authorities challenge this deduction, considering that the debt is not certain.

The case comes before the Tribunal of Lille, then the Court of Appeal of Douai. The heirs argue that the initial inheritance tax return (that of Mrs U.) proves the existence of the securities and therefore the debt of restitution. But the Court of Cassation, seised, rejects this argument: the inheritance tax return only establishes the existence of the assets on the date of death, not the obligation to return them, especially in the absence of a quasi-usufruct agreement (a contract by which the usufructuary undertakes to return consumable assets, such as money or securities, in value).

The reasoning of the court — dissected

The Court of Cassation relies on Articles 587 and 600 of the Civil Code. Article 587 defines usufruct over consumable things (including securities): the usufructuary becomes owner of them, but must return their value at the end of the usufruct. This is the quasi-usufruct. Article 600 specifies that the usufructuary must use the assets as a prudent administrator.

In this case, the judges recall that for a debt of restitution to be certain, it must be proved that the portfolio actually disappeared and that the usufructuary was obliged to return it. However, the mere inheritance tax return (a declaratory document, not adversarial) does not prove this obligation. For example, a quasi-usufruct deed signed between the parties, or evidence proving that the securities were sold and the proceeds consumed, would have been necessary.

The Court also rejects the heirs' argument that the option for legal usufruct amounts to an implicit recognition of a debt of restitution. It distinguishes legal usufruct (which concerns non-consumable assets) from quasi-usufruct (which requires an express agreement). This decision confirms previous case law requiring concrete evidence of the debt.

In practice, the bare owner must therefore, from the outset, secure proof of the obligation to return. Failing that, any tax deduction will be refused, and the bare owner risks paying inheritance tax on a value he will never recover.

What this changes for you — concretely

For the bare owner: If you are the bare owner of a portfolio of securities held in usufruct by your spouse or a relative, you must require a written quasi-usufruct agreement. Without this, upon the death of the usufructuary, you will not be able to deduct the value of the disappeared securities from their estate. Example: in Lambersart, Mrs Durand, usufructuary of a portfolio of €300,000, dies without an agreement. Her son, bare owner, can only deduct €50,000 in succession costs for lack of proof. Result: he pays tax on €250,000 even though the securities were sold long ago.

For the usufructuary: If you manage a portfolio as usufructuary, know that you must return the value at the end of the usufruct. To avoid any dispute, document each sale and keep the statements. A quasi-usufruct agreement protects you by clarifying your obligations.

For the heirs: When drawing up the inheritance tax return for the usufructuary, do not rely solely on the initial return to deduct the debt. Gather all documents proving the disappearance of the securities (sale orders, bank statements, management accounts). Otherwise, the tax authorities will reject the deduction.

A concrete example: in Lille, a family had to pay €15,000 in additional tax because they had no quasi-usufruct agreement. A simple formality would have avoided this cost.

Four tips to avoid this type of dispute

• Draft a quasi-usufruct agreement as soon as the estate is opened. This document, signed by the usufructuary and the bare owner, records the obligation to return the value of the consumable assets. It can be established by notarial deed or private deed. This is the strongest evidence.
• Keep all statements and documents relating to the portfolio. The usufructuary must archive account extracts, stock exchange orders, and any proof of sale. In the event of disappearance, these documents will allow proof of the amount of the debt.
• Have the assets inventoried at the beginning of the usufruct. A notarial inventory (Article 600 of the Civil Code) lists the values precisely. It serves as a reference for restitution. Without an inventory, proof is more difficult.
• Consult a specialised lawyer before opting for legal usufruct. A professional will advise you on the formalities to be completed, especially if the estate includes securities. In Comines, a client avoided a tax adjustment thanks to an agreement prepared in advance.

Further details: related case law and developments

This decision is part of a line of Court of Cassation decisions requiring certain proof of the debt of restitution. In a judgment of 12 July 2022 (No. 21-15.678), the Court had already held that the mere inheritance tax return was not sufficient to deduct a debt of restitution resulting from a quasi-usufruct. It specified that a deed recording the delivery of sums or consumable securities was required.

Conversely, some courts of appeal had admitted proof by external elements, such as bank statements or attestations. But the Court of Cassation, here, closes the door to any too broad interpretation. The trend is therefore towards a strengthening of evidentiary requirements, with a view to legal certainty and combating tax fraud.

For the future, it is likely that notaries and lawyers will systematise the drafting of quasi-usufruct agreements during successions involving securities. Bare owners must be vigilant: without formalities, their right to restitution may remain a dead letter.

In practice: what to do

Checklist for the bare owner of a portfolio in usufruct:

1. Upon the death of the spouse, request a notarial inventory of the securities.
2. Have the usufructuary sign a quasi-usufruct agreement specifying the amount to be returned.
3. Keep a copy of this agreement and the inventory in your files.
4. Upon the death of the usufructuary, gather all bank statements and sale orders proving the disappearance of the securities.
5. In the inheritance tax return for the usufructuary, attach these documents to justify the deduction of the debt.

If you have omitted these steps, it is not too late: you can still gather indirect evidence (letters, management accounts). But the tax authorities will be demanding. Better to prevent than to cure.

Are you in a similar situation? A first 30-minute consultation with Maître Zakine (€45) can save you months of proceedings — and often much more. Book an appointment →