Wills, intestate succession, and usufruct: three concepts that are not the same
In Panamanian inheritance law, it is common to hear these three terms mentioned together, as if they were steps in the same process. They are not. Each addresses a different question: a will defines who inherits; intestate succession determines what happens when no such definition exists; and usufruct establishes the nature of a person's right to a property ,specifically, whether they may use and enjoy it or if they are also its owner. Understanding the distinction helps in better estate planning and avoids surprises when the time comes to handle an inheritance.
The Will: Intentions Put into a Document
A will is the legal instrument by which a person, while alive and in accordance with the formalities required by the Civil Code, sets out how they wish their assets to be distributed after their death. It may take the form of a holographic will (handwritten by the testator), an open will (executed before a notary and witnesses), or a closed will (submitted in a sealed envelope), in addition to special forms for specific situations, such as making a will while abroad.
Its function is simple yet powerful: as long as it exists and is valid, the law upholds the testator's wishes over the standard distribution rules established by the Civil Code. For instance, it allows the testator to favor one heir over another within legal limits, appoint a trusted executor to carry out the provisions, or bequeath assets to individuals who would not automatically be included under the law.
Intestate succession: what the law decides when the person did not.
When a person dies without a valid will or if the existing will does not cover all their assets intestate succession proceedings begin. In this scenario, there is no intent to interpret; the Civil Code (Articles 646 through 654) establishes a fixed order of heirs: first descendants, then ascendants, followed by the spouse, and finally collateral relatives. If no eligible heir comes forward, the estate passes to the municipality where the deceased last resided, in accordance with Article 692.
Intestate succession is not "simpler" than testate succession, as many assume. In practice, it tends to be more time-consuming and prone to conflict, as heirs must judicially prove their kinship and entitlement, and the case file must also be reviewed by the Public Prosecutor's Office before the judge issues a ruling on the inheritance.
Usufruct: a right distinct from ownership
Usufruct is not, in itself, a form of succession; rather, it is a real right (defined in Article 452 of the Civil Code) that grants a person (the usufructuary) the right to use and enjoy an asset belonging to another (the bare owner), subject to the obligation to preserve its form and substance. The holder of the usufruct may live in a house, collect rent from commercial premises, or reap the produce of a farm, but they cannot sell the asset or dispose of it as if it were fully their own, because ownership, specifically, "bare ownership" remains vested in another person.
Usufruct can be established in various ways: by an contract, by testamentary disposition, or by direct operation of law. It is also a common estate planning tool; for instance, parents might transfer the bare ownership of a property to their children during their lifetime while retaining the usufruct for themselves, thereby continuing to enjoy the asset even though the matter of ownership has already been settled.
How the three concepts relate to each other
The key to avoiding confusion is to remember that they answer different questions:
Who decides the fate of the assets? The will, if one exists and is valid; otherwise, the law, through intestate succession.
How are assets distributed if there is no will? According to the legal order of heirs for intestate succession.
What type of right does a person acquire over a specific asset? This is where *usufruct* comes in; it can arise in the context of a will (if the testator so stipulated) or through an act completely independent of any inheritance.
A will, for example, might grant the usufruct of a property to one person and the bare ownership to another, combining both concepts. Conversely, an inheritance can be entirely intestate without usufruct playing any role, provided none of the assets involved are subject to such a right.
Why it's worth knowing the difference
Confusing these concepts often leads to unclear decisions regarding one's estate: families who believe they have "settled" the inheritance with a verbal agreement, individuals who think that bequeathing the *usufruct* (right of use) of a home is the same as bequeathing the property itself, or heirs who discover—only during legal proceedings—that the law distributes assets very differently than they expected because there was no will.
Clear planning is the best way to ensure your estate is distributed exactly as you intend, rather than how the law dictates by default.
If you found this article interesting, I invite you to read more about why making a will can save your family years of conflict: read the next article
About the author:
Jaime Enrique Paolo Jr., a specialist in civil law with decades of experience in inheritance, succession, and other similar civil proceedings.
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