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Estate Planning 101: How Planning Today Can Save Your Family Headaches in the Future

by: John Patrick F. Ingles

(09 December 2022)

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To most Filipinos, family comes first. Their aspirations in life are typically centered on family. Filipinos work hard to ensure a better life for the family. They desire to earn well and to acquire property to not only provide the daily needs of their families, but also to provide them financial security. However, a common pitfall among Filipinos is the lack of planning, specifically, estate planning. 


Without estate planning, you may find yourself in any of these unfortunate situations – your hard-earned wealth and assets will go to unintended beneficiaries; the intended heirs may be caught off-guard by the enormous taxes they need to pay to legally inherit the assets; there are disputes among  family members because of the lack of a will. If you wish to avoid these and many other issues, now is the time to get started on your estate plan. 


Now, you may think that you have plenty of time left to think about the future. However, if the pandemic has taught us anything, it’s that life is fleeting and no one is invincible. Nobody can predict when their time would be up, so we should, in fact, plan well in order to protect one’s hard-earned assets and wealth, and put one’s affairs in order through a process known as “estate planning”. 


Estate Planning is planning in advance, naming the intended people or organizations that would receive your property after you die, and taking steps now to ensure these plans are smoothly carried out in the future. 


Estate Planning can be simple or complicated, depending on the assets that form a person’s estate and the size of his/her family. But no matter the size of one’s estate, there are similar aspects that have to be addressed when preparing an estate plan. Below are some aspects to be considered when one decides to establish an estate plan:


Property of the Estate


Property is defined as all things which are or may be the subject of appropriation[1]. Simply put, property is absolutely anything that is owned by a person.


Property may either be real or personal[2]. Real property includes land, a house, a building, a condominium and those mentioned under Article 415 of the Civil Code of the Philippines. Personal property includes shares of stock in a corporation, bank accounts, insurance policies, vehicles, and even jewelry. 


All the property owned by a person at the time of his or her death are the assets that form part of his or her estate, and said assets of the estate would eventually be passed on to the heirs or beneficiaries.


You must have a complete and clear picture of what you own. This can be done by making an inventory of your assets.


An inventory of the assets must answer the following:


  • What are your assets?

  • Is there documentary proof of ownership of the assets in your name? 

  • How much or what percent of these assets do you own (in case of co-ownership)?[3]


A list of your assets, with the necessary information and the details of their locations, are critical in estate planning. Without the collected  information, valuable time will be wasted looking for the assets and the necessary documentation that goes with them[4]


For example, when executing the inventory for real property assets, list down and provide the following information: Property Type, Transfer Certificate Title Number, Location, Classification, Registered Names of the Owners, Total Area Covered, and Annotations, if any, on the Title.


It is not enough that you make a list of the real properties of your estate. One must also secure and keep on file corresponding copies, or if possible certified true copies, of the following: Certificates of Titles, Tax Declarations, Official receipts on Real Property tax payments, Transfer Tax receipts, and Bureau of Internal Revenue (“BIR”) Certificate Authorizing Registration, of the immediately preceding transfer of the property.


On the other hand, for personal properties you must list down and provide, among others, the following information:


  • Shares of Stock: Name of Company, Registered Stockholder, Type of Share, Number of Shares, Par Value per Share, Current Book Value per Share, and the Location of the Stock Certificate. You may also request, from the Corporation you invested in, a Certification that would indicate the exact number/s and type/s of shares you own;

  • Bank Accounts: Name of the Bank, Branch Address of the Bank, Account Number/s, Type of Account, Registered Account Holder/s, and the Currency of the Account/s; and

  • Motor Vehicles: Make and Model of the vehicle, Color, Engine Number, Chassis Number, and Plate Number


You must also secure photocopies of the documents that establish proof of ownership of the above-mentioned personal properties, and keep them on file. 


Every time additional assets are acquired, update your inventory of assets. Furthermore, trusted family members should have access to said inventory. This will spare the heirs the trouble of collecting information about the assets in the event of one’s untimely death. 


Family Composition


While listing assets is an important part of the estate planning process, it is equally important to know who the legal heirs are.


Establishing a clear picture of the person’s family relations is essential. These family relationships play a critical role in setting up an estate plan. 


An “heir” is a person called to the succession either by the provision of a will or by operation of law[5]. In the Philippines, certain heirs known as the “compulsory heirs” are given priority and a definite share in the inheritance. These compulsory heirs cannot be disregarded in the distribution of the assets of an estate.


By listing family members and creating a family tree, the compulsory heirs of an estate would come to light. A family tree will paint a clear picture of the heirs and the various relationships that govern them. 


Heirs and the relationships between each one of them affect how they inherit from the estate. These different relationships will be the basis of who gets what and how much that heir would be receiving out of the estate.


Transfer of Assets


With the inventory of assets and the family tree in order, what now? How will these assets be transferred to the heirs of the estate owner? 


There are several ways ownership over property can be transferred. In terms of succession, ownership may be transferred through testamentary sucession, legal or intestate succession, or a mix between the two.[6]


Testamentary succession occurs when, upon a person’s death, the assets that form his or her estate is passed on to the heirs through a last will and testament[7]. The owner of an estate may choose to execute a will, that must be in accordance with the form prescribed by law, which would serve as the basis for transfer and distribution of the assets of his or her estate. Transfer through a will is subject also to the legal requirements that govern the rightful share of each and every compulsory heir of the estate.


If, on the other hand, a person passes away without executing a will, legal or intestate succession will take place.[8] In the absence of an Extrajudicial Settlement among heirs to the estate, the law takes charge on how the estate is to be distributed.


Mixed Succession comes into play when the last will and testament fails to completely dispose of a person’s properties. 


Estate Taxes 


On 19 December 2017, the Tax Reform for Acceleration and Inclusion (“TRAIN”) was signed into law. The TRAIN made several amendments that affected the National Internal Revenue Code of 1997. Among the provisions amended were the provision covering the payment of “estate taxes”.


The TRAIN law now implements a flat tax rate of six percent (6%)  based on the value of the net estate[9].  The law also eliminated medical expenses, judicial expenses, and funeral expenses as acceptable deductions[10]. The TRAIN law further raised the Standard Deduction allowed to Five Million Pesos (Php 5,000,000.00). Further, there is an added deduction for a Family Home equivalent to its current fair market value up to Ten Million Pesos (Php 10,000,000.00) provided that if its current fair market value exceeds Ten Million Pesos (Php 10,000,000.00), the excess shall be subject to estate tax[11].


These are just some of the salient points that cover taxes to be paid when settling your estate or when, upon your passing, your estate’s assets are to be transferred. 




While we hope we have helped demystify estate planning for you and have shed light on its importance, you will surely encounter complexities which you will navigate better through the help of a legal counsel. 


A competent legal counsel will surely guide and help you understand the intricacies of the law, and help execute the necessary documents required to carry-out your estate plan. Legal counsel will definitely help in translating the relationships between your heirs and provide the  valuable information on who should receive what and how much each and every heir must/would receive from your estate. Furthermore, guidance of competent counsel is necessary in the proper execution of a will, and thereafter to process the distribution, payment of the appropriate taxes, and eventual transfer of assets to your heirs and beneficiaries. 


They say that today is all we have as tomorrow is not guaranteed. Give yourself and your loved ones the gift of peace of mind, take action now to secure the future of your loved ones. Be prepared. Have an estate plan.


John Patrick "JP" F. Ingles assists with estate planning and estate settlement matters for ILC Law. You can read more about JP here and contact him here.

Read more articles and the disclaimer here.


[1] Civil Code of the Philippines, Art 414

[2] Id. 

[3] Maria Victoria Rotor-Hilado, A Well-Ordered Estate: Organizing your Assets and Paper work Prior to State Planning or Death) (2017) 

[4] Id.

[5] Civil Code of the Philippines, Art 782

[6] Id. Art 778

[7] Id. Art 779

[8] Id. Art 960

[9] Tax Reform for Acceleration and Inclusion, (TRAIN), Republic Act No. 10963, Section 22 (2018) 

[10] Id., Section 23

[11] Id.

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