Mabini Colleges 3.
Paying necessary taxes
Daet, Camarines Norte 4. Distribution to heirs.
AE 25 Query: Can a married woman make a will without the consent of her
husband and without the authority of court? Answer: Yes. The law said
SUGGESTED HANDOUT #1 that anyone can make a will provided it meet the requirements.
Modes of Acquiring Ownership Requirement to make a will:
1. Occupation 1. Legal age
2. Intellectual Creation 2. Sound mind
3. Donation a. If silent, the law assumes that the person is sound mind
4. Succession b. If contested, the burden of proof is on the one accusing
5. Prescription c. If contested, the burden of proof is on the person who
maintains the will that the testator is in lucid interval
Transfer taxes are levied from gratuitous disposition of when he made he will
property. 3. There are properties
Transfer tax is levied from DONATION & SUCCESSION.
Taxes from donation is called Donor’s Tax Capacity to Succeed
Taxes from Succession is called Estate Tax In order to be capacitated to inherit, the heir, devisee,
Estate & Donor’s Tax is considered also as EXCISE TAX legatee must be living at the moment the succession opens, meaning
when the maker of the will dies.
ESTATE TAXATION
Query: Can a child inside a mother’s womb capable in succession?
Estate-the sum total of all property of a deceased individual. Answer: Yes, Provided it be born later.
Kinds of Succession Forms of Wills
1. Testamentary/testate-There is a last will testament
2. Legal/intestate-died without leaving a will Every must bear:
3. Mixed 1. Documentary Stamp Tax
2. Notary Public
Elements of Succession
1. Death of Decedent Holographic Will-written solely by testator with his own hand and not
2. Inheritance witnessed. Strict contents must be followed like: written, dated,
3. Successors signed by hand writing of testator
4. Acceptance
Revocation of Will
Executors- appointed by a testator to dispose property after death. Before death, a will can be revoked. Waiver or restriction is
Administrator-Appointed by court to manage the assets of decedents VOID.
Will-an act to which a person(decedent),with the formalities of law, Institution of Heir-the testator designates in his will the persons
prescribes who will be the controller or beneficiary of estate after who will succeed his property & obligations.
his/her death.
Legitime-part of testator property that cannot dispose because the
Codicil-instrument to amend the provisions in the will LAW HAS RESERVED IT FOR CERTAIN HEIRS, ESP. COMPULSORY HEIRS.
Process of Probate:
1. Collecting Decedent’s estate Compulsory Heirs
2. Liquidating liabilities 1. Legitimate Children & Descendants
2. Legitimate Parents & Ascendants ii. If transferor died without revoking it, IT IS
3. The widow or widower PRESUMED REVOKE AT THE TIME OF DEATH
4. Naturally adopted children c. Transfer under General Power of Attorney
5. Other illegitimate children
If one has NO compulsory heirs, he can dispose the property to anyone Mr. A gave lot to Mr. B. Mr. A states that if Mr. B died, he
with the capacity to succeed. can only give it to Mr. C
i. The decedent here is the donee, meaning the person
Legal/Intestate Succession-dies without leaving a will. accepting the donation. If it is under the special
power of attorney, it is not part of gross estate.
Consanguinity- persons are rooting from a common ancestor (by blood) 4. Transfer with retention of certain rights over income or
Affinity-existing during marriage property
5. Transfer for Insufficient consideration
a. Determine adequacy of consideration by comparing: FV at
GROSS ESTATE- Depends upon the citizenship and/or residence of the time if transfer and Consideration Received by decedent
decedent; all properties owned by the decedent at time of death at time of transfer
Decedent Real Property Tangible Intangible Personal b. If not enough consideration or no consideration, compare
Personal Property the Consideration received and FV at time of death.
Property c. If bona fide sale and FV at time of transfer &
Within Without Within Without Within Without consideration received is equal or greater than FV at
Citizen (RC YES YES YES YES YES YES time of transfer, no amount will be included in gross
& NRC) estate
Resident YES YES YES YES YES YES d. If the consideration received is less than the FV at time
alien of transfer, the difference between, FV at time of death
Non- Yes No Yes No Yes No & consideration received will be part of gross estate
Resident No(if there e. If no consideration is given, the FV at time of death
Alien is will be included in gross estate.
reciprocity) 6. Proceeds of Life insurance
a. Included if beneficiary is:
Estate Tax-tax on right to transmit property at time of death. It is i. Estate, administrator, executor, whether revocable
not tax on property but tax on privilege to transfer. or not
ii. 3rd person other than mentioned above and decedent
Gross Estate Includes: has power to revoke
iii. If silent, revocable
1. All properties owned by the decedent at time of death b. Not include if beneficiary is:
2. Interest in property owned by the decedent i. Other than estate, administrator, executor and NOT
3. Taxable transfers(donation mortis causa)-Decedent remains in REVOCABLE
control of the property. It is a donation made when the ii. Group Insurance
decedent is still alive but will be transferred only to donee iii. Benefits from SSS, GSIS
upon death of donor 7. Claims against insolvent persons L>A 100,000
a. Transfer in contemplation of death 8. If married, the his/her conjugal/community properties, &
i. No transfer of title to donee separate properties
ii. The donor is still the owner of property 9. Family Home FMV at time of death
iii. The donor has the power to revoke 10. Amounts received under RA 4917
iv. If donee dies first, donation is void
b. Revocable transfer
i. The transferor reserves right to amend, revoke,
alter, or terminate the term over property.
Valuation of properties:
Generally: @ FMV @ time of death
Property Valuation
Usufruct, Use, Habitation, Based on probable life of
Annuity beneficiary approved by Basic
Standard Mortality Table
Real Property FMV, whichever is higher of zonal
or assessed value
Personal Properties FMV @ time of death
Stocks listed in PSE 1. Closing price of share @
time of death
2. Average of lowest & highest
quotes @ time of death
Stocks not listed For OS=book Value
For PS=par value
Notes, A/R Discounted amounts
Transfer not subject to estate tax
1. Merger/Usufruct in the owner of naked title to the property
Ex. Mr. A, father gave Lot to Mr. C and B sons. Mr. B died.
2. Fideicommissary substitution
Ex. Mr. A transfer to B property in favor of C.
3. Transmission from first heir in favor of another beneficiary
4. All bequests, devises, legacies, & transfer to social welfare,
cultural, & charitable institutions. Provided not more than 30%
shall be used in administrative purposes
End of Handout
Next Issue: Deduction from Gross Estate
A B C D
FV at time of Transfer 500,000 500,000 500,000 500,000
Consideration received 500,000 300,000 0 600,000
FV at the time of death 750,000 750,000 750,000 750,000
How much is included 0 450,000 750,000 0
In Gross estate
