Basic concepts in estate proceedings and estate tax

Among the inescapable facts in life, something which everyone shares regardless of status, race, sex or creed, is death. A person may leave properties (or liabilities) upon death, so a discussion on the basic concepts on estate proceedings is in order.

Inheritance – Inheritance includes all the property, rights and obligations of a person which are not extinguished by his death. (Civil Code, Art. 776)

Testate Estate – An estate of a deceased person which is settled or to be settled with a valid last will and testament.

Intestate Estate – An estate of a deceased person without a will.

Will – An act whereby a person is permitted, with the formalities prescribed by law, to control to a certain degree the disposition of his estate. (Civil Code, Art. 783)

Testator – The deceased person who made a last will and testament. (Civil Code, Art. 775)

Probate – A special proceeding to establish the validity of a will. Probate is mandatory, which means that no will passes either real or personal property unless it is proved and allowed in a proper court.

Reprobate – A special proceeding to establish the validity of a will previously proved in a foreign country.

Legatee – One who is given personal property through a will. (Civil Code, Art. 782)

Devisee – One who is given real property in a will. (Civil Code, Art. 782)

Executor – The person named in the will who is entrusted to implement its provisions. (Rules of Court, Rule 78)

Executrix – A female executor.

Administrator – The person entrusted with the care, custody and management of the estate of a decedent until the estate is partitioned and distributed to the heirs, legatees and devisees, if any. (Rules of Court, Rule 78)

Administratrix – A female administrator.

Special proceedings – A remedy by which a party seeks to establish a status, a right, or a particular fact. (Rules of Court, Rule 1, Sec. 3 [c]). Among the subject matters of special proceedings are escheat and settlement of estate of deceased persons. (Rules of Court, Rule 72, Sec. 1)

Escheat – A proceeding whereby the state, by virtue of its sovereignty, steps in and claims the real or personal property of a person who dies intestate leaving no heir. In the absence of a lawful owner, a property is claimed by the state to forestall an open “invitation to self-service by the first comers”. (Republic vs. CA, G.R. No. 143483)

Estate tax – A tax on the transfer of the net estate of the decedent. (Tax Reform Act of 1997, Sec. 84)

Gross estate – The total value of all property belonging to the decedent at the time of death, wherever situated. (Tax Reform Act of 1997, Secs. 85, 104)

Net estate – Gross estate less allowable deductions and exemptions. (Tax Reform Act of 1997, Secs. 84, 85 and 86)

31 thoughts on “Basic concepts in estate proceedings and estate tax

  1. lawenthusiast

    can a person such as an heir offer his future inheritance a contribution to an entity such as
    a partnership? is that a valid contribution?

    Reply
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  3. Tina

    I am not a lawyer and I need help on my research on making my Living Revocable Trust. Is a Living Revocable Trust valid in the Philippines?
    Or only a Will is honored in the Philippine system?

    Reply
  4. Atty. Fred Post author

    Lawenthusiast, sorry I didn’t see your post. For whatever this is worth, please check Article 1347 of the Civil Code which reads in part: “No contract may be entered into upon future inherintance except in cases expressly authorized by law.”

    Tina, a Revocable Living Trust is, well, a trust, which concept is partly governed by Articles 1440 to 1457 of the Philippine Civil Code. Just to be clear, please don’t consider this as an advice on your concerns, as no legal opinion is dispensed in this Forum. Good luck with your research.

    Reply
  5. pax2006

    base on sec. 20 of Bill of Rights that no person shall be imprisoned for debt or non payment of a poll tax…

    does it mean that nobody would be imprisoned for non payment of real or property tax…

    thanks =)

    Reply
  6. Atty. Fred Post author

    Pax,

    Let’s make this more interesting. A tax is not an ordinary debt, wherein you could not be imprisoned. In general, non-payment of taxes is tax evasion, which has a criminal penalty. The exception provided in Sec. 20 is a “poll tax”, which is definitely not an income tax or, as you mentioned, real property tax. Since I understand that you’re a PolSci student and had studied the Local Government Code (or am I wrong? =), could you please tell me if a person who does not pay real property tax may be imprisoned? =)

    Reply
  7. pax2006

    Actually, we’re still studying the introduction to constitutional law and we’re focusing on Bill of Rights…

    I have no idea as what the difference between poll tax, income tax and real property tax.

    That question was being asked during our exam last week, and no result yet, if the not paying real property tax could not be imprisoned…

    Reply
  8. anna

    good day, i just want to ask if there is a penalty for not paying the estate tax immediately after the death of the owner of the property. my father died last 1993 leaving two parcel of lands, we pay the real property tax yearly but we are not awre of the esttae tax until we decided to finally sell the parcels of land this month.

    Reply
  9. jhdma5

    Situation:

    My grandfather & grandmother owned a lot & house. They had 10 children. The children grew up and some moved away. The house burned down. Another house was built on the lot by the 4 unmarried children of my grandparents.

    Questions:

    What is common and what is not common in the estate?
    Who has the right to take tenants in the house only?
    What are the Philippine statutes/laws that define these?

    Reply
  10. Nathan

    My brother, a US citizen, lived in the Philippines for ~20 years. He died October 2007 with his domicile in the Philippines. His widow was named executrix in his will. I am helping her to get a letters testamentary. We have been told that this can only be done in the jurisdiction of the deceased’s residence. We live in the US. She has emphezema and is on oxygen. Is there some way we can get the letters testamentary without having to fly to the Philippines? Thank you.

    Reply
  11. fab

    how about if the liability of the deceased is a credit card obligation? how does this get settled? does the card companies still have the rights to collect for it?

    thank you.

    Reply
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  13. divina

    can a child who was registered as a natural child by simulated birth in the birth registration certificate be considered a natural child and therefore a legitimate child and mandatory heir of the adoptive parents? Or her being a “natural legitimate” child, since it was falsified documents invalid from the very beginning? will this have any bearing on future inheritance of the property of the adoptve parents? thanks!

    Reply
  14. fairlady

    What documents are required,apart from the heir’s affidavit, for the extrajudicial estate settlement proceedings?

    Reply
  15. phil cap

    hi fairlady,

    i’m new to e-legal forum. please allow me to give you some points on your querry.

    normally, when filing an extrajudicial settlement you need the following:

    the birth certificates of the heirs and their the taxpayers identification numbers assuming all the heirs are adults

    of course you will also be needing certified true copies of all transfer certificates of titles of all lands owned and registered under dissidents name. aside from that you will also need certified copies of tax declaration of said real properties.

    for further details, the best government office to get info on this is the bureau of internal revenue where you will be filing your estate tax.

    be warned though that filing curing all the required documents is a long, time consuming, and tedious.

    you may need a lawyer or an accountant to file the estate tax return.

    have a good day.

    Reply

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