I thought my tears have all dried up. But as I feel the warm large wet drops against my cheeks, again, I wonder, when will this all end? Looking at Jake and Julius across the courtroom, I felt a sudden lump in my throat. Oh, how I love them so much. If only they knew that. When they were growing up, I was their best friend. They would come to me to play, climbing their favorite tree house, running barefoot at a mudslide they created when it rained and even hiding them from their father’s wrath when they dropped his beloved pen, a Montblanc.
I wish they have remained as children. As I look at their eyes, I can see some hint of sadness or so I hope. But when our eyes meet, I can no longer see the children that they were. I see hatred and jealousy, I wish this will all end soon.
Linda, is a former Nanny of Jake and Julius, who married their father, Manolo, 20 years her senior. Manolo, a wealthy man with 500 Million worth of estate died a year ago of prostate cancer. He left without leaving a last will and testament. Half of his fortune was left to his third wife, Linda including half of the family home. Half of the fortune will be shared by his two sons, Jake and Julius. Jake and Julius contested this, with much urging from their wives who claimed that they witnessed that Linda abused their father-in-law and “terrorized” him. They contested in court to invalidate the Linda’s claim to the family home, which Jake’s and Julius’ wives would like to have as their own.
Most people do estate planning with only one objective in judgment, which is, to avoid estate tax or only lessen it. Candidly talking, after scrutinizing and studying estate planning under the Estate Planning guru, Atty. Angelo Cabrera, one of the leading Estate Tax Lawyers in the country, I discovered that there is more to it than just tax avoidance or estate taxation.
Let me define first, what Estate Planning really is:
Estate planning is the detailed and systematic study of the personal and financial affairs of a person to help him adopt and carry out a plan, for the disposition of his properties and earnings that can give him and his family maximum benefit and satisfaction.
Like the story above, Improper or No Estate Planning can result to:
1.Conflict between heirs/ Strained relationship between relatives
Let me give you a local news:
“Mag-amang pulitiko, nag-away dahil sa mana.” – Pilipino Star Ngayon, December 3, 2002
2. Some Conflicts can lead to family feud that could last for generations and even worse, these conflicts can even lead to crimes among blood relatives
“Magsasaka pinatay ng sariling kapatid dahil sa mana”
“Nephew stabs aunt over inheritance matters” – Phil Daily Inquirer 2014
“School principal kills brother over land feud” Philstar 2014
3. Shrinkage of Estate
This is where Estate tax comes in, in this article by the Philippine Star last 2013 says it all.
BIR to focus on Estate Tax, eyes P50B by 2016. – Philstar 2013
They are really serious now in collecting estate taxes from the heirs of the deceased person. BIR even launched the Project R.I.P. which links up with all institutions, public and private, to access and secure records of the decedent and serve notice to heirs to file a return and pay the estate tax due.
If you think they are not that serious about this, think again, here is one latest news just this August:
Fernwood Gardens heir sued by BIR over P35M unpaid Estate Tax – Inquirer, August 2015
4. Problems with Premature transfer, like loss of property, loss of control of property of the owner and many others.
More on this: “Giving your Wealth too soon? How will that hurt you too?”
In summary, let me enumerate on why do problems arise?
- Problems arise because people have inadequate knowledge on Philippines laws governing estate taxes, either they don’t know or they don’t care to know.
- Some estate owners are given wrong advice from unqualified individuals that don’t know what they are talking about.
- Dying without a Last Will and Testament.
- Some estate owners have a very wrong notion that, “I have built this wealth; it’s up to them (heirs) to subdivide it.” With this kind of mentality, you are surely setting up your family to war.
- The wrong belief that Estate Planning is just for the very rich and the very old. In fact, estate planning should be considered early in the wealth building/creation and updated yearly to be able to adapt to increasing wealth. It might be too late later on. Life insurance, one of the most effective and simplest tools used in estate planning might not be applicable anymore due to health and age reasons of the estate owner.
Stating everything above, for my conclusion, I believe that the real benefit of Estate Planning is because of LOVE.
The very reason we plan for proper division and distribution of our wealth is because of our LOVE for our family. We want to uphold the peace and love of your family towards each other. We don’t want the wealth that we have built will be the cause of conflicts amongst our children, or even the children of our children.
“A good man leaves an inheritance for his children’s children” Proverbs 13:22
- With improper or lack of planning the wealth that you have built instead of becoming a blessing will become a curse for your family.
- With proper planning, your love for your family will transcend even after you are gone for generations to come, and they will thank you for the wealth that you have built for them.
“Estate Planning is not only about protecting your wealth when you shall have built one. It is also about protecting your family while building your wealth.” A.M. Cabrera
Jake and Julius are walking hurriedly besides each other. Their heads are down, they did not bother to see that they are walking on a path with graves of unknown people on their feet. Their faces are downcast with tear marks that dried up in their faces. Finally, it is over. Mama Linda gave up her claim to the Family home. They should be happy, but why are they not?
Jake thinks of his childhood. He loved Mama Linda so much that he regarded her as his own mother. And he knows that it is also true with Julius. How many times they have wanted to withdraw and stop the legal proceedings, but did not try to. He felt bad and sad that they have to go through this with her. Holding in his hand a white envelope with the letter Mama Linda left for them, he read:
Jake and Julius,
My sons! It has been an emotional turmoil between us during these previous years and I only wanted to keep the family home because I no place to go and I would like to cherish my last days in the house I called home for the past 20 years and believe it or not. I want to keep both of you close to me since I know my days are numbered. It is never true that I abused your father, I love him so much, although I don’t know if you will ever believe me. It does not really matter now. I give you everything in both of your names. May you share it peacefully, I love you both, and nothing has changed.
Your Mama Linda.
Jake and Julius look at the grave in front of them, it was their fathers’ and beside it, will be the place where they will put their Mama Linda’s, whom they come to believe was their father’s greatest love. Yes, the house and all the fortune are theirs, but they did not imagine that Mama Linda has to take her own life just to end the useless fight. The feeling of emptiness crept in again, in their hearts they pray that Mama Linda would forgive them.
“You can avoid jealousy and hatred with one stroke of the pen.” Gerald P R Sacks
Do you want to have a personalized Estate Plan? Contact me here!
Do you want what you are reading, and you want more? Subscribe here for free!
Helping you plan,
Your Estate Planner
Read more here:
This is the part 5 of the series on Estate Planning 101:
- Part 1: What is Estate Tax and How it can hurt you even After Death?
- Part 2: Estate Tax Settlement Options: What to do to Protect your Wealth?
- Part 3: What to do to Protect and Conserve your Wealth?: Part 3 of Estate Planning 101
- Part 4: Giving your Wealth too Soon? How will that hurt you too?
Latest posts by Pinky De Leon-Intal, MD, RFC (see all)
- Say Goodbye to Chronic Lifestyle Diseases (Hypertension, Diabetes, Cancer, Gout, etc.) with Right Food and Right Water - 23 May, 2023
- Embracing Superpowers: A Mom’s Journey as a Doctor, Professor, and Financial Consultant - 19 May, 2023
- Celebrating the Power of Women: Honored by Philippine Daily Inquirer - 17 May, 2023
Hi Dr. Pinky – You mentioned that if the bank has knowledge of your death, your partner/spouse will not be able to withdraw from your account, same goes with your other investments like stocks, bonds and among others. Does this include Insurance? What about investment with insurance products being offered by insurance companies such as; Manulife, Prulife and Philam?
Thanks
Diana
No, only bank accounts, and pure investment type products like stocks, mutual funds and Uitf.
I’m curious, what if the heirs (sons/daughters) never bothered to pay for estate tax? Will there come a time that the land titles owned by the deceased would be worthless? Meaning, the market value would be equal to the tax payable?
I only know that no one can sell the property since the owner is already deceased.
As of now, yes. The estate tax increases 20% every year it is not paid. Why I said as of now? Because, there are changes happening in the estate tax laws, they are changing it. Let’s see what will happen in the months/years to come.
I’m curios, if the death occured on 2017 but the heirs have not filed & paid the estate tax until now… Will the TRAIN law be applied or not?
No, Train law is from 2018 onwards.
Hi Dra. Just wanna say thank you so much for all of the efforts you put in in making more people like me to be well informed. I learned a lot. I just stumbled to your site by accident while looking for explanations regarding VUL.- and now I am binge reading your endless blogs. Surely worth the time. I bookmark you page in my PC. More power to you. Godbless.
P.S. I was emotionally hit by your sad stories. Hope it won’t happen to me
Thank you so much for your kind words sir. 🙂
My friend died in Dec. 2010. Her children all living int the USA , sold their house and lot to me. They made me give 20% an earnest money in Feb. 2018. because their Atty needs to settle the Title and Estate tax ( Title is lost). Feb 25, 2020 I had a meeting with their Atty. Their Atty wants me to shell out – out of pocket for the estate tax and P 100, 000.00 to be given to the care taker to get moving out of the house. Also, we have an agreement that cpotal gains and transfer of title will be charged to me I am worrying if the Atty might charge the estate tax expenses to me or there may be other expenses that I cannot get out any more,
The estate tax should be paid by the heir of the deceased. It should not be passed to you unless you agreed to that. Better if you can get another opinion from another lawyer.