How to go about Estate Planning?
ESTATE PLANNING SERIES
As part of our efforts to make legal knowledge more accessible, we are launching a special series on the topic of estate planning and settlement. In the coming weeks, we will be posting articles explaining the differences between estate planning and estate settlement, how to prepare for planning and settlement, and the best ways to manage an estate's assets, among other things. If you have any questions regarding the topic, please send us an email at batocabeandpartners@gmail.com and we’ll try our best to answer.
PART II - HOW TO GO ABOUT ESTATE PLANNING?
To start the process of estate planning, you must take an inventory of everything that you own. Taking inventory of your assets is significant in order to know what your assets are, the value of these assets, how much of these assets you own, and even ownership of these assets.
When you take inventory of your assets, check the existing paperwork of these assets to confirm that you remain the owner of these assets and that all the information in the titles, tax declarations, and other documentation are correct in all respects.
All of your assets should be included in your inventory for all purposes. However, people generally only limit their list and only include real properties, shares of stock, and bank accounts in their inventories. They list these assets because these are recorded in government and private registries, such as the Registry of Deeds. The transfer of these properties involve the payment of some sort of tax and it follows a procedure provided for by law. If your heirs do not go through the procedure set by law, they cannot do much with the asset except let it exist in its present state, meaning, your heirs cannot sell, lease, or mortgage the asset.
While real properties, shares of stocks, and bank accounts are covered by registries, there are some assets, however, that are not. For example, personal property, offshore real properties, funds deposited or held offshore, furniture, offshore revocable trust accounts, properties beneficially owned by you but registered in the names of other persons, receivables from debts, and other personal assets held offshore. The assets are sometimes omitted in the inventory because these can be transferred to your heirs without needing any clearance from any Philippine government agency or registry. We suggest that you do not omit these assets in your inventory so that you would have a more accurate idea regarding the size and worth of your estate. This is important because there can be no equitable and fair distribution of your net assets among your heirs and, more importantly, you cannot determine the necessary and proper taxes to be paid without having an accurate idea of the size and value of your estate.
Once you determine the total value of your estate, then you can compute the taxes due and equally divide your net assets among your heirs.
The next topic will dive a little deeper on how to list down your assets.
