Family Planning in Taxation (estate planning)

Published in Daily Tribune on July 24, 2020
by: Juan Romulo R. Taleon

As one adage says, “Despair is most often the offspring of ill-preparedness.” The same goes with payment of estate taxes. Death is inevitable but if one’s estate has been comprehensively mapped-out and defined, tax liabilities and expenses will be less burdensome. This can be achieved through estate planning.

Estate planning is the management of a person’s asset base in anticipation of death. It includes, among others, the preparation and probate of a will during the testator’s lifetime, partition of assets and properties in favor of the heirs, establishment of family trusts and settlement of estate taxes. It maps out the order of succession, the amount of successional rights and the nature and objects of the testator’s bounty giving you the power to control the disposition of your assets to the extent permitted by law, even beyond your lifetime.

For estates that include family-owned corporations or businesses, the planning could include establishing rules for leadership succession, limiting the rights to transfer shares of family members, defining the criteria for family members and in-laws who want to work for, or transact with, the company, and formulating and codifying such other guidelines to provide stability and harmony for the family and the business.

It also buys peace and equanimity for family members. It distances heirs from unnecessary court litigation that tend to drag on for years, straining family relationships. It protects brothers, sisters, mothers, fathers, and even in-laws, from brewing conflicts and disputes arising from an estate’s disarray. Most importantly, it allows payment of the necessary taxes without the penalties brought about by neglect of family members who do not pay estate taxes simply for lack of knowledge on the matter.

Because of the government’s current Estate Tax Amnesty, surcharge and interest on unsettled estates are waived until 15 June 2021. Once this is over, surcharges and interest on delayed payment of estate taxes are restored and can significantly drain a family’s resources if no estate planning is done.

Although generally, a person engages in estate planning to save on taxes, the exercise can have other beneficial upshots. It can be used as a tool to resolve potentially unpleasant family disagreements by making the benefactors preferences known. Estate planning can avoid or at least minimize conflict and pave the way for the heirs to continue your legacy with relative ease amidst a kind and loving environment. After all, blood is thicker than water.

While most Filipinos still find the discussion of death as taboo, it is best that you prepare for its inevitability. By comprehensively and meticulously planning your estate as early as now, your family, your hard-earned properties, and your legacy will be protected. Having a well thought out estate plan is the real personification of love beyond death — for even when you’re no longer here, your love and legacy will still be felt by your heirs and your family’s future generations.

Atty. Juan Romulo R. Taleon is a Junior Associate of Parker Faustino Pagayatan Law Offices. Julo obtained his Juris Doctor degree from Siliman University in 2017. While in law school, he worked as an intern in the Provincial Prosecutor’s Office of Negros Oriental where he received hands-on training in criminal litigation. His practice areas include corporate law and compliance, civil, criminal and administrative litigation, taxation, agrarian reform, property law, and family law.

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