Estate Tax First Week 2024 PDF

Property It encompasses all that may be the subject of ownership. The term includes not only ownership and possession but also the right of use and enjoy such property legally. The person in whom the rights, dominion or title of property is bestowed is known as the owner. Types of T...

Property It encompasses all that may be the subject of ownership. The term includes not only ownership and possession but also the right of use and enjoy such property legally. The person in whom the rights, dominion or title of property is bestowed is known as the owner. Types of Transfer Onerous Transfer  Barter  Sale Gratuitous Transfer  Donation  Succession Complex Transfer Quasi Transfers Void Transfers Modes of Acquiring Ownership According to the Civil Code Occupation Intellectual Creation Donation Succession Prescription TRANSFER TAXES Transfer taxes are taxes imposed upon the gratuitous disposition of private property. They are not taxes on property as such because their imposition does not rest upon general ownership but on the passing of the property. Kinds of Transfer Taxes: 1. Estate Tax 2. Donor’s Tax 3. Inheritance tax and donee’s tax (Repealed by Presidential Decree 69) Theories Supporting Transfer Tax 1. Benefits-received theory 2. State Partnership Theory 3. Wealth Redistribution Theory 4. Ability to Pay Theory 5. Theory of Tax Evasion 6. Tax Recoupment Theory ESTATE TAXATION Title III of the NIRC  Succession Succession is a mode of acquisition by virtue of which the property, rights and obligations to the extent of the value of the inheritance, of a person are transmitted through his death to another or others either by his will or by operation of law. (Book III, Title IV, Chapter I, Art. 774, Civil Code of the Philippines)  Book III, Title IV, Chapter I of the Civil Code of the Philippines Art. 775. In this Title, "decedent" is the general term applied to the person whose property is transmitted through succession, whether or not he left a will. If he left a will, he is also called the testator. Art. 776. The inheritance includes all the property, rights and obligations of a person which are not extinguished by his death. Art. 777. The rights to the succession are transmitted from the moment of the death of the decedent.  Book III, Title IV, Chapter I of the Civil Code of the Philippines Art. 778. Succession may be: – (1) Testamentary; – (2) Legal or intestate; or – (3) Mixed. Art. 779. Testamentary succession is that which results from the designation of an heir, made in a will executed in the form prescribed by law. Art. 780. Mixed succession is that effected partly by will and partly by operation of law. Art. 782. An heir is a person called to the succession either by the provision of a will or by operation of law. Book III, Title IV, Chapter 2, Section I of the Civil Code of the  Book III, Title IV, Chapter 2 Section 1 of the Civil Code of the Philippines Art. 783. A will is an act whereby a person is permitted, with the formalities prescribed by law, to control to a certain degree the disposition of this estate, to take effect after his death. Art. 784. The making of a will is strictly a personal act; it cannot be left in whole or in part of the discretion of a third person, or accomplished through the instrumentality of an agent or attorney. Art. 785. The duration or efficacy of the designation of heirs, devisees or legatees, or the determination of the portions which they are to take, when referred to by name, cannot be left to the discretion of a third person.  Devisee/Legatee vs Heir Heir - A person's blood Legatee - A legatee may not relatives are usually his be related to the person heirs, as well as his leaving her an item under his surviving spouse and will. For example, Max's will adopted children. Heirs leaves a car to his friend, include children, parents, Catherine. Catherine isn't his siblings, nieces and heir, as she's not married to nephews, parents, Bob or related to him by blood grandparents, aunts, or adoption, but she is his uncles and cousins. If legatee because she received someone dies without an item from him in his will. A leaving a will, state legatee may be a business, intestacy laws decide the charitable organization or inheritance order and the other agency; some states size of the shares. refer to a legatee as a "devisee."  Book III, Title IV, Chapter 2 Section 1 of the Civil Code of the Philippines Art. 790. The words of a will are to be taken in their ordinary and grammatical sense, unless a clear intention to use them in another sense can be gathered, and that other can be ascertained. Technical words in a will are to be taken in their technical sense, unless the context clearly indicates a contrary intention, or unless it satisfactorily appears that he was unacquainted with such technical sense. Art. 792. The invalidity of one of several dispositions contained in a will does not result in the invalidity of the other dispositions, unless it is to be presumed that the testator would not have made such other dispositions if the first invalid disposition had not been made. Mr Extrada, a Filipino, made a will while he was on a vacation in Hong Kong. Is the will valid? YES Mr. Extrada, Filipino, 17 years of age, made a will here in the Philippines. Is the will valid? NO Book III, Title IV, Chapter 2 Section 1 of the Civil Code of the Philippines SUBSECTION 2. - Testamentary Capacity and Intent Art. 796. All persons who are not expressly prohibited by law may make a will. Art. 797. Persons of either sex under eighteen years of age cannot make a will. Art. 798. In order to make a will it is essential that the testator be of sound mind at the time of its execution. Book III, Title IV, Chapter 2 Section 1 of the Civil Code of the Philippines Art. 799. To be of sound mind, it is not necessary that the testator be in full possession of all his reasoning faculties, or that his mind be wholly unbroken, unimpaired, or unshattered by disease, injury or other cause. It shall be sufficient if the testator was able at the time of making the will to know the nature of the estate to be disposed of, the proper objects of his bounty, and the character of the testamentary act. Book III, Title IV, Chapter 2 Section 1 of the Civil Code of the Philippines Art. 800. The law presumes that every person is of sound mind, in the absence of proof to the contrary. The burden of proof that the testator was not of sound mind at the time of making his dispositions is on the person who opposes the probate of the will; but if the testator, one month, or less, before making his will was publicly known to be insane, the person who maintains the validity of the will must prove that the testator made it during a lucid interval. Mr. Ramz, made and executed a will on September 1, 2013. On November 1, 2013, he became insane. Is the will Valid? YES Mr Ramz, who was insane as of June 15, 2013 made a holographic will on July 1, 2013. On November 1, 2013, he was cured and became sane. Is the will valid? NO Book III, Title IV, Chapter 2 Section 1 of the Civil Code of the Philippines Art. 801. Supervening incapacity does not invalidate an effective will, nor is the will of an incapable validated by the supervening of capacity. Art. 802. A married woman may make a will without the consent of her husband, and without the authority of the court. Art. 803. A married woman may dispose by will of all her separate property as well as her share of the conjugal partnership or absolute community property.  st Te s h la 1. Which of the following is not a type of succession a. Intestate Succession b. Legal Succession c. Mixed Succession d. None of these 2. Which of the following is not included as an inheritance? e. Real Property f. Personal Property g. Obligations h. None of these 3. A succession which results from the designation of an heir, made in a will executed in the form prescribed by law. a. Legal b. Testamentary c. Mixed d. None of these 4. A succession which is effected by operation of law in default or absence of a will. e. Legal f. Testamentary g. Mixed h. None of these 5. Which of the following is/are false? a. The making of a will is a strictly personal act b. The words of a will are to be taken in their ordinary and grammatical sense c. Technical words in a will are to be taken in their technical sense d. None of these 6. The invalidity of one of several dispositions contained in a will e. Invalidates the other dispositions f. Does not result in the invalidity of the other dispositions g. Both a and b h. Neither a nor b 7. Who among the following cannot make a valid will? a. A 17 year old man b. An 18 year old woman c. A 70 year old American d. Both a and c 8. Which of the following is false? e. The law presumes that every person is insane, in the absence of proof to the contrary. f. Supervening incapacity does not invalidate an effecti will. g. A married woman cannot make a will without the husband’s consent h. Both a and c End of Flash Quiz Book III, Title IV, Chapter 2 Section 1 of the Civil Code of the Philippines SUBSECTION 3. - Forms of Wills Art. 804. Every will must be in writing and executed in a language or dialect known to the testator. Art. 805. Every will, other than a holographic will, must be subscribed at the end thereof by the testator himself or by the testator's name written by some other person in his presence, and by his express direction, and attested and subscribed by three or more credible witnesses in the presence of the testator and of one another.  Book III, Title IV, Chapter 2 Section 1 of the Civil Code of the Philippines The testator or the person requested by him to write his name and the instrumental witnesses of the will, shall also sign, as aforesaid, each and every page thereof, except the last, on the left margin, and all the pages shall be numbered correlatively in letters placed on the upper part of each page. The attestation shall state the number of pages used upon which the will is written, and the fact that the testator signed the will and every page thereof, or caused some other person to write his name, under his express direction, in the presence of the instrumental witnesses, and that the latter witnessed and signed the will and all the pages thereof in the presence of the testator and of one another. If the attestation clause is in a language not known to the witnesses, it shall be interpreted to them. Book III, Title IV, Chapter 2 Section 1 of the Civil Code of the Philippines Art. 806. Every will must be acknowledged before a notary public by the testator and the witnesses. The notary public shall not be required to retain a copy of the will, or file another with the Office of the Clerk of Court. Art. 807. If the testator be deaf, or a deaf-mute, he must personally read the will, if able to do so; otherwise, he shall designate two persons to read it and communicate to him, in some practicable manner, the contents thereof. Art. 808. If the testator is blind, the will shall be read to him twice; once, by one of the subscribing witnesses, and again, by the notary public before whom the will is acknowledged. Book III, Title IV, Chapter 2 Section 1 of the Civil Code of the Philippines Art. 809. In the absence of bad faith, forgery, or fraud, or undue and improper pressure and influence, defects and imperfections in the form of attestation or in the language used therein shall not render the will invalid if it is proved that the will was in fact executed and attested in substantial compliance with all the requirements of Article 805. Art. 810. A person may execute a holographic will which must be entirely written, dated, and signed by the hand of the testator himself. It is subject to no other form, and may be made in or out of the Philippines, and need not be witnessed or notarized. Book III, Title IV, Chapter 2 of the Civil Code of the Philippines Art. 811. In the probate of a holographic will, it shall be necessary that at least one witness who knows the handwriting and signature of the testator explicitly declare that the will and the signature are in the handwriting of the testator. If the will is contested, at least three of such witnesses shall be required. In the absence of any competent witness referred to in the preceding paragraph, and if the court deem it necessary, expert testimony may be resorted to. Book III, Title IV, Chapter 2 of the Civil Code of the Philippines Art. 812. In holographic wills, the dispositions of the testator written below his signature must be dated and signed by him in order to make them valid as testamentary dispositions. Art. 813. When a number of dispositions appearing in a holographic will are signed without being dated, and the last disposition has a signature and a date, such date validates the dispositions preceding it, whatever be the time of prior dispositions. Art. 814. In case of any insertion, cancellation, erasure or alteration in a holographic will, the testator must authenticate the same by his full signature. Book III, Title IV, Chapter 2 of the Civil Code of the Philippines Art. 815. When a Filipino is in a foreign country, he is authorized to make a will in any of the forms established by the law of the country in which he may be. Such will may be probated in the Philippines. Art. 816. The will of an alien who is abroad produces effect in the Philippines if made with the formalities prescribed by the law of the place in which he resides, or according to the formalities observed in his country, or in conformity with those which this Code prescribes. Book III, Title IV, Chapter 2 of the Civil Code of the Philippines Art. 818. Two or more persons cannot make a will jointly, or in the same instrument, either for their reciprocal benefit or for the benefit of a third person. Art. 819. Wills, prohibited by the preceding article, executed by Filipinos in a foreign country shall not be valid in the Philippines, even though authorized by the laws of the country where they may have been executed. KNOW ALL MEN BY THESE PRESENTS: I, name of testator , Filipino citizen, of legal age, single/married to insert name of spouse if any, born on the ____th of ______________ , 20__ , a resident of __insert address__ , being of sound and disposing mind and memory, and not acting under undue influence or intimidation from anyone, do hereby declare and proclaim this instrument to be my Last Will and Testament, in English, the language which I am well conversant. And I hereby declare that: I. I desire that should I die, it is my wish to be buried according to the rites of the Roman Catholic Church and interred at our family mausoleum in Manila; II. To my beloved wife _____name of wife_____, I give and bequeath the following property to wit:_________________________ ; Book III, Title IV, Chapter 2 of the Civil Code of the Philippines SUBSECTION 4. - Witnesses to Wills Art. 820. Any person of sound mind and of the age of eighteen years or more, and not bind, deaf or dumb, and able to read and write, may be a witness to the execution of a will mentioned in Article 805 of this Code. Art. 821. The following are disqualified from being witnesses to a will: (1) Any person not domiciled in the Philippines; (2) Those who have been convicted of falsification of a document, perjury or false testimony. Sample Case 1. Mr. X, convicted of perjuryon April 1, 2008, was asked to be a witness in the execution of a will on November 20, 2013. Is the will valid? NO 2. Mr. X was asked to be a witness in the execution of a will on October 1, 2013. On November 1, 2013, Mr. X was convicted of falsifying documentts. Is the will valid? YES Book III, Title IV, Chapter 2 of the Civil Code of the Philippines SUBSECTION 5. - Codicils and Incorporation by Reference Art. 825. A codicil is supplement or addition to a will, made after the execution of a will and annexed to be taken as a part thereof, by which disposition made in the original will is explained, added to, or altered. Art. 826. In order that a codicil may be effective, it shall be executed as in the case of a will. Mr Testator made and executed a will on November 1, 2013. In the will, it was written that, the cash stated in his Metrobank passbook will be given to Miss Robinson. Mr. Testator opened his only savings account (passbook) at Metrobank on December 1, 2013. Is the will valid? YES. But the disposition is not valid.  Book III, Title IV, Chapter 2 of the Civil Code of the Philippines Art. 827. If a will, executed as required by this Code, incorporates into itself by reference any document or paper, such document or paper shall not be considered a part of the will unless the following requisites are present: (1) The document or paper referred to in the will must be in existence at the time of the execution of the will; (2) The will must clearly describe and identify the same, stating among other things the number of pages thereof; (3) It must be identified by clear and satisfactory proof as the document or paper referred to therein; and (4) It must be signed by the testator and the witnesses on each and every page, except in case of voluminous books of account or inventories. Mr. Ramsy made a will on November 30, 2013 indicating that his wife Mrs. X will get P2,000,000. After making the will, Mrs. X made Mr. Ramsy sign an agreement that he can no longer change or revoke the will that he made. On December 26, 2013, Mr. Ramsy revoked the will. Is the revocation valid? YES Book III, Title IV, Chapter 2 of the Civil Code of the Philippines SUBSECTION 6. - Revocation of Wills and Testamentary Dispositions Art. 828. A will may be revoked by the testator at any time before his death. Any waiver or restriction of this right is void. Art. 829. A revocation done outside the Philippines, by a person who does not have his domicile in this country, is valid when it is done according to the law of the place where the will was made, or according to the law of the place in which the testator had his domicile at the time; and if the revocation takes place in this country, when it is in accordance with the provisions of this Code. Mr. Lady George made a will on March 1, 2013 giving some of his properties to his dear friend Noelito. On November 20, 2013, he realized that he was giving too much to Noelito so he took the will from a safe deposit box, crumpled the will, torn it to shreds, and burned the will. Is this a valid revocation? YES Mr. Noelito executed a will on November 1, 2013. In the document was a disposition which stated that his Red Ferrari would go to Ms. Burns. On November 30, 2013, Mr. Noelito executed a codicil which stated that the Red Ferrari would instead go to Ms. Dette. Is the disposition in the first will revoked? Book III, Title IV, Chapter 2 of the Civil Code of the Philippines Art. 830. No will shall be revoked except in the following cases: (1) By implication of law; or (2) By some will, codicil, or other writing executed as provided in case of wills; or (3) By burning, tearing, cancelling, or obliterating the will with the intention of revoking it, by the testator himself, or by some other person in his presence, and by his express direction. If burned, torn, cancelled, or obliterated by some other person, without the express direction of the testator, the will may still be established, and the estate distributed in accordance therewith, if its contents, and due execution, and the fact of its unauthorized destruction, cancellation, or obliteration are established according to the Rules of Court. Book III, Title IV, Chapter 2 of the Civil Code of the Philippines Art. 833. A revocation of a will based on a false cause or an illegal cause is null and void. Examples: destroying whilst the testator is of unsound mind does not revoke a Will a Will destroyed by accident is not revoked if a Will is destroyed in the mistaken belief that it is invalid, useless or already revoked, the act of destruction does not revoke it Mr. Xtrada executed a will on October 1 specifying that majority of his free estate would go to Ms. X. On November 1, 2013, Mr. Xtrada executed a new will stating that instead of majority of his free estate going to Ms. X, majority would now go to Mrs. Y. On November 25, 2013, Mr. Xtrada destroyed the second will to revoke it. Is the first will revived? NO Book III, Title IV, Chapter 2 of the Civil Code of the Philippines SUBSECTION 7. - Republication and Revival of Wills Art. 835. The testator cannot republish, without reproducing in a subsequent will, the dispositions contained in a previous one which is void as to its form. Art. 836. The execution of a codicil referring to a previous will has the effect of republishing the will as modified by the codicil. Art. 837. If after making a will, the testator makes a second will expressly revoking the first, the revocation of the second will does not revive the first will, which can be revived only by another will or codicil. Mr. Lady George made a will giving Ms. Madz P 1,000,000 from his estate while Ms. Madz aimed a gun at Mr Lady George’s head. Is the will valid? No. Mr. Noelito, drunk, was making a will while Ms. Glory was dancing a sexy dance at his side, whispering in his ear “Noelito, give me P5,000,000 in your estate and I’ll give you everything”. Mr Noelito agreed. Is the will valid? NO