More than just distributing your hard-earned fortune, estate planning is a tool to secure your legacy ultimately to secure the people you love. It ensures a smooth predictability in passing to your heirs of your assets while shielding them from unnecessary legal battles and heavy tax burdens.
Prominent American financial advisor Suze Orman once said: “Estate planning is an important and everlasting gift you give to your family.”
What is estate planning?
Estate planning is the process by which an individual or family arranges the transfer of assets in anticipation of death. An estate plan aims to preserve the maximum amount of wealth possible for the intended beneficiaries and flexibility for the individual prior to death.
What are the tools of estate planning?
Legacy can be protected through execution of a deed of donation, last will and testament, and a tax-free exchange of a property to acquire shares of stocks in a corporation.
A donation is an act of liberality where a person freely gives a thing or right to another person who accepts it. Donation takes effect during the lifetime of the donor. For real properties, the deed of donation and acceptance of the done must be notarized.
It is subject to the payment of a 6% donors taxes. The main advantage in donating property in its current value for tax purposes is to prevent future property price increases from raising your future estate tax.
Last Will and Testament
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. Notarial will has three (3) witnesses. Holographic will is entirely written, dated, and signed by the testator.
The main feature is asset control or as to who receives the inheritance. Testator can likewise choose a guardian over the property of the children and charitable gifts to organizations and churches. He can also designate a guardian over the property of the children to manage the property under court supervision until his or her child or children reaches the age of majority. It allows the choice of a personal representative (executor) to manage the estate and pay debts.
The rate of estate tax is 6% of the value of the net estate.
Tax-Free Exchange of Property to Share of Stocks
Properties are transfer to an existing corporation in exchange of the controlling shares of stocks of at least 51% of the voting shares under the name of the person planning his estate.
Under Section 40 (C) (2) of the National Internal Revenue Code (NIRC), such exchange shall be fully exempt from capital gains tax, creditable withholding tax, income tax, donor’s tax, value-added tax, and documentary stamp tax.
For more information, you may reach us through our email address (attynarcisoreyesjr@gmail.com), or call our landline number (049-5011-720), or call our mobile number (0977-318-6192). Our office is located at 3rd Floor, Ventura Center Building, Santa Rosa-Tagaytay Road, Don Jose, Santa Rosa City, Laguna, Philippines.