Did I just say the “D” word? *looks over my shoulder like a paranoid scam artist (haha, sorry I couldn’t resist!)*
During the Registered Financial Planning course that I took last year, the lawyer who lectured about estate planning kept on using euphemisms like kicked the bucket, passed on, met his maker, gone under, crossed over. He just couldn’t say the word “death” and it was amusing to see his face contortions whenever he had to talk about it.
I’m not a linguist, but it’s obvious that language is a mirror image of culture and human behavior. Filipinos don’t like to talk of death – especially when someone’s on his deathbed. A financial planner that I know had to be hired by a family just to tell the old man that he was going to die soon and he had to figure out how to divide his estate for everyone’s sake.
I asked him how he was able to do it and he looked at me with professional detachment in his eyes and shrugged. “I just told him. Someone had to do it,” he said. Don’t you just love letting professionals handle the difficult stuff?
Many of us, however, will not be able to afford a professional. We need to do the planning and handle the difficult stuff ourselves. I’m pleased to say some people are actually doing that. Last week I received several emails that showed people are planning for the future. Tricia asked:
I have numerous five-year time deposits at various banks. Will these accounts be automatically transferred to my spouse and kids if I die before the accounts reach maturity? Can they withdraw without problems? What are the documents to be prepared? – Tricia de GuzmanOnce a bank knows its depositor is dead, the deposits will be as inaccessible to the person’s family as Cristina Aguilera’s hotel room number to the public. You know its there, somewhere, but you will have no way to get to it. The only withdrawals allowed are bank charges. So, what do we do? Pay first the estate tax. Prepare the documents you need to show the bank. Click here for the list of documents that you need. Sounds like a maze of rules? Some couples opt for a joint account instead…or delaying publication of the obituary and withdrawing the money as soon as possible. Let it not be said, however, that MoneySmarts recommends such an act. Ehem. The key here is that your family knows what to do when the unexpected happens. Keep a record of your bank accounts, and keep them updated and hidden in a safe place. Can we say the word “death” now? After all, it’s just another step to another kind of existence...and if you didn’t scam anyone in this lifetime, you should be at peace. *Bad typing fingers! That wasn't me! :-) * Peace!
Hello. My father is planning to transfer his house to me through a deed of sale. We have already drawn up the contract which he signed but I'm at a loss on how to go about the process of transferring it to me and my husbands name. Do you know how to go about it? I'm afraid to ask around manila cityhall since i've heard some "kwento" b4 of people being duped even by people working inside cityhall. Please help.
hi salve,
you mean if i die, my family can't get the cash even in my savings bank account? i also have money in mutual funds, they can't get that as well? whew. this is informative. thanks.
Hello Starter Boy--
You can transfer your funds to Variable life contracts & invest in any of their separate accounts (fixed income, equity, or balanced funds) which are also collective investment funds similar to (but not same as) mutual funds and UITFs.
Your beneficiaries will receive the fund/account value tax-free (under irrevocable designation) & will not form part of the your taxable estate.
Another advantage is that in the event of your death, if the fund performed not too well, or the value is lower than 125% of your total investments (before charges), your beneficiaries are assured of getting 125% of your total invstments (or the actual value, whichever is higher.) Not so with mutual funds or UITFs, wherein if you had invested say for example 1M, which at the time of your death, had a marked-to-market value of 800K, your beneficiaries will get 800K, less estate tax due pa.
jsalamat--
Since u were already married when your father gave u the house, i think you have the option of putting it under your name only and not make it conjugal property, that is, kung gusto mo lang naman.
Your father may also want to consider a deed of donation in favor of deed of sale if donor's tax is lower than capita gains tax.
Also, I trust your father's healthy coz BIR can contest that the transfer was done in contemplation of death. When this happens, mado-doble ang taxes coz the house will form part of your father's taxable estate. In computing for estate tax, the house naman will enjoy a maximum deductible of 1M kung primary residence yun ng dad mo.
By the way, your dad can prepare the fund for his estate tax by purchasing life insurance, which will give him great savings. To illustrate, he may use 5 or 10% of his estate now for his future estate tax thru life insurance...or his beneficiaries may use 20% of the estate to pay for estate tax. Problem is, if there is no cash, beneficiaries will be forced to sell properties at a loss. Hence, estate shrinkage.
Compare the different costs and see under which scheme is most beneficial.
(complete da sentence)
Nobody wants to talk of dying, and yet…
WE'LL ALL DIE ANYWAY! :D
Hi Salve I'm writing you from Los Angeles :) those scam blogs are really buzzing, eh?
jsalamat--
kulang pala yung sinabi ko...if u want ur dad's house to be ur exclusive property, u have to prove that u purchased the house using your exclusive mioney. Kaya better na siguro if by deed of donation na lang. Then perhaps thru a conjugal tax split donation. By the way, did u get married before or after Aug.3,1988?
angie v -
i got married after 03aug1988. we made a deed of sale na since the capital gains tax is lower. thanks.
Pls advise where to enroll for the Registered Financial Planning course.
Thanks.
how do you minimize taxes transferring lots and buildings to your heirs? would donating them early be the best choice? how about placing all your assets in a foundation owned or managed equally by all the heirs?
Deciding at the death bed is what most people do but it is better to decide before hand and get a will prepared. Our possessions has to be passed onto our kith and kin and surely we wouldn't want to see them at war with each other because of our wealth. So best is to hire a financial advisor and start the legal processes of passing on or legacy. And by the way I liked your sense of humor "...and if you didn’t scam anyone in this lifetime, you should be at peace..."
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