Recently in estate planning Category

We all want to live comfortably, if not with an affluent lifestyle. But not all of us think about how to exit this life in style. Just today, I learned how that requires quite a lot of money! A family estate at Loyola Memorial Plans, for example, now costs at least P5 million complete with an air conditioned family mausoleum. Five years ago, the same lot cost P3 million, quite a big jump in price. I think it was business columnist, author and public speaker Francis Kong who said one of his favorite investments is funeral lots! You know what they say about obstetricians and gynecologists – they are never out of business. At The Heritage Park in Fort Bonifacio, a family estate costs P3.4 million – and that’s the cash price. The same lot goes up to P3.7 million if you pay in installment. A stately funeral service will start with the cost of a casket. That will set you back P50,000 to P90,000. When you are grieving, the last thing you want to do is to have to deal with financial stuff. Our Take Charge of Your Money article today says:

Consider this: nice caskets alone cost P50,000 and up, depending on the type (wood or metal). A three-day wake in a funeral home may cost P6,000 and up. There’s also the cost of embalming, food and drinks for mourners during the wake, and the cost of burial and/or crematory services. And the memorial plot or columbary space costs another P50,000 at least. Clearly, a family can expect to spend at least P100,000 for a nice decent funeral for a family member today. And since inflation is part of life, expect this amount to go up in the future. On top of coping with the loss of a family member, a family has to bear the financial burden of meeting funeral expenses too. It is then wise to set aside some money for this purpose so the family will not be so burdened in the future.

Read the rest of the article here: http://business.inquirer.net/money/personalfinance/view_article.php?article_id=97638 How about a memorial lot for a pet? :-) (Source: PDI Photo)

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 Guzman

Once 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!

Sibling squabbles are a reality of life in the Philippines – and not just in rich families. The property in question could be a small residential lot in a province somewhere, some farmland or a business even. The size and value often doesn’t matter. Ariel Martinez, a taxation and estate lawyer of more than 15 years, calls money a “blood thinner.” He said it could cause siblings to forget they grew up together. Martinez has the admirable trait of going straight for the jugular and it’s not difficult to imagine that he does as he claims: devote some time scolding clients during their first few meetings. “I couldn’t help it,” he said. “I would tell them ‘Di ba kayo nahihiya, di matatahimik sa puntod ang nanay ninyo. Even if you go to the judge now to plead your case, sasabunin din kayo nun!” But for all his no-nonsense way with words, Martinez has helped quite a lot of families come to an agreement on how to divvy up estates. Instead of waiting for the courts to have all the time in the world to decide on the legitimacy of a will, he recommends donating properties while alive. “A will is just one of the tools in advance personal planning, there are many others. Less than one percent of Filipinos write wills, even the ultra rich don’t,” he said. One of the greatest considerations in estate planning is the huge estate tax levied by the government. For estates P10 million and above, the government will require a tax payment of P1.215 million plus 20 percent of the excess. Look at the estate tax table here. By contrast, the donor’s tax is only two percent to 15 percent. Look at the tax table here. There are many cases where the estate languishes for many, many years with not a single heir benefiting from it because the tax cannot be paid – the money is tied up in the property. It’s a tough situation for families to find themselves in. A good way to get out of the situation would be to avail of the voluntary assessment of the Bureau of Internal Revenue. Applying for voluntary assessment can cancel the penalties. There’s nothing wrong with wanting to write a will too, especially if you want your assets to be distributed in a distinctive kind of way (like giving some to charity). Philippine courts accept holographic wills, meaning it’s handwritten and written in any language or dialect, or notarial where you need to sign it in the presence of three witnesses and a lawyer. An article in the Personal Finance section of Inquirer.net posted today also discusses the benefits and pitfalls of helping your children why you are still alive. The article was written in response to this question from one of our readers:

“Sorry if I sound morbid, but I’ve been thinking of what will happen to my family when I die. I just turned 60 and have four grown children, three of whom are married. Should I start distributing my assets to them? My friends have warned me against this, saying that I may end up living longer and short on resources if I give away my money so soon. -- Name withheld upon request”

Asia’s richest woman has left her wealth – she was worth $4.2 billion – to her fortune-teller, Agence France-Presse reported today. I bet my future millions in savings (optimistic, eh? :-)) that relatives of the astute, albeit quirky, businesswoman are right this moment chafing at the bit, ready to storm the poor lawyer who will execute her will. The article says:

Nina Wang, who died aged 69 earlier this month and had no children, left a legacy estimated as worth at least $4.2 billion after transforming her company Chinachem into a real estate empire. A day after her lavish funeral Wednesday, two wills she allegedly wrote in 2002 and 2006 were published separately in Next Magazine and its sister Apple Daily publication. The 2002 document said Wang's fortune would go to her charitable trust. But the later version named her personal fortune teller, Chan Chun Chuen, as the beneficiary.

Read the rest of the article here: Filipinos don’t like talking about death, unless it’s the death of someone they absolutely hate. Heck, we don’t even like to talk of illnesses. The first time I told my husband that we needed to get a good insurance plan, he asked me if I wanted to kill him. But good financial management requires us to think about death, risks, and a lot of ‘what ifs’. Wills are not just for the wealthy. To me, one of its most important purposes is to determine who will be the children’s guardians if we die. Wills can be simple documents – but they have to be in written format. Make sure you get legal advice – this is not for do-it-yourselfers. I found this very helpful website for the Philippine setting. It has a form to help you start (click here), but be sure to contact a lawyer. Wills must be dated, should be signed and witnessed. Don’t assume that your best friend or aunt perhaps will agree to be an executor or guardian for your children. Ask first, and prepare back-ups. Wills are an important part of your financial plan that could have the greatest long-term impact on your family. You may not know how well it will work – because surprise – you won’t be there to see it! That is why it is so important to do this part right.