tax estate 1.1

• Exclusions from Gross Estate


  • The merger of usufruct in the owner of the naked title
  • The transmission or delivery of the inheritance or legacy by the fiduciary heir or legatee to the fideicommissary
  • The transmission from the first heir, legatee or done in favor of another beneficiary, in accordance with the desire of the predecessor (special power of appointment)
  • All bequests, devises, legacies or transfers to social welfare, cultural and charitable institutions
  • War Damages, Benefits from US VA, SSS and GSIS Benefits
• Usufruct


  Pertains to the right of use and the fruits thereof
• Usufructuary


  Owner of the naked title
• Fiduciary Heir


  In trust and confidence. Has the obligation to: a. Preserve the property b. Deliver the property in the conditions and terms prescribed in the testator's will to the fideicommissary
• Fideicommissary


  Receives the property from the fiduciary heir
• Usufructuary may use and enjoy the property whilst a fiduciary heir must preserve the property
• First Heir


  Has no power or control over the estate, hence excluded. This is as opposed to general power of appointment.
• Condition for exclusion of bequests, devises, legacies or transfers to social welfare, cultural and charitable institutions: Not more than 30% will be used in administrative purposes
• SSS and GSIS benefits are exempt from all kinds of taxes (VAT, ITAX, ESTATE, DONORS, ETC)
• Included in Gross Estate or not?

  • Proceeds from life insurance, third person is irrevocably designated as beneficiary - No
  • Proceeds from life insurance, third person is revocably designated as beneficiary - Yes
  • Proceeds of life insurance, the beneficiary's designation is not clear - Yes
  • Proceeds of life insurance, administrator of the estate is irrevocably designated as beneficiary - Yes
  • Proceeds of life insurance, executor of the estate is revocably designated as beneficiary - Yes
  • Benefits received from SSS, third person is irrevocably designated as beneficiary - No
  • Benefits from GSIS, third person is revocably designated as beneficiary - No
• Basic Formula in computing Estate Tax


  • Gross Estate
  • Less: Ordinary Deductions (LIT, VUT, Losses, Indebtedness, Taxes unpaid, Vanishing Deduction, Transfers for Public Use)
  • Estate After deductions
  • Less: Special Deductions (Family Home, Standard Deduction)
  • Net Taxable Estate
  • Taxable Rate: 6%
  • Estate Tax Due
• For Married Individuals, the gross estate includes the capital of the surviving spouse
• Property Regimes


  • Marriage settlements executed before the marriage
  • Provisions of the Family Code
  • Local custom
• Property Regimes


  • Absolute Community of Property
  • Conjugal Partnership of Gains
  • Complete Separation of Property
• Absolute Community of Property


  Community: all the property owned by the spouses at the time of the celebration of the marriage or acquired thereafter
• What is exclusive in Absolute Community of Property?


  • Property acquired during the marriage by gratuitous title by either spouse, and the fruits as well as the income thereof, if any, unless it is expressly provided by the donor, testator or grantor that they shall form part of the community property
  • Property acquired before the marriage by either spouse who has legitimate descendants by a former marriage, and the fruits as well as the income, if any, of such property
  • Property for personal and exclusive use of either spouse; however, jewelry shall form part of the community property
• Conjugal Partnership


  All property acquired during the marriage, whether the acquisition appears to have been made, contracted or registered in the name of one or both spouses, is presumed to be conjugal unless the contrary is proved
• What is exclusive in Conjugal Partnership?


  • That which each acquires during the marriage by gratuitous title
  • That which is acquired by exchange, by right of redemption, by barter with property belonging to only one of the spouses
  • That which is purchased with exclusive money of the wife or of the husband
  • That which is brought to the marriage as the spouses' own (properties when they were still single)
• Separation of Property


  Separation of property may refer to present or future property or both. It may be total or partial. In the latter case, the property not agreed upon as separate shall pertain to the absolute community.
• Income and fruits during the marriage in Conjugal Partnership of Gains are conjugal regardless of the source
• Income during the marriage in Absolute Community of Property follows the source of the income
• Default Property Regime (silent) is Absolute Community of Property, effective August 3, 1988. Before this date, Conjugal Partnership of Gains was the default.
• Exclusive properties in Conjugal Partnership of Gains


  • Properties brought into the marriage as either of the spouse's own
  • Properties acquired by gratuitous (or lucrative) title during the marriage
  • Properties acquired by right of redemption or by exchange with other property belonging to only one of the spouses
  • Properties acquired with exclusive money of either spouse
  • Properties acquired through occupation such as fishing and hunting
  • Livestock existing upon the dissolution of the partnership in excess of the number of each kind brought to the marriage by either spouse
  • Properties acquired by chance, such as winnings from gambling and betting
• Conjugal properties in Conjugal Partnership of Gains


  • Properties acquired by onerous title during the marriage at the expense of the common fund, whether the acquisition be for the partnership, or for only one of the spouses
  • The fruits, natural, industrial or civil, due or received during the marriage from the common property, as well as the net fruits from the exclusive property of each spouse
  • The share of either spouse in the hidden treasure which the law awards to the finder or owner of the property where the treasure is found
• Exclusive properties in Absolute Community of Property


  • Properties acquired during the marriage by gratuitous (or lucrative) title by either spouse, and the fruits as well as the income thereof, if any, unless it is specifically provided by the donor, testator or grantor that they shall form part of the community
  • Property for personal and exclusive use of either spouse, however, jewelry shall form part of the community property
  • Property acquired before the marriage by either spouse who has legitimate descendants by a former marriage, and the fruits as well as the income, if any, of such property
• Conjugal properties in Absolute Community of Property


  • All properties owned by spouses at the time of the celebration of marriage or acquired thereafter