The familiar Passion play

During the Lenten season, the whole of Christendom celebrates the Passion of our Lord, starting from the Last Supper
with Christ’s Apostles on Holy Thursday, to the suffering, crucifixion and death of our Lord on Good Friday, and
culminating with the Resurrection of Jesus on Easter Sunday.

For a great number of Filipinos, this Passion play is somewhat replicated on a regular basis, not in terms of events that
arise but in the terms of the anguish and suffering encountered. We are too familiar with the drama that arises with the
death of a member of the family. Though the suffering may not be comparable with how Jesus Christ agonized, the
loved ones of a deceased will not only grieve because of the loss of the precious relative, but also will suffer because of
the inheritance and tax problems that will arise instantaneously at the time of bereavement.

In the Philippines, the death of a person often times will result in the remaining members of the family dealing with the
contentious issues on inheritance and settlement of the estate tax. The situation becomes quite complicated especially
if the deceased person is affluent or failed to plan for these realities of death.

Inheritance issues include the legal if not equitable legal process of distributing the properties to the heirs; establishing
the wish of the departed one, who may or may not have a last will and testament; dealing with the expectations, if not
demands, of legitimate as well as “illegitimate” heirs ; and zillions of details that need to be addressed urgently even
while the successors are bereaving.

Equally problematic are the tax concerns that will definitely arise. The old Tax Code before the onset of the current
TRAIN law imposed an inheritance top tax rate of 20% and a whole set of complicated rules to compute and pay the
estate tax. The new tax laws which took effect in 2018 somewhat simplified the tax system and reduced the estate tax
to a lower rate of 6%. But even with this simplification, a tax is a burdensome and complicated item to deal with,
especially if the surviving heirs have never discussed or planned for this inevitability.

And more often than not, this is the state of unpreparedness is the situation that most of my acquaintances and clients
encounter at the hour of death of a loved family member. I have been involved in the business of tax for over thirty five
years and I continue to be hear these hardship stories from the spouse, sons and daughters who were left behind to
address these inheritance woes and tax problems.

The explanation I continue to hear why these issues were not resolved during the lifetime of the decease is that it was
perceived that discussing the topic of inheritance and estate tax planning was taboo if not disrespectful. “Why do you
want to discuss your inheritance? Do you want me dead already so that you can get your share of the properties that I
had worked so hard to accumulate?” These are the thoughts or sentiments of the elderly head of the family, real or
otherwise, perceived by that the younger members of the family that hinder or prevent these conversations on efficient
estate tax planning and transfer of properties.

Would this familiar Passion play in the lives of the typical Filipino family never change?

Chairman Joel L. Tan-Torres is the chairman of the Professional Regulatory Board of Accountancy. He
is a Certified Public Accountant who placed No. 1 in the May 1979 CPA Board Examinations He was the
former Commissioner of the Bureau of Internal Revenue from 2009 to 2010.

This column accepts contributions from accountants, especially articles that are of interest to the accountancy
profession, in particular, and to the business community, in general. These can be e-mailed to
boa.secretariat.@gmail.com