CHAPTER 13-B

CHAPTER 13-A
CHAPTER 13

ESTATE ESTATE
TAX:
THE CONCEPT GROSSTAX: GROSS
ESTATE
OF SUCCESSION ESTATE
OF ESTATE
AND MARRIEDTAXDECEDENT
Exempt Transfer
Gross estate consist of all properties of the
The gross estate of a decedent is reported
Gross as follows in the estate tax return:
Estate Formula The gross estate of married decedent is composed of: Property for exclusive personal use, except jewelry
decedent, tangible or intangible, real or personal
Conjugal/ 1. The decedent exclusive properties Under ACP, properties for the exclusive personal use of either of the
and wherever situated at the point of death.
Inventory of property at the point Exclusive
of death Communal PTotal
xxx,xxx 2. The common properties of the spouse spouses, except jewelry, are always exclusive property whether they are
GrossExempt
Less: estate Transfers P xxx,xxx P xxx,xxx P xxx,xxx acquired during the
1. Transfer marriage.
of the properties Note notthatowned
this ruleby
does
the not exist with
decedent
Less: Properties
deductions SUCCESSION
not owned
Types of Succession
ESTATE TAXATION
CPGProperties
. not owned by the decedent are not part of his/her donation
Properties owned but exclude by law Procedure in Establishing Gross mortis casua. These property must be excluded in gross estate even if they
Inventory of Taxable Present Properties Estate transfer to other person at the point of death.
Basic rules in the determination of property interest
Add:ATaxable
model ofTransfer
acquisition by virtue by which the property, 2. Transfer legally excluded
GROSS rights and obligations to the extent of the value of the
ESTATE Testate of Testamentary succession Pertains to the taxation
These properties naturallyof theform
gratuitous
part of his/her donation mortis casua to the
Property
inheritance, of Relations
a person are Between Spouses
transmitted through his * which result from the designationat heir, transfer
heirs of
but properties
are of
exempted the decedent
by the law to theestate taxation.Hence these are
from
Inventory count of existing Separate Properties Acquired During Marriage
death to another or others either by his will or made in a will executed in the form of properties at the point of death heirs upon
excluded fromthegrossdecedent
income. death.
Similar to conjugal partnership of gains, properties received by way way
operation of law. prescribe by law. of gratuitous title such as donation or inheritance during marriage is a
Adjustment
 Common for exempt
Property transfersofRule
Presumption
Classification Decedents for
Under the family code, theProceeds of Life between
property relation Insurancethe and taxable transfers Taxation Purposes separate property unless designated by the donor or decedent to be for
spouses must be agreed upon by the spouses before their both spouses.
Transfer of the property not owned by the decedent
marriage and is set in their “prenuptial Designation
agreement”.of Beneficiary Legal or Intestate Succession 1. NatureMergerof of Estate Tax in the owner of the naked title
the usufruct
Beneficiary Elements of Succession Revocable Irrevocable
* when a decedent die w/o a will,In the
theinventory taking the property of the estate, the 2. The commission or delivery of the inheritance or legacy by the
Estate, administrator or include distribution of the estate shall properties
Include be in of the spouses is presumed common
Taxable Transfer fiduciary heir or legatee to the fedeicommissary
properties Resident or Citizen Decedents
Property Relation of the Spouses
executor accordance with the default provision of unless proven to be exclusive properties of 3. The transmission
Excise Fruit Taxfrom the first heir legatee or donee in favor of
Taxable on properties located within or
Other parties include the Civil Code on succession. either the spouses. This presumption does not apply
exclude * Estate another
tax is beneficiary, Income
a tax on theinproperty
notindustry
or Gains
accordance with the desire of the
under absolute separation outside the Philippines.
of property. Fruits of labor and
Decedent but on thepredecessor
privilege to transfer property
The property interest Mortis casua transfers of properties in the Fruits4.arising from theoflabor
Proceeds or industry
irrevocable of either orpolicy
life insurance both payable
spousesto arebeneficiary
* general term of the spouses
applied shall be determined
to the person throughproperties
common death. ofthe
theestate,executor
spouses.
base on their agreed property
whose property transmitted through regime. Mixed succession guise and form of inter-vivos transfer. other than or administrator
succession, whether Composition
or not he left ofaGross
will. estate * transmission of the decedent properties 5. Properties held in trust by the decedent
Non-resident Rule
Consistent Classification Alien decedents Fruits6.of Properties
1. Properties movable or immovable, tangible or intangible shall be partly by virtue of a written will Separate properties of the surviving spouse of the decedent.
Taxable only on properties located in the The fruit ofRevenue
separate or General
property is aTax
separate property. It follows therefore
2. Decedents interest on properties and partly by operation of law. TypesPhilippines,
of Taxable except
Transferintangible personal 7.
* Estate
that
Transfer
the fruittax ofiscommon
by theas
intended way
property
of bonaorfide sales
revenue
is a common property. In short, Fruits
3. Proceeds of life insurance
Common Types of Property Regime property when the reciprocity rule applies. fiscalprincipal
measure.
follow
a) Designated as revocable
Estate to any heir The sale or exchange of properties do not alter their
b) * The
Designated
property,torights
estate,
and administrator
obligation ofortheexecutor as beneficiary classification. Properties acquired using separate
4. Taxable decedent will extinguished by his death.
transfer properties are separate
Transfer properties. Likewise,
in contemplation of death properties
1. Absolute separation of property- all properties of acquired using common properties are common Valuation of The Gross Estate
These are donation made by the decedent during Ad Valorem Tax
the spouses are separate properties, except properties properties.
his lifetime which are motivated by the though of * Estate tax is dependent upon the value
which they may acquire jointly. his death. of the estate. Properties subject to estate tax shall be appraised at
2. Conjugal partnership of gain-
Heirs all properties that Properties acquired their Before marriage
fair value at the point During
of death.marriage
Presentation of Gross Estate in The Estate Tax Return The Estate Tax Model
accrue as * fruit
a of their
person individual
called to the or joint laboreither
succession during the
Inmarriage
reporting gross estate under BIR Form 1801, the composition of the gross estate From gratuitous
byshall
the become
provision common
of will orproperties
by operationof the
of Accruals
Revocable in Value or Gains
transfer, on Sale
including of Properties
conditional
shall be classified as follows: acquisitions communal exclusive
spouses. law. transfer National Tax
1.3.Real Properties- all immovable properties of the decedent, excluding family home. From fruit of industry communal Valuation communal
Rules
Absolute community of property- all present Involve transfer of possession over property * Estate taxofis imposed by the national
2.properties
Family Home From the fruit
owned by the spouses at the date of during the lifetime of the decedent, but not government.
3.celebration
Personal Properties-
shall becomeallcommon
movableproperties.
properties of the decedent, except right of The increase in valueGross Estate
or gains P xxx,xxx property
interest of any business transfer of ownership over saidon the sale of properties
property. -separate property Communal exclusive
Less: Deduction from
are fruits subject to the rules of the property regime
4. Business Interests agreed upon by the spouses.Gross estate P xxx,xxx -community
property
1. The fair value of theProportional
property Communal
as the communal
Net Taxable Estate P xxx,xxx Taxtime of death shall be the value to include in
In the absence of an agreement or when the regime Property passing under general power of grossFor exclusive
estate use of
* Estate tax is imposed as 6% on the net
agreed by the spouses is void, marriages celebrated appointment 2. Faireither
value spouses
rules set by the law or revenue regulation must be followed.
estate.
before August 3, 1988 shall be governed by the conjugal The presence of the general power enables the 3. In default
-jewelryof such fair value Communal
rules, reference may be communal made to fair value rules under
partnership of gains. Marriage celebrating starting holder of such power to do with the property generally accepted accountingExclusive
-non-jewelry principles. exclusive
august 3, 1988 shall be govern by the absolute anything which he could do as if the property 4. Encumbrances on the property or decrease in value thereof after death shall be
community of property. were his own. ignored. One-Time Tax
* Estate tax applies to a person only on in
a life time.