1 Page J.A.

Villanueva, CPA

INTRODUCTION TO SUCCESSION AND ESTATE TAXATION Will

A Will is an act whereby a person is permitted, with the

SUCCESSION is a mode of acquisition by virtue of which, the
property, rights, and obligations to the extent of the value of the
inheritance, of a person are transmitted through his death to another
or others either by his Will or by operation of law (Art 774 NCC).
formalities prescribed by law, to control to a certain degree the
disposition of his estate to take effect after his death (Art. 783 NCC).
It is a document whereby a person, called the testator,
disposes of his/her properties or estate to take effect upon his/her
death.

Article 776 of the NCC states that the inheritance includes all the The making of a Will is a strictly personal act. All persons who
property, rights and obligations of a person which are not are not expressly prohibited by law may make a Will. The persons
extinguished by his death. prohibited by law to make a Will are those below 18 years old and
those who are not of sound mind at the time of its execution.
The rights to the succession are transmitted from the moment of
death of the decedent (Art. 777 NCC), notwithstanding the Types of Will:
postponement of the actual possession or enjoyment of the estate by 1. Notarial/Ordinary/Attested Will:
the beneficiary. A Will which is executed in accordance with the formalities

prescribed by Art. 804 to Art. 808 of NCC.

Types of Succession:
1. Testate or Testamentary Succession
It is a type of succession that results from the designation of
an heir, made in a Will executed in the form prescribed by law.
(Art. 779 NCC)
2. Legal or Intestate Succession
It is a type of succession which is effected by operations of law
(Title IV of NCC) since the decedent did not execute a Will or if
the last Will and testament executed by him is void.
3. Mixed Succession
A type of succession which is effected partly by Will and partly
by operation of law.
Requisites of a Valid Notarial Will:
a. It must be in writing and executed in a language or dialect
known to the testator;
b. It must be subscribed at the end thereof by the testator
himself or by the testator's name written by some other
person in his presence and by his express direction; and
C. It must be attested and subscribed by three or more credible
witnesses in the presence of the testator and of one another.
2. Holographic Will:
A Will which is entirely written, dated, and signed by the hand
of the testator himself.

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3. Codicil: Heirs under Intestate Succession:

A supplement or addition to a Will, made after the execution of In intestate succession, the heirs shall be the following in descending
a Will and annexed to be taken as a part thereof, by which any order pf priority:
disposition made in the original Will is explained, added to, or 1. Compulsory heirs
altered. In order that a codicil may be effective, it shall be 2. Relatives up to 5th degree of consanguinity
executed as in the case of a Will (Arts. 825 and 826 NCC). 3. Republic of the Philippines

Causes of Legal Succession or Intestacy: Compulsory Heirs:

1. If a person dies without a Will, or with a void Will, or one which 1. Primary heirs: Legitimate Children and their direct
has subsequently lost its validity. descendants.
2. When the Will does not institute an heir. 2. Secondary heirs: Legitimate/Illegitimate parents and
3. Partial institution of heir. Consequently, intestacy takes place ascendants.
as to the undisposed portion. 3. Concurring heirs: The surviving spouse and illegitimate
4. When the heir instituted is incapable of succeeding. descendants.

5. Other applicable causes.

Order or Priority:
Elements of Succession: 1st: Primary heirs and Concurring heirs
1. Decedent. 2nd: Secondary heirs and Concurring heirs
It is the general term applied to the person whose property is 3rd: Relatives up to the 5th degree of consanguinity
transmitted through succession, whether he left a Will. If he 4th: Republic of the Philippines
left a Will, he is called a testator (Art. 775 NCC).
2. Inheritance or Estate. Heirs under Testamentary Succession:
Include all the property, rights, and obligations of a person 1. Compulsory heirs
which are not extinguished by his death (Art. 776 NCC) 2. Other persons specified by the decedent in his Will.
3. Successor or Heir.
A person who is called to the succession either by the provision Estate under Testamentary Succession:
of a Will or by the by operation of law (Art. 782 NCC). 1. Legitime: it is the portion of the testator's property which
could not be disposed off freely because the law has reserved
it for the compulsory heirs. Specifically, the legitime is

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ascertained to protect the children and the surviving spouse acquires the rights which the latter would have if he were living or
from the unjustified distribution of properties (Art. 886 NCC). could have inherited. Representation may arise either because of:
1. Death
The testator cannot deprive his compulsory heirs of their 2. Incapacity
legitime, except in cases expressly specified by law (Art. 904 3. Disinheritance

NCC).
2. Free portion: it is the part of the whole estate which the Other basic concepts:
testator could dispose of freely through a written Will 1. Legatee-one who is given personal property through a Will.
irrespective of his relationship to the recipient. In other words, 2. Devisee- one who is given real property in a Will.
this is a portion of the decedent's estate in excess of the 3. Executor- the person named in the Will who is entrusted to
legitime. implement its provisions.
4. Administrator- a person appointed by the court to manage
the distribution of the estate of the decedent.
Disinheritance: 5. Probate- A special proceeding to establish the validity of a
It is a testamentary disposition by which a compulsory heir is Will.

deprived of or excluded from the inheritance to which he has a right. 6. Escheat- a proceeding whereby the State, by virtue of its
Requisites for Disinheritance: sovereignty, steps in and claims the real or personal property
1. Effected only through a valid Will of a person who dies intestate without heir.
2. For a cause expressly stated by law
3. Cause must be stated in the Will itself
4. Cause must be certain and true
5. Unconditional
6. Total (no partial disinheritance)
7. The heir disinherited must be designated in such a
manner that there can be no doubt as to his identity.

Right of Representation:
It is a right created by fiction of law where the representative
is raised to the place and degree of the person represented, and

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Estate Taxation: The Estate Tax Model:

It pertains to the taxation of the gratuitous transfer of
properties of the decedent to the heirs upon the decedent's death. Gross Estate P Xxx,xxx
Less: Deductions from Gross Estate P XXX,XXX
The Law that governs the imposition of Estate Tax: Net Taxable Estate P XXX,XXX
It is a well settled rule that estate taxation is governed by the
statute in force at the time of death of the decedent.

The estate tax accrues immediately at the time of death, Estate Tax Rate: 6%
irrespective of the actual date of filing the estate tax return. It shall
be noted that the accrual of estate tax is distinct from the obligation
to pay the same.

Time of Death Between January 1, On or after January

1998, to December 1, 2018
31, 2017
Governing Law NIRC TRAIN Law

Nature of Estate Tax: (NO-RAPE)

1. National Tax
2. One-time Tax
3. Revenue/General Tax
4. Ad Valorem Tax

5. Proportional
6. Excise Tax

Classifications of Decedents:
1. Resident or Citizen
2. Non-Resident Alien

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