How not to surprise your heirs

Published November 15, 2021, 12:12 AM

by Jaime Laya


It has been depressing to read Facebook posts of photos with labels like “Happy Birthday in Heaven,” “See you again in heaven,” “Remembering Mama and Papa in heaven,” and announcements of masses for colleagues, friends, and relations who likewise have left for heaven—we give ourselves the benefit of the doubt.  

Happily, infections are down and with some 88 percent of Metro Manilans (the most vulnerable group) already fully jabbed, normal working, shopping, and eating out can’t be too far behind.  

By chance I came across the perfect All Saints Day long weekend reading a very interesting and informative book by Maria Victoria Rotor-Hilado intended to reduce havoc among one’s heirs. It’s about establishing one’s net worth and doing the paperwork to make life less difficult and, at worst, to avoid quarrels and lawsuits among the survivors.

“Didn’t Daddy have land in Masbate?” 

“Where does he keep his titulo?” 

“Who has the key to his safety deposit box and where is it na nga?” 

“Didn’t he have San Miguel shares?”  

“I know he kept cash under the mattress.” 

“The Amorsolo with Ate Nene, isn’t it with her just for safekeeping?”  

“How about the money you borrowed from Daddy for your condo,” 

“That diamond necklace you wore during your wedding, aber?”  

Etcetera, etcetera.

Rotor-Hilado cites a case where a couple discover that the title to their home given to them by the husband’s parents was still in the name of the husband’s grandfather. In the process of retitling, dozens of heirs emerged from the woodwork and the couple found they owned only 1/60th of the house. They ended up homeless because they couldn’t afford to buy out the other 59 heirs. 

The point is that one should list down one’s assets and liabilities, see that everything is in order, and then work out an estate plan or, at least, put everything together in a place or with someone that one’s heirs know about.  

Naturally complexities are greater the larger the net worth, but siblings could fight over what others might consider trivial, e.g., an irreconcilable difference between a brother and a sister over some furniture or a book collection because the former poisoned the latter’s aquarium when they were kids.

The objective is to know what one’s assets and liabilities are, if the titles of the assets are in one’s name, and how much or what percent of the asset is owned by one in cases of co-owned property. This would be the first step in estate planning and settlement, including drawing up a Last Will and Testament if one wishes to do so. This becomes more important when children and heirs are in diaspora, with only one or two remaining here.

Atty. Rotor-Hilado makes detailed suggestions on how and what to compile.

Real property – land and improvements thereon. These require the most effort, being of high value. Depending on the purpose, some or all of the following are needed: Certificate of Title, Tax declaration, Official Receipts for real property tax payments, Tax Clearance Certificate, Transfer Tax Receipts. BIR Certificate Authorizing Registration of the immediately preceding transfer, Certificate of Landholdings, and Appraisal.

Shares of stock. Shares listed on the Philippine Stock Exchange would be simple enough to track, particularly if in the custody of one’s stockbroker. Stockbrokers normally issue monthly statements of one’s portfolio including name of company, number of shares and the market value as of the statement date. Shares of unlisted companies and of family corporations would have to be identified as to number of shares and stock certificate serial numbers, name of registered owner, and company financial statements.

Bank and other Financial Accounts. At the very least, bank statements ought to be on file so that heirs would know bank names, account numbers, and running balances, noting that accounts could be in pesos or in foreign exchange, and in local or foreign banks. One could also have investment accounts in local or offshore financial institutions. The account names and signatories should be identified.

Life insurance policies. An insurance policy with irrevocable beneficiaries is not part of one’s estate and the proceeds can be used for immediate needs inasmuch as bank accounts are frozen upon one’s death.

Chattels – jewelry, watches, paintings, etc.  These are part of one’s estate and are therefore taxable and subject to laws relating to compulsory heirs.  Enforcement is obviously difficult but for transparency’s sake, it would be best to list them down with estimated worth of each.

Collation – previous transfers and donations to compulsory heirs.  The value of properties given free to compulsory heirs during one’s lifetime is added to one’s gross estate so that the donation may be taken into account when computing the shares to which each compulsory heir is entitled.

Liabilities. These have to be identified as to amounts owed to whom, on what terms and due dates, in order to compute what one’s heirs can receive.

Having completed an inventory of one’s assets and liabilities, the next step would be to prepare an estate plan that will “preserve the maximum amount of wealth possible for the intended beneficiaries and flexibility for the individual prior to death.” While one wants one’s heirs to receive the maximum possible amount, one also wishes to retain enough to be independent until the end. One had better consult an expert to be sure.

Note: This article is based on Maria Victoria Rotor-Hilado, A Well-Ordered Estate (Manila: Anvil Publishing, Inc., 2017).

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