Saturday, April 30, 2011

Estate planning across the miles

Are you a Filipino immigrant/naturalized citizen of another country who stands to inherit properties in the Philippines? Or have you left behind properties in the Philippines and you have nobody to rely upon for their preservation and protection?

Of course, the easiest thing to do would be to dispose your properties to any interested buyer. Having a buyer who would purchase them for the desired price is a different issue, however. By the way, even the hereditary rights may be sold or transferred (subject to subrogation). Article 1088 of the New Civil Code provides, that:

“Should any of the heirs sell his hereditary rights to a stranger before the partition, any or all of the co-heirs may be subrogated to the rights of the purchaser by reimbursing him for the price of the sale, provided they do so within the period of one month from the time they were notified in writing of the sale by the vendor.”

For properties subject to inheritance, you may convince your parent/s and your siblings for the execution of a donation inter vivos, instead of a last will and testament. Conditions may be imposed anyway so that the use of the properties and their income, if any, will stay with your parent/s while they are still alive. You can do this as well with respect to your own properties. This way, the taxes to be paid would actually be lower.

Or you may consider having a trustee, whose duties may include management, preservation, collection of fruits and income, even disposition of the properties, for your benefit and that of other beneficiaries. According to the New Civil Code:

“A person who establishes a trust is called the trustor; one in whom confidence is reposed as regards property for the benefit of another person is known as the trustee; and the person for whose benefit the trust has been created is referred to as the beneficiary.” (Art. 1440)

In this regard, you as the trustor may execute an agreement reposing on the trustee certain duties that you may deem fit based on your situation and the attending circumstances. It may include both real and personal properties. The beneficiaries could be your children and even some charity organizations. Also, said agreement has to be duly notarized.

Forming a corporation is also an attractive option. You will need to comply with the requirements of the Corporation Code and the regulations of the Securities and Exchange Commission, though. Registration, having a set of officers, annual reporting, and the like ought to be complied with. This way, you may even get exemptions from payment of transfer taxes (in exchange for shares of stocks). In case of eventual sale to intended beneficiaries of the said shares, the taxes are also considerably lower.

Thus, depending on your situation and needs, on your future plans, you have several options to manage your properties in the Philippines for your own good self and for your loved ones.

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