TIL DEATH…DO YOUR PART! Estate Planning in a Pandemic
With the end of the COVID-19 pandemic nowhere in sight, we all continue to be anxious about handling our businesses and affairs at this time. Currently, our tally shows us that we have around 245,000 confirmed cases, with almost 4,000 deaths. By now, we probably each have heard of stories about people being fine today, and the next day, quickly taken from their loved ones. Like it or not, we have to face reality, and that means sitting down and talking about the hard topics such as estate planning.
Last Will and Testament
Although our laws provide for Extrajudicial Settlement of Estate when the decedent dies without leaving a last will and testament, this doesn’t sound as simple as it seems. Two other requirements would have to be fulfilled – a) there would have to be no debts left by the decedent, or all the debts should be fully paid; and b) all of the heirs should agree on the partition of the estate. Unfortunately, it can be common in Filipino families for heirs and other family members to disagree, especially when it comes to real estate.
When there is no will left by the decedent and the heirs fail to agree on the partition of the estate, any interested person may file a Petition for Intestate Settlement of the Estate. In this situation, the court appoints an administrator who facilitate the division of the properties among the heirs, as well as oversee the payment of any taxes and obligations.
Finally, another way to settle the estate while still invoking the participation of the court is through a last will and testament executed by the decedent that will be submitted for probate. While a will may sound daunting to execute and costly to handle, it actually gives the decedent the opportunity to decide and control how his or her estate will be divided among his heirs. Furthermore, the decedent may choose a person he/she trusts to serve as the executor of his estate, who will serve as the administrator in charge of implementing what is written in the will.
Power of Attorney
Estate planning does not only contemplate death, but it may also be applicable to situations where a person is sick, unable to make decisions, or is generally incapacitated. A Power of Attorney is a legal document that may be executed by anyone and at any time to give authority to a trusted person to handle any personal affairs. A General Power of Attorney may be resorted to, to grant another the general authority to administer and manage your businesses and properties.
On the other hand, a Special Power of Attorney (SPA) is for a more specific task, and is required by law in certain instances such as in the sale or lease of a piece of land, or when a loan needs to be acquired. An SPA may be executed here in the Philippines or abroad, subject to certain formal requirements.
Trust
Some people also prefer to approach estate planning through the creation of trusts. An irrevocable trust may be formed and beneficiaries designated in order to reduce the gross estate of the transferor. However, our new tax laws now provide for the same tax rate for donor’s tax and estate tax, so trusts may no longer be the way to go to reduce estate taxes. Still, the creation of trusts is another way for a person to control where their assets and properties go to, and to ensure that one’s own wishes with regard to these properties are realized during their lifetime.
Estate planning is not a “one size fits all” concept, and is unique to every person or family. Talking to an attorney who is knowledgeable about wills and SPAs will certainly save you the stress of thinking about your personal affairs at this time, and will better prepare you for other unforeseen and unexpected situations that may arise in the future.