Author Topic: Estate Tax  (Read 156 times)

Offline danilo666

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Estate Tax
« on: February 13, 2018, 02:50:23 AM »
A few questions for anyone with relevant experience or knowledge.
1 If I die before my wife, are all our accounts likely to be frozen pending the payment off the estate tax, or just the accounts in my name or in joint names?
2 The land is in my wife's name off course, but the house we built together, so will the BIR include this in the estate tax?
3 Are offshore accounts liable to be included in the estate tax?
On reading the BIR website it slightly concerns me that they want the estate tax to be paid within 6 months, but will freeze all assets until it it has been. Maybe I should keep a lump sum in a safe hidden in my house? I'm not trying to avoid legitimate taxes, but I don't want my wife unable to pay them and then finding herself financially strapped. Thanks in advance guys.

Offline Lee2

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Re: Estate Tax
« Reply #1 on: February 13, 2018, 03:03:40 AM »
I cannot answer all your questions, hope someone else can, but I can say that Philippine banks joint accounts will be locked if they find out about our deaths, it says something about joint accounts on each ATM withdrawal slip. I suspect accounts in the wife's name alone would be considered to be hers as would accounts in our name alone, well according to our bank in the Philippines, anyway, how would the BIR know, and as far as the house, if it is in your name, then I believe that could get messy, best to talk to a Philippine lawyer and have them draw up a will for you and discuss it with them.

As for accounts outside the Philippines, I had been told by a lawyer in Florida that they would be subject to a U.S. will and or POD on the accounts in the state of residence, that would be for the U.S., I do not have any idea about for other countries.

I hope someone with experience can give you more direct answers, I just wanted to chime in with what I know and think I know.
:) Happily married since 1994 & live part of the year in Cebu and the rest in S. Florida.

Offline danilo666

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Re: Estate Tax
« Reply #2 on: February 13, 2018, 03:11:01 AM »
Thanks Lee, the house isn't in my name, I just assume the BIR will consider it to be joint owned. A trip to our local attorney will be made on our next visit to check this out.

Offline Lee2

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Re: Estate Tax
« Reply #3 on: February 13, 2018, 03:16:56 AM »
Thanks Lee, the house isn't in my name, I just assume the BIR will consider it to be joint owned. A trip to our local attorney will be made on our next visit to check this out.
If the land and house is in your wife's name without your name listed on it at all, then I believe she should not have to pay any taxes, heck you apparently bought it for her as a gift, but if your name is also listed on it, as our condos and many people I know have it, then there would be tax due, check your deed wording.
:) Happily married since 1994 & live part of the year in Cebu and the rest in S. Florida.

Offline suzukig1

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Re: Estate Tax
« Reply #4 on: February 13, 2018, 09:46:03 AM »
1. Alien PHL residents are liable for estate taxes on assets wherever they are located. (We are not supposed to discuss how the BIR would ever find out about your overseas assets.)  If your widow makes a large transfer of cash to the PHL after your death that will be flagged by the receiving bank in the PHL.  That may or may not be reported to the BIR (but I would guess it will be if its a very large amount).

1a. For estate tax purposes PHL residency is determined by the number of days per year (I believe 180 days per year) you spend in the PHL and not by your visa status.  So you could be considered a PHL resident for estate tax purposes even though you are here on a tourist "visa".  (I cannot find a reference for this.  If I find one I will post it later.)

2. The estate tax was recently lowered to 6% from 20% under TRAIN (but it doesn't show up that way on the BIR website).

2a. P5M is deductible now instead of P1M + P1M for a house.

2b. You can withdraw money from the deceased's account as long as you pay 6% of the amount withdrawn to the BIR.  (I don't know if or how you would get that money back if in the end you don't owe that much in estate taxes.)

 https://businessmirror.com.ph/estate-tax-changes-under-train-law/

3. Upon the death of one spouse conjugal (community) property ceases to exist.  The dead spouse's assets are supposed to go through probate.  (In the U.S. when one spouse dies the assets of the dead spouse usually just pass to the surviving spouse.  It's not that way in the PHL.  In the Phl the dead spouse's assets are supposed to go through probate and estate taxes may be owed.)


https://www.bir.gov.ph/index.php/tax-information/estate-tax.html

2. What are included in gross estate?

For resident alien decedents/citizens:

a) Real or immovable property, wherever located

b) Tangible personal property, wherever located

c) Intangible personal property, wherever located

For non-resident decedent/non-citizens:

a) Real or immovable property located in the Philippines

b) Tangible personal property located in the Philippines

c) Intangible personal property - with a situs in the Philippines
« Last Edit: February 13, 2018, 10:14:14 AM by suzukig1 »

Offline suzukig1

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Re: Estate Tax
« Reply #5 on: February 13, 2018, 10:30:42 AM »
For the U.S. only: There are several "unusual" issues with estate taxes and retirement accounts.

1. The surviving spouse can keep the retirement account (IRA, 401k) as a retirement account and transfer it to their name.  But there is a time limit to do this; I believe 60 days.  If the retirement account doesn't get transferred as a retirement account income taxes (not estate taxes) will be owed on non-Roth retirement accounts just as if the whole retirement account was distributed.

2. If the retirement accounts are transferred as retirement accounts the surviving spouse can take distributions at any age.  The surviving spouse does not need to over 59 1/2.  There may be some rules on the distribution amounts but I'm not sure.  Income taxes are owed on the distributions and a U.S. income tax return will have to be filed.

3. If the "surviving" spouse is not a U.S. citizen and not a U.S. resident and dies with assets in the U.S. huge estate taxes may be owed.  There is only a $60,000 deductible for non U.S. citizen, non U.S. residents on estate taxes.  The U.S. estate tax rate is high; something like 40% - 50%.  (U.S. citizens and U.S. residents get a $5M+ deductible on estate taxes.)

Offline danilo666

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Re: Estate Tax
« Reply #6 on: February 13, 2018, 11:41:20 AM »
Thank you suzokig, that's very helpful especially with the new lower tax and higher allowances. I'm named on the deed as having right to survivorship.

Offline iamjames

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Re: Estate Tax
« Reply #7 on: February 13, 2018, 01:36:05 PM »
A peculiarity of Philippine tax is that there is no such thing as a tax refund. If you pay too much then tough luck. It is one reason for the huge level of tax evasion here.

Offline bigrod

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Re: Estate Tax
« Reply #8 on: February 13, 2018, 02:07:20 PM »
A peculiarity of Philippine tax is that there is no such thing as a tax refund. If you pay too much then tough luck. It is one reason for the huge level of tax evasion here.


The following seems so refute your claim of no tax refund...actually the employer refunds the over payment in your Jan pay check.

http://primer.com.ph/tips-guides/2016/12/29/expats-guide-to-tax-refund-in-the-philippines/

Chuck
Life is  to short not to live it right the first time

Offline BudM

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Re: Estate Tax
« Reply #9 on: February 13, 2018, 06:18:10 PM »
A peculiarity of Philippine tax is that there is no such thing as a tax refund. If you pay too much then tough luck. It is one reason for the huge level of tax evasion here.

That is wrong James.  My wife has a business and she has the quarterly reporting and then at the end of the year, her exemption has caused her to be overpaid.  Rather than apply for a refund though, she just keeps it there as overpaid to subtract on the next go round in the first quarter of the following year or more if necessary.

Whoever told you that is full, I mean is misinformed and needs to brush up on their Philippine tax laws.  And don't let them kid you, the Philippines is in hot pursuit of tax evaders along with DOLE on the ones trying to avoid paying benefits to their employees.  In recent years, it has become a whole new country with all that stuff.
Whatever floats your boat.

Offline mikbal

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Re: Estate Tax
« Reply #10 on: February 14, 2018, 12:06:02 AM »
     Although the exemption for US persons increased to 10 million dollars under the new US tax bill, the exemption for non-US remained at $60,000.

http://www.jonesday.com/new-us-tax-law-leaves-non-us-person-estate-tax-intact-01-19-2018/

 


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