PHL laws to be aware of regarding wealth

[Lee2]

I am not sure how many people might know this, or not, but joint ownership in the Philippines does not mean no taxes upon a death, as it may in your home country. I do not know about in all countries but in the US, money in bank accounts jointly owned is insured up to one million US dollars, not that most of us would have to worry about that, and upon death the joint owner automatically gets the money tax free under most circumstances, no so from what I have been told by bank representatives in the Philippines. I have been told, and even ATM slips show it, that upon death of one owner of an account, the account would be locked if the bank was aware of the death and under penalty of law, it would be unlawful to withdraw any money from your joint accounts until the inheritance taxes are paid, even if the money belongs to both of you.

Then on property, same deal, if one owner dies, I was told that inheritance taxes would need to be paid before the title could be changed, best to check that out for yourself.

Then last, I was made aware that if a property is sold, then there is a 6% capital gains tax on the sale, that is even if no profit was made or even if there was a loss when sold, just another thing to be aware of.

So all, check with your home country and with your banks and lawyers in the PHL to make sure all that is correct and think about keeping any money you may have in your home country, or have separate accounts in the Philippines and even then, that too might be a problem if one party dies.

[Art, just a re(tired) Fil-Am]

Inheritance laws in Philippines and Joint Account concerns

I do not really have any links, but below are just a few excerpts I saved and bunched together on one page that came from a group forum discussion a few years ago. So take it for what it's worth:

Yes, well the banks will never tell you nothing about accounts here, not like
U.S. where they give you a handout on your accounts that explain everything
regarding various types of accounts. No real estate involved anymore with us,
we liquidated 2 houses in California and one in Manila already, so that money is
in the states in Joint Accounts (with survivor-ship), treasury bonds in both our
names, so with our life insurance. So going to Attorney tomorrow to have Last
Will done, I suggested a joint will, which I have the form for, but only problem
with those, is once one dies, they can never be changed. So will get two wills
done, mainly for Philippines. None of our things in Nevada require a will, as
all held jointly, but as you know here in Philippines does not really mean
jointly. Will also retain my attorney here to speed my friends sister in states
account along, whose brother passed away one year ago, Metro dragging their feet
on that. The sister has forwarded everything to Metro, his will, her power of
attorney, IDs, but her being in states, they keep saying the case is pending and
now they are saying she must have a Surety Bond in force before they release his Dollar Account to her

That is exactly what my attorney told me when my wife and I did our wills.
Thanks for the information on this. It appears that there is a lot of confusion
on how bank accounts are handled if one account holder dies. Another thing to
think about is that your wife or partner could die before you. The ex-pat could
also run into problems getting funds from the bank. Also if the Filipino partner
owns property the ex-pat could end up with nothing. Something to think about and plan for.
 
The best answer I have received with my ongoing investigation into bank
accounts here came from BIR, and not the banks, banks know absolutely nothing about what happens generally to your accounts when one spouse dies. Consumer protection in Philippines far as banks go, is non-existent. The BIR told me that to avoid putting a hold on any bank account is to keep the amount at P200,000 or below either type of account singular, joint, dollar, peso, etc. This makes sense to me also and I was thinking the same thing when I talked to the BIR, the chart plainly shows no tax on P200,000 and below. So if you want your spouse to avoid getting a hold on accounts, keep them below P200,000, I guess, that could change next week.

Same with BDO

At the bottom of a BPI ATM receipt:
"FOR JOINT ACCOUNTS, YOU DECALARE UNDER THE PENALTY
OF PERJURY THAT YOUR CO-DEPOSITOR IS STILL LIVING".   

Not when it is done electronically over the internet as BPI allows.

True but on the withdrawal form ay BDO (I did not check other banks) you
are required to state or affirm  on joint accounts the other person is still
living.

True, however with an or account the survivor can withdraw funds before the bank is notified of the death.

In regards to Sec. 97 of the National Internal Revenue Code (or Republic
Act No. 8424

In case of death of one of the parties of a joint account, the surviving
party cannot legally withdraw funds from the joint account until
authorization from the Commissioner of Internal Revenue. In connection
with this law as it pertains to death of one of the joint account holders,
there is no distinction between and/or joint accounts.
By way of consolation though, the law allows the administrator of the
estate or any one of the heirs to withdraw from the account not more than
P20,000 even without such certification on condition that the Commissioner
authorizes him to do so. The article below indicates that some bank
manager will look the other way, and allow more funds to be withdrawn, but don't count on it. Here's a pretty good article explaining joint accounts can be found here: http://business.inquirer.net/45999/joint-bank-accounts

Just a note on joint accounts.
Make sure it is John or Jane Doe NOT John and Jane Doe on the account.
This way either of you can withdraw money without needing the others signature....And if you don't trust your wife enough to list the account this way then you should not be married at all.

Do not know if everyone has knowledge of this or not, I did not until I got to researching a case for a High School Friend;s sister who is claiming his dollar account here recently. General Johnny passed away in Cebu last year and his sister in states is having one hell of a time getting his proceeds from his dollar account here, even though she has his will and power of attorney. They evidently even tax a Joint Account for married couple and also insurance proceeds here. Limited funds here is the answer far as I am concerned until I find more about this matter.

[suzukig1]

There is no spousal exemption on estate taxes in the Phl like in the U.S.

In the U.S. when one spouse dies everything can pass to the surviving spouse without paying estate taxes at that time.  Estate taxes will be collected when the "surviving" spouse dies.

In the Phl community property ceases to exist when one spouse dies.  Estate taxes are due on the deceased spouse's estate at that time which includes the deceased spouse's share of community property.

The good news is that if you are not a Phl citizen, Phl inheritance laws only apply to assets held within the Phl.  Assets held outside the Phl are governed by inheritance laws of your country of citizenship or the country where the assets are held, whichever applies.

[suzukig1]

There is no spousal exemption on estate taxes in the Phl like in the U.S.

In the U.S. when one spouse dies everything can pass to the surviving spouse without paying estate taxes at that time.  Estate taxes will be collected when the "surviving" spouse dies.

In the Phl community property ceases to exist when one spouse dies.  Estate taxes are due on the deceased spouse's estate at that time which includes the deceased spouse's share of community property.

THE FAMILY CODE OF THE PHILIPPINES - FULL TEXT - CHAN ROBLES VIRTUAL LAW LIBRARY
http://www.chanrobles.com/executiveorderno209.htm#.UIJ5j8WsiSo

Art. 130. Upon the termination of the marriage by death, the conjugal partnership property shall be liquidated in the same proceeding for the settlement of the estate of the deceased.

[fred]

Yeah its all true.. Foreigners can inherit land just long enough to pax estate taxes!!! If (God forbid) the Mrs goes before I,me and the kids will have to pay up to 20% Inheritance tax on the whole estate.. We got enough insurance last year to cover most of it if the worst should happen..
My Mrs knows full well to put aside grieving till she empties the accounts of cash when I kick the can..

[suzukig1]

There is no spousal exemption on estate taxes in the Phl like in the U.S.

In the U.S. when one spouse dies everything can pass to the surviving spouse without paying estate taxes at that time.  Estate taxes will be collected when the "surviving" spouse dies.

In the Phl community property ceases to exist when one spouse dies.  Estate taxes are due on the deceased spouse's estate at that time which includes the deceased spouse's share of community property.

The good news is that if you are not a Phl citizen, Phl inheritance laws only apply to assets held within the Phl.  Assets held outside the Phl are governed by inheritance laws of your country of citizenship or the country where the assets are held, whichever applies.

Apparently the above statement in red is wrong.  Resident aliens are liable for PHL estate taxes on assets "wherever located".

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

[iamjames]

I came here to relax in my retirement. All the above refer to possessions, property, children, wives. I have none here so no stress or worry.  This is not a country to do business if you are a foreigner.

[Art, just a re(tired) Fil-Am]

I am not sure how many people might know this, or not, but joint ownership in the Philippines does not mean no taxes upon a death, as it may in your home country. I do not know about in all countries but in the US, money in bank accounts jointly owned is insured up to one million US dollars, not that most of us would have to worry about that, and upon death the joint owner automatically gets the money tax free under most circumstances, no so from what I have been told by bank representatives in the Philippines. I have been told, and even ATM slips show it, that upon death of one owner of an account, the account would be locked if the bank was aware of the death and under penalty of law, it would be unlawful to withdraw any money from your joint accounts until the inheritance taxes are paid, even if the money belongs to both of you.

Then on property, same deal, if one owner dies, I was told that inheritance taxes would need to be paid before the title could be changed, best to check that out for yourself.

Then last, I was made aware that if a property is sold, then there is a 6% capital gains tax on the sale, that is even if no profit was made or even if there was a loss when sold, just another thing to be aware of.

So all, check with your home country and with your banks and lawyers in the PHL to make sure all that is correct and think about keeping any money you may have in your home country, or have separate accounts in the Philippines and even then, that too might be a problem if one party dies.

Below is a comment made on another forum mostly made up of military retirees, but I couldn't understand what the poster meant by it. Anyone have a clue?

Descendant Affairs with most married couples is often an over-looked subject, but if proper preparation is taken there should be an orderly manner with this also.

 When my wife passed on now over 3 years ago, both of us discussed the matter and had all joint accounts in both Philippine Banks and U.S. Banks.  I had very few problems with BIR and hardly zero problems with banks in U.S.  My advice if you can fill out a simple form, do not just run to some attorney unless you want to pay an inordinate amount out to facilitate the orderly flow of the estate.  I got figures from P100,000 to P250, 000 to handle the situation.  I declined and did it all myself and never spent probably P2,000 pesos from start to finish, mostly in mails and telephone charges, few small other fees at City Hall etc. 

Read your Descendant Affairs procedures in both countries, they are FREE on the internet with a little search engine work

[bigrod]

Below is a comment made on another forum mostly made up of military retirees, but I couldn't understand what the poster meant by it. Anyone have a clue?

Descendant Affairs with most married couples is often an over-looked subject, but if proper preparation is taken there should be an orderly manner with this also.

 When my wife passed on now over 3 years ago, both of us discussed the matter and had all joint accounts in both Philippine Banks and U.S. Banks.  I had very few problems with BIR and hardly zero problems with banks in U.S.  My advice if you can fill out a simple form, do not just run to some attorney unless you want to pay an inordinate amount out to facilitate the orderly flow of the estate.  I got figures from P100,000 to P250, 000 to handle the situation.  I declined and did it all myself and never spent probably P2,000 pesos from start to finish, mostly in mails and telephone charges, few small other fees at City Hall etc. 

Read your Descendant Affairs procedures in both countries, they are FREE on the internet with a little search engine work

I being a member of the other forum too have seen the post.  He basically said do not waste your money using a lawyer to get your money from joint accounts.  The individual like you and I has joint accounts both in the USA and here.  He gave copies of the death certificate to banks in the USA and filled out forms to change the status of the accounts.  Here he contacted BIR to unfreeze the accounts by paying any taxes due under Philippine law and changed the status of the accounts.  This individual like us was not worried about the frozen accounts here to survive, like most Filipinos would be. since he still had funds in the USA he could utilize.

Chuck

[Art, just a re(tired) Fil-Am]

I being a member of the other forum too have seen the post.  He basically said do not waste your money using a lawyer to get your money from joint accounts.  The individual like you and I has joint accounts both in the USA and here.  He gave copies of the death certificate to banks in the USA and filled out forms to change the status of the accounts.  Here he contacted BIR to unfreeze the accounts by paying any taxes due under Philippine law and changed the status of the accounts.  This individual like us was not worried about the frozen accounts here to survive, like most Filipinos would be. since he still had funds in the USA he could utilize.

Chuck

So does it mean that a surviving spouse can avoid going thru a probate court upon a member's demise? It would seem so, if all the taxes due were paid to clear all the frozen joint accounts and community property estate and or inheritance taxes.

[bigrod]

So does it mean that a surviving spouse can avoid going thru a probate court upon a member's demise? It would seem so, if all the taxes due were paid to clear all the frozen joint accounts and community property estate and or inheritance taxes.

After a quick search it appears that if there is a will it needs to go through probate to be valid.  The post from the other forum just concerned the joint bank accounts.

Chuck

Chuck