Transfer Taxation - Part II

Question 1

Explain the Tax Amnesty Act of 2018 in terms of the Estate Tax Amnesty.

Answer 1

To encourage the processing of unsettled estates, Republic Act (RA) No. 11213, or the Tax Amnesty Act of 2018, was signed on Feb. 14, 2019. This gave estates of decedents who died on or before Dec. 31, 2017, with or without assessments, whose estate taxes remained unpaid or have accrued as of Dec. 31, 2017, the opportunity to settle their tax obligations without having to pay the penalties that had accumulated due to the failure to pay the estate tax on time. Aside from dispensing with the penalties and interest, the amnesty also imposed the 6% estate tax under the TRAIN Law at every stage of transfer of the property.

Question 2

Republic Act (RA) No. 11213 - What’s the current deadline for the Estate Tax Amnesty?

Answer 2

June 14, 2025

Question 3

Republic Act (RA) No. 11213 - For those availing the Estate Tax Amnesty, which allowable deductions are applicable?

Answer 3

The deductions remain those applicable at the time of the death of the decedent.

Question 4

Republic Act (RA) No. 11213 - Meanwhile, if the deductions exceed the value of the gross estate, how much would be the minimum estate amnesty tax for the transfer of the estate of each decedent?

Answer 4

There would be a minimum estate amnesty tax for the transfer of the estate of each decedent in the amount of P5,000.

Question 5

Republic Act (RA) No. 11213 - In case there are properties included in the Estate Tax Amnesty availment which are the subject of a taxable donation/sale, what taxes are imposed?

Answer 5

They shall be assessed donor’s tax/capital gains tax/other applicable taxes at the time of the donation/sale, plus penalties, if applicable.

Question 6

What is a pre-deceased spouse?

Answer 6

A pre-deceased spouse is a term used in legal and inheritance contexts to refer to a spouse who has died before another spouse.

Question 7

What is a conjugal property?

Answer 7

Conjugal property refers to property or assets that are jointly owned by a married couple. It typically includes assets acquired by either spouse during the course of the marriage, regardless of which spouse’s name is on the title or deed.

Question 8

For every how many years after the latest revision shall the Schedule of Zonal Values be automatically adjusted?

Answer 8

Once every three (3) years

Question 9

What are prenuptial agreements?

Answer 9

It is originally a practice wherein the parents of the bride and the groom negotiated on behalf of the new couples. It is an agreement made between two people before marrying that establishes rights to property and support in the event of divorce or death.

Question 10

What are other names for prenuptial agreements?

Answer 10

Premarital agreements or ante-nuptial agreements

Question 11

What are the three requisites for a valid prenuptial agreement?

Answer 11

1. Must be in writing
2. Must be executed prior to the celebration of marriage
3. Must be signed by the future spouses

Question 12

Are modifications to the prenuptial agreements allowed after the celebration of marriage?

Answer 12

No.

Question 13

Why is preparing a prenuptial agreement in the Philippines is relatively easy?

Answer 13

It is not required by the laws to be registered in a government office for the agreement to be binding between the two parties.

Question 14

Where does the Philippine law require the prenuptial agreement to be recorded?

Answer 14

1. Local Civil Registry where the marriage is celebrated
2. Register of Deeds - the province where the affected property is located.

Question 15

Why do the Philippine law require the prenuptial agreement in the Local Civil Registry and the Register of Deeds?

Answer 15

This requirement is for the security for properties which may be affected by the agreement, and for the binding of third parties.

Question 16

What are the three characteristics of property relations?

Answer 16

1. Applicable to married persons only.
2. Separates common and exclusive property.
3. Subject to pre-nuptial agreement, law, and customs.

Question 17

Discuss Article 75 of the New Family Code.

Answer 17

The future spouses may, in the marriage settlements, agree upon the following systems of property relationship:

(1) Absolute community of Property (ACP)
(2) Conjugal partnership of gains (CPG)
(3) Complete separation of property, or
(4) Any other regime.

Question 18

In the event the couple had not adopted or agreed upon a system before their marriage, what does Article of 75 of NFC prescribe?

Answer 18

Either Conjugal Partnership of Gains or Absolute Community of Property

Question 19

When was the New Family Code effected?

Answer 19

August 3, 1988

Question 20

What is the requirement for the Conjugal Partnership of Gains property relation?

Answer 20

If marriage was before August 3, 1988

Question 21

What is the requirement for the Absolute Community of Property property relation?

Answer 21

If marriage was on or after August 3, 1988

Question 22

Discuss Article 77 of the New Family Code.

Answer 22

It thereof provides for the requirements for execution and modification of marriage settlement. For marriage settlement to be valid, the following must be present:

1. it must be in writing;
2. It must be signed by the parties;
3. Executed before the celebration of marriage; and
4. Registered in the Civil Register where the marriage contractis recorded.

Question 23

If the decedent was married with surviving spouse, what should the property in the gross estate be classified into:

Answer 23

(1) Common property - owned by both spouses (2) Exclusive property - owned either by husband or by wife

Question 24

What refers to the property owned by the husband?

Answer 24

Capital property

Question 25

What refers to the property owned by the wife?

Answer 25

Paraphernal property

Question 26

What is the reason for the need of classifying the property in the gross estate if the decedent was married with surviving spouse?

Answer 26

This is to facilitate the computation of the 1/2 share of the surviving spouse on the net conjugal as well as the net taxable estate of a married decedent.

Question 27

Other terms of “common property”?

Answer 27

1. Conjugal property
2. Communal property

Question 28

What is the most common regime in Philippine marital property relations?

Answer 28

Absolute Community of Property

Question 29

Define Absolute Community of Property.

Answer 29

If the spouses DO NOT HAVE A VALID MARRIAGE SETTLEMENT, this system will govern the property relations of the couple, and it is more in keeping with Philippine custom and family unity.

Question 30

Where shall the provisions on co-ownership apply to as a general rule?

Answer 30

It shall be applied to the absolute community of property between the spouses.

Question 31

What are considered community property when acquired during marriage?

Answer 31

1. Family Home
2. Proceeds of Life Insurance (if included in the gross estate)
3. Claims against insolvent person (can be exclusive or conjugal)

Question 32

Define family home.

Answer 32

It is the place where the decedent lived at the time of his death. The family home constituted by husband and wife is a common property. If it is exclusive, then it can’t become a community property even when used as a family home.

Question 33

What makes proceeds of life insurance exclusive?

Answer 33

If premium was made from exclusive funds

Question 34

What makes proceeds of life insurance conjugal?

Answer 34

If premium was paid from common funds or from income of either spouse during marriage

Question 35

What is neither conjugal nor exclusive deductions, something not to be deducted as claim against the estate?

Answer 35

Medical expenses

Question 36

Who bears the wagering loss during marriage?

Answer 36

The loser