a.

b.
c.
d.

ESTATE
Justification of Estate Tax (RBPA)
Redistribution of wealth theory inheritance receive
contributes to unequal distribution of wealth
Benefit-received theory - govt provides services for
transfer of estate of decedent.
Privilege or state partnership theory State is a passive
and silent partner in the accumulation of wealth as it
protects every individual in its territory.
Ability to pay theory- the effect of the inheritance
increases the wealth of the heir thereby creating an
ability to tax.
Effectivity of transfer of properties
Upon moment of decendents death
*right if succession
*determination of on tax of property transferred
Succesion mode of acquisition wherein PRO (property,
right, obligations) to the extent to the value of the
inheritance of a person transmitted through his death to
another or others either by
*will(testate)
*operation of law(intestate)

Basis of Succesion(FIS)
a. Family relation- a person provides for those who are left
behind
b. Implicit ownership- heirs assumed owner ship of
property of the decedent because they have primary
rights over inheritance
c. Socio-economic wealth left by decedent must be a
actively used to provide economic benefit to the
community.
Elements of Succesion
a. Decedent- person who died whose property is
transferred through succesion
b. Testator- person whose properties are transferred
through a written will
c. Intestate- person whose properties are transferred
through a w/o written will
d. Estate properties of the decedent, which s subject to
succesion
e. Successor heir or person to whom a property is
transferred

Person to take charge of estate

*gather and distribute the properties left by the
decedent
a. Executor- person or trust company named in the will.
b. Administrator- person or trust company appointed in the
court if there is no will or if there is the person does not
act or executes its provision.
*Net estate after payment of decedents obli and estate
tax- inheritance distributable to the heirs
Succesors
*compulsory-decedents cannot disregard them to obtain
inheritance
a. Primary compulsory heirs-legal portion of the estate is
first reserved by law
*legitimate children and their descendants
*surviving spouse
*illegitimate children and their descendants(natural and
spurious)
b. Secondary compulsory heirs
*Lparents and Lascendants
*ILparents(no other ascendants)
Absence of compulsory heirs
*relatives up to 5th degree
*government
*other person inherits free free portion if there is a will
*devisee-a person whom a gift of real property is given
by virtue of a will
*legatee-a person whom a gift of personal property is
given by virtue of a will
*voluntary heirs- bros and sis receives inheritance as
long as legitime of compulsory is no impared if testator
desired.
Kinds of Succesion (TIM) Testamentary, Intestate,
Mixed)
Testamentary Succesion- designation of heir through
will.
Testate- a person died leaving a will
Will- act whereby a person is permitted to control the
disposition of his estate upon death. Maybe notarial or
holographic

Codicil- supplement or addition to will. Explaination,

addition, or alteration of will.
Holographic Will- written, dated and signed bye testator,
subject to no formalities.
*properties left by decedent may be legitime or free
portion
Legitime- property that could not be disposed of freely
because law has reserved it for compulsory heirs.
*to protect the children and surviving spouse from
unjustified distribution of properties.
*compulsory may demand full legitime if compulsory
received less than legitime
Free portion- can be dispose of freely through written will
irrespective of his relationship to the decedent.
SUCCESOR
LC or descendants
ILC alone
LC, NC, ILC

1LC & SS

2 or more LC & SS
ILC & SS
2 or more LC, NC & SS
Parents or ascendants
alone
SS alone

LEGITIME

LC-
NC- of LC
ILC- of LC
*no case shall legitime of
ILC will be higher than
free portion
*legitime of SS must first
be fully satisfied
LC SS-
*in case of legal
separation, SS may inherit
if it was the deceased who
caused for the separation
LC- SS-1 of LC
1/3 1/3
; NC-1/2 of LC; SS-1 of
LC

In general
*of marriage is for purely
financial motive and if
testator died 3mos after
marriage. And if the
marriage is made at the
moment of death (articulo
mortis)

Ascendants & SS
AS, SS & ILC
-

exception: when the

couple had been living as
husband and wife for
more than 5 years of
actual marriage
AS-1/2 SS-1/4
AS-1/2 SS-1/8 ILC-1/4

Disinheritance
act by which owner od the state deprives his heir the
right to inherit
can only be effected through will wherein the legal
clause shall be specified
legal clause should be one authorized by the law
burden of proving the truth rest upon the heir of the
testator, if the disinherited heir should deny it.
Disinheritance of children
When a child of descendant
guilty of an attempt to testators life, his or her
spouces, AS, and DS
accused the testator of a crime with 6 year of
imprisonment and has been found groundless.
Convicted of adultery or concubinage with the spous of
the testator
By FVIU(fraud,violence,intimidation,undue influence)
causes testator to make a will or change one already
made
Refuses w/o justifiable cause to support parent
Maltreatment of the testator by word or deed by the
child or descendant
Leads a dishonorable or disgraceful life
Conviction of crime with penalty of civil interdiction
Disinheritance of Parents
when parents abandoned their children or induced their
daughter to live a corrupt and immoral life or attempted
against their virtue
when parents or ascendants
convicted of an attempt to testators life, his or her
spouces, AS, and DS
accused the testator of a crime with 6 year of
imprisonment and has been found false.
Convicted of adultery or concubinage with the spous of
the testator
By FVIU(fraud,violence,intimidation,undue influence)
causes testator to make a will or change one already
made

Loss of parental authority for causes specified in the

code
Refuses w/o justifiable cause to support children
Attempt of life of one parent to the other, unless there
has been reconciliation
Intestate Succession- legal succession that takes effect
through operation of law because there is no
decendents last will and testament to dispose the
estate.
May be done when a person dies:
-without a will
-void will
-will which subsequently lost its validity
-will but no name of successor
Order of Intestate succession
-DS, direct line
-AS, direct line
-Collateral lines

Survivor
LC(DS) alone
LC & P
LC & B/S
LC & SS
LC & ILC
LC, ILC &SS
ILC alone
ILC & LP
ILC & SS
ILC, LP & SS
LP & SS
ILP & SS
P & B/S
SS & B/S
Adopted children & LC
Death of adopted children
w/o DS
Surviving relative up to 5th
degree
*right to inherit ab

Inheritance
Entire estate, shared
equally
100% to LC
100% to LC
SS=1LC
10:5
10:5, SS=1LC
Entire estate

Entire to parents

Equally
Parents and relatives by
blood
State is the heir

intestanto
Mixed Succesion
-partly by will, partly by operation of law
-testator made a will but omitted some properties or
testator acquired new properties after the execution of
last will.
*compulsory heirs have no right to insist legitime be in
form of property. It is sufficient that legitime is paid in
cash.
GROSS ESTATE
-consists of all property owned by decendent at the time
of his death, including SBRM (stocks, bonds, real estate,
mortgages) and other property that technically belonged
to him. However it shall not include exclusive properties
of SS.
Composition of GE
Real and personal, tangible and intangible, wherever
located for decedent citizens and resident aliens.
In case of nonresident- only properties located in the
phil.
Real property-attached to land
Tangible personal property- property with physical form
that could be seen or touched.
Intangible personal property- property that has no
physical form such as bonds and securities
**notes
- the situs of the property is the domicile or residence of
the owner
- shares of stock by NRA from domestic corp are taxable
in the Philippines
- Bonds, mortgages and cert of stock are taxable at the
place where they physicallt located
- intangible personal prop in the phil- subject to rule of
reprocity
Valuation in GE
*fmv at the date of decendents death
* for real prop-FMV from provincial/city assessors or BIR
commissioner, whichever is higher
*for perso prop:
recently acquired-acquisition
previously acquired- current market price
*stocks, bonds and other securities

if listed in local stock exchange- value bet highest

and lowest quoted selling prices at the date nearest the
date of death if none is available on the date of death
if not listed in lse
unlisted common shares- book value at DOD
unlisted pref shares- par value
*in determining the bv, appraisal surplus shall no tbe
considered as well as the value assigned to pref shares
Additions to GE
Some properties that are not physically included at the
estate at the DOD but are still included in GE for
computation of estate tax
1.
a.
b.
c.
d.
2.
a.
b.
c.
d.

TAXABLE TRANSFERS (RCGI)

Revocable transfers
Transfers in contemplation of death
Prop passing under general power of appointment
Transfer for insufficient consideration
Others (ILIR)
Decendents interest accrued at the DOD
Proceeds of life insurance with revocable beneficiary
Claims against insolvent person
Amount received by heirs under RA No 4917
Revocable Transfer
- transfer of prop with retention or reservation of rights
over the prop while donor still llives.
*by gift where donor has reserves power to alter amend
or revoke donation
*donor retains the option to relinquish such power in
contemplation of death
General rule: If enjoyment of prop transferred by
decedent is subject at the DOD to any change through
exercise of power to revoke, alter, amend or terminate
the transfer, the transferred prop is included in
decedents estate.
*mental incompetence of the decedent does not destroy
power to revoke
*power continues to exist eventhough decedent may not
have been capable of exercising it
Notes:
Revocable transfers cover the ff:
*transfer w/ retention to income/ right to designate
persons who will enjoy the income or pro
*