ESTATE PLANNING FOR FAMILIES AND WEALTH PRESERVATION: Securing the future, today

UNCLE GIO passed away when he was 94 years old.

He already lived in a senior’s home in upstate Ontario, kept his Philippine citizenship and has assets both in Canada and family back in the Philippines.  In the States he has one child from another partner. His wife now also 90, still lives in a cottage also in Toronto with her youngest son. Even before his death they were in very good terms, despite the presence of an illegitimate child, whose mother died of COVID-19 in 2020. Their youngest daughter lives in Spain and his second and third children, stayed in the Philippines, one living in Iloilo and and the other a nun based in Dumaguete.

Reading through this description, everything sounds tricky and complicated, manily because of the relationships and locations. But with proper estate planning, things worked out well.

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Uncle Gio, in his prime was a salesman for SunLife, which took him to Canada in his prime. There he continued to manage a team of insurance consultants, while working on his tiny backyard farm in Ontario. His knowledge of the businesses made him spend a lot of the time to plan his estate well..

And though his death, was a deeply emotional and challenging time, the grief did not extend after his burial. He had everything in place, removing the complication of the legal process of inheritance. Even for his children based on Philippine law provides clear guidelines on how estates are distributed, ensuring fairness and minimizing potential conflicts.

Planning the wealth before and after

When the bulk of a family’s income and stability relies on inherited property, the stakes are especially high. This scenario highlights the importance of estate planning and the legal structures that govern succession in the Philippines.

Consider a case where the family is thrust into uncertainty upon discovering a handwritten will, in which the patriarch has left all of his property to a non-relative. In such cases, where the will appears to go against the expectations of the family, Filipino law offers guidance and protection. Thanks to the Philippine Civil Code, clear rules on succession ensure that the family’s rightful inheritance is not lost, even in the face of surprising decisions by the deceased

The rules governing estate distribution in the Philippines fall under three categories: compulsory succession, testamentary succession, and intestate succession. Compulsory succession is the backbone of inheritance law, dictating that a portion of the deceased’s estate must automatically go to specific family members, regardless of the contents of a will.

In the case of a widow, son, and daughter, for example, the law ensures that half of the estate is reserved for the legitimate children and widow. This system protects the rights of these family members, ensuring that they receive their fair share

Possible complications

However, complications can arise when, for example, an illegitimate child surfaces and claims a portion of the estate. The law provides clarity here as well, granting the illegitimate child half the share of a legitimate one, thus maintaining balance among all claimants. This structure, while complex, ensures that familial bonds—legitimate or otherwise—are respected..

Beyond compulsory succession, testamentary succession comes into play. This refers to the execution of a will that deals with the portion of the estate not governed by compulsory rules. When drafting a will, testators must be mindful of the restrictions set by law. A will cannot disinherit compulsory heirs or violate public policy. An attempt to gift a property to a common-law spouse, for example, would be considered invalid under the law, as such actions are viewed as a circumvention of legal restrictions on donations.

If there is no will, there is a way

In cases where a will is absent, intestate succession ensures that the remaining estate is distributed according to the same principles laid out in compulsory succession. This final legal mechanism ensures that no part of the estate is left unallocated and that the process of inheritance is carried out smoothly and fairly.

Estate planning, therefore, is not just a legal necessity but a tool for preserving family harmony. By planning in advance and following legal procedures, families can avoid bitter disputes and confusion, allowing them to focus on healing after the loss of a loved one.

The legal framework protects the family’s interests while respecting the wishes of the deceased, ensuring that wealth is preserved across generations. This careful balance between family rights and personal wishes lies at the heart of estate planning in the Philippines, making it an essential practice for anyone with significant assets to protect.

Legacy planning vs. estate planning

Legacy planning is closely related to estate planning but with a broader focus. While estate planning typically centers on the legal and financial transfer of assets after death, legacy planning goes beyond this to include the lasting impact one wants to leave behind—be it values, philanthropic efforts, or business continuity. Legacy planning in the Philippines often involves:

Wealth transfer and succession: This includes creating a detailed plan to pass on both tangible assets (such as property, investments, and businesses) and intangible assets like family traditions and values. It ensures that not only financial wealth but also personal beliefs and principles are carried forward.

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Philanthropy and social responsibility: Many individuals and families in the Philippines incorporate charitable giving or set up foundations as part of their legacy. This could involve endowing scholarships, supporting causes, or establishing family foundations that continue their philanthropic activities even after their passing.

Business succession: For business owners, legacy planning includes strategies to ensure the continuity of the family business. It involves preparing the next generation to take over leadership roles, creating structures that protect the business’s long-term survival, and aligning the business with the family’s vision for future generations.

Cultural and family legacy: This aspect focuses on preserving family history, values, and cultural heritage. In Filipino families, legacy planning may involve storytelling, recording family traditions, or preparing younger generations to uphold family values.

Legacy planning is growing in importance, especially among high-net-worth individuals and families who want to ensure not only that their wealth is managed responsibly but that their contributions to society, family unity, and values continue across generations. -Research and story by Deriq T. Bernard

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