Saturday, June 4, 2011

Estate Planning

In the last month, I have come to realize the value of estate planning, and preparing for ones death, even when one is perfectly healthy in the present times.  The death of three different individuals and the legal problems caused by their death was brought to my attention.

Scenario number one involved a very close friend of mine who just recently died of pancreatic cancer.  Perhaps holding on to the very last minute that she would live, she did not consider to express her intention (on paper) under what law she wishes to retire.  Pass forward a few days after her death, her husband filed in her behalf for retirement under Republic Act 1616. Unfortunately, by then it was too late and all that the husband was entitled to was survivorship benefit and the proceeds of the life insurance.  Certainly no longer the lump sum that she could have been entitled to had she decided to prepare on paper that she wished to retire under R.A. 1616.  It was difficult to break it to the husband, but I somehow skirted the issue and just granted the request for terminal leave by reason of separation by death.

Scenario number two, an employee had retired (prior to her death) and filed for retirement benefits under R.A. 1616.  She filed it before her death, but she died just before she was able to receive it. There was no named beneficiary in the retirement benefit, so her siblings (she having no parents nor children left) went after the P2.5 million worth of lump sum benefit she was entitled to.  Now, considering she died intestate (without a will), after satisfying the share of all compulsory heirs (under Philippine law these are the heirs you CANNOT deprive except in exceptional circumstances), the remaining part of the estate would have to be distributed in probate courte.

Scenario number three, my husband's cousin has been living and doing business in Saipan for years.  In 2009 he died quite suddenly of a heart attack, leaving no children and an ex-wife.  Although I do not know the law in Saipan, I can bet that just like here, considering he died intestate, everything has to go to probate court.  His relatives, worried about the business and all its assets going to the wrong person inquired from me what they could or needed to do.  I suggested they go to Saipan to oversee the actions of the lawyer who was appointed as Administrator of the estate.  They said they can't because they have limited means and are just living off retirement income.  Sadly, that case will go on without them and possibly at loss to them, because it will be distributed (if ever) without their knowledge or consent to whoever poses as a creditor.  I think my husband's cousin would have been better off preparing a Will to ensure that his estate will not be butchered off between the creditors and other "interested parties" upon his death.

The foreigner here with assets locally (in the Philippines) and abroad (in their home countries) would do well to think about how to plan the disposition of their properties upon their death. It must be emphasized that under Philippine law, "intestate and testamentary successions, both with respect to the order of succession and to the amount of successional rights and to the intrinsic validity of testamentary provisions, shall be regulated by the national law of the person whose succession is under consideration, whatever may be the nature of the property and regardless of the country wherein said property may be found."   This simply means that in regard to how to "apportion" the property, the national law of the person concerned shall be what governs.  This becomes especially problematic in the case when there are real properties situated in one place, and personal properties (e.g. stocks, 401 (k)) acquired somewhere else.

It is a long story I cannot write about in one sitting. :) I will try to sit down to write about it in greater length in some future time when time permits me. :)  In the meantime, anyone can pose queries regarding it in order for me to come up with something more succinct. :)   


  1. Good work on this. We need a lot more knowledge on this subject, and not just the foreigner readers.

    It's human nature to ignore the 'end game', but oh my goodness what a burden is left on the survivors when one passes with no provisions for settling things.

    One of life's duties that's a bit unpleasant to contemplate, but really necessary to face up to.

  2. It is especially heartbreaking when relatives begin to fight over the inheritance. What should be a moment of mutual consolation and a time of mourning becomes a time of arguing over who gets what. At least if there is a will, they can (hopefully) live with the fact that that is the deceased's wishes.