Business and Transfer Taxes Notes

Business and Transfer Taxes Notes EstateTax Principles of Succession EleMENTS OF SUCCESSION 1. Deceased/ Decedent–Person who died. Testator/ Testatrix (F)– person who wrote the last will and testament. Also called the decedent. 2. Estate- a bulk of property left behind by the decedent. 3. Successors/ Heir- the persons to whom theestate is given to. 4.Executor/Administrator– person who will take charge of the estate before the distribution. ** Executor- person named in the will by the testator ** Administrator- person appointed by the courts in the absence of an assigned executor. Succession –mode of acquisition by virtue of which the property rights and obligations, to the extent of the value of the Estate of a person are transmitted through his death to others by will or operation of Law. ( Reyes) Things Transmissible in Succession 1. Property –things that the decedent owned before the time of his death. a. Real Estate/ Property-land, building or anything that is attached to the soilwith permanence. b.Tangible Property-property that can beseen or touched. Eg. Cars, Jewelry, Electronic Gadgets, etc. c.Intangible Property-property thatcannot be seen or touched. Eg. Rights, Franchises, Shares, bonds, etc. 2.Rights –legal claims, franchises, (could be thesame as intangible property) 3.Obligations –unpaid debt Kinds of Succession 1. Testamentary Succession-succession whichresults from a designation of heirs made in thelast will and testament executed by thetestator. 2.Intestate/Legal Succession- succession whichresults from the operation of law where there isno last will and testament or the LW&T is voidfor any reason given by law. 3. Mixed Succession – succession which resultspartly from the LW&T and Partly from theoperation of law. Kinds of Heirs ~ Primary Compulsory Heirs – heirs in asuccession whether there is or there is no lastwill and testament. These include:W L e g i t i m a t e Children & L e g i t i m a t e DescendantsW L e g i t i m a t e Surviving Spouse L e g i t i m a t e d Children Legitimate Children

- all children born & conceivedNOT out of wedlock.♪ L e g i t i m a t e C h i l d ♪Legally Adopted Child♪ Legitim ated Child Illegitimate Children – all children born & conceivedout of wedlock. “All Children conceived and born outside a valid marriage are considered illegitimate.” ~(Art 165, Family Code of thePhilippines) ~ Secondary Compulsory Heir– only can getpart of the estate in the absence of theprimary compulsory heirs.W L e g i t i m a t e A s c e n d a n t s W Illigitimate Ascendant s ~ Voluntary Heirs – Heirs determined throughthe last willand testament. LAST WILL AND TESTAMENT –a will or testament is a document by which a person (the testator) regulates the rights of others over his or her property or family after death. For the devolution of property not disposed of by will, see inheritance and intestacy. In the strictests e n s e , " w i l l " i s a g e n e r a l t e r m, while "testament" applies only to dispositions of personal property (this distinction is seldom observed).A will is also used as the instrument in a trust. - A written instrument wherein the testator would adm inister his properties rights and obligation after his death. (acaylar) Codicil- addenums or attachments to the will. Kinds of Last Will and Testaments ~ Holographic Will -a will entirely written or created by the testator himself, signeda n d d a t e d a n d N O T s u bj ec t to legalf o r m a l i t i e s o n f o r m , w i t n e s s e s , o r ac knowledgement before a notary public.> > > T h i s k i n d o f w i l l d o e s n o t n e e d formalities because m a n y p e o p l e c a n recognize his ha n d w r i t i n g a n d i t c a n b e verified by a penmanship expert. ~ Notarial Will- a will that is created FOR thetestator by a 3 rd party, usually his lawyer,follows proper form, signed and dated infront of the required

number of witnessesand ack nowledged by the presence of anotary public.