GROSS ESTATE OF MARRIED DECEDENT MARRIAGE SETTLEMENT The determination of the gross estate of the decedent who is married will depend upon the property relations between the spouses. The spouse may, in the marriage settlements, agree upon the regime of absolute community, conjugal partnership of gains, complete separation of property, or any othe regime. In thwe absence of a marriage settlement, or when the regime agreed upon is void, the property relations of the spouses shall be governed by the following regime or system: 1. Conjugal Partnership of Gains, if married before August 3,1988. 2. Absolute Community of Property, if married on or after August 3,1988 ( Art. 75, Family Code) Note: the Family Code took effect on August 4, 1988. Conjugal Partnership of Gains The regime of Conjugal Partnership of Gains is also called Relative Community of Property.
A. CONJUGAL PROPERTIES 1. 2. 3. 4. 5. 6. 7.
Those acquired by onerous title during the marriage at the expense of the common fund, whether the acquisition be for the partnership, or for only one of the spouses; Those obtained from labor, industry, work, or profession of either both the spouses; The fruits, natural, industrial, or civil, due or received during the marriage from the common property,as well as the net fruits from the exclusive property of each spouse; The share of either spouse in the hidden treasure which the law awards to the finder or owner of the property where the treasure is found; Thise acquired through occupation such as fishing and hunting; Livestock existing upon the dissolution of the partnership in the excess of the number of each kind brought to the marriage by either spouse and; Those which are acquired by chance, such as winnings from gambling or betting. However, losses therefrom shall be borne exclusively by the loser-spouse.
B. EXCLUSIVE PROPERTIES 1. That which is brought to the marriage as his/her own; 2. That which each acquires during the marriage by gratuitous title; 3. That which is acquired by right or redemption, by barter or by exchange with property belonging to only one of the spouses; and 4. That which is purchased with the exclusive money of the wife or of the husband. Absolute Community of Property The Absolute Community of Property between the spouses shall commence at the precise moment that the marriage is celebrated.
A. COMMUNITY PROPERTIES 1. ALL properties owned by the spouses at the time of the marriage, and 2. ALL properties acquired thereafter. B. EXCLUSIVE PROPERTIES 1. Property acquired during the marriage by gratuitous title by either spouse, and the fruits as well as income thereof, if any, unless it is expressly provided by the donor, testator or grantor that they shalol form part of the community property; 2. Property for personal and exclusive use of either spouse. However jewelry shall form part of the community property; and 3. Property acquired before the marriage by either spouse who has legitimate descendants by a former marriage, and the fruits as well as the income, if any, of such property.
Similarities Between the Regimes of the Conjugal Partnership and Absolute Community Property
Conjugal Partnership
Absolute Community
The property acquired during the marriage (other than inheritance or donation)
Conjugal Property
Community Property
Property acquired from labor, industry, work or profession of the spouses
Conjugal Property
Community Property
Fruits or income received during the marriage comming from the common property
Conjugal Property
Community Property
Property inherited or donated during the marriage
Exclusive Property
Exclusive Property
Differences Between the System of Conjugal Partnership and Absolute Community of Property Property Property acquired before marriage, or brought to the marriage Fruits or income due or received during the marriage from exclusive property
1.
2.
Conjugal Partnership Exclusive Property Conjugal Property
Formula for Gross Estate of Married Decedent If the couple was under the conjugal partnership of gains Conjugal Properties xxx Add: Exclusive Properties of Decedent GROSS ESTATE If the couple was under the absolute community of properties Community properties Add: Exclusive properties of decedent GROSS ESTATE
ILLUSTRATIVE PROBLEMS IP 1. Mr. And Mrs. J. Reyes have the following assets: 1. Properties inherited by Mr. Reyes before the marriage 100,000 2. Properties brought to the marriage by Mrs. Reyes 400,000 3. Properties inherited during the marriage by Mr. Reyes 200,000 4. Income of the properties in No. 3 20,000 5. Properties inherited during the marriage by Mrs. Reyes 500,000 6. Income from properties in No. 5 50,000 7. Property acquired during the marriage 300,000 8. Income of the property in No. 7 100,000 Required: A. Classify ther properties under Conjugal Partnership of Gains. B. Classify the properties under Absolute Community of Property.
Absolute community Community Property Exclusive Property
xxx xxx xxx xxx xxx
SOLUTIONS: A. UNDER CONJUGAL PARTNERSHIP 1. Conjugal Properties Property acquired during the marriage 300,000 Income of properties inherited during the marriage by Mr. Reyes Income of properties inherited during marriage by Mrs. Reyes 50,000 Income of properties acquired during marriage 100,000 TOTAL CONJUGAL PROPERTIES 470,000 2.
Exclusive Properties of Mr. Reyes Properties inherited by Mr. Reyes 100,000 Properties inherited during the marriage by Mr. Reyes 200,000 TOTAL EXCLUSIVE PROPERTIES OF MR. REYES 300,000
3.
Exclusive Properties of Mrs. Reyes Properties brought to the marriage by Mrs. Reyes 400,000 Properties inherited during the marriage by Mrs. Reyes 500,000 TOTAL EXCLUSIVE PROPERTIES OF MRS. REYES 900,000
20,000
B. UNDER ABSOLUTE COMMUNITY 4. Community Properties Properties inherited by Mrs. Reyes before the marriage 100,000 Properties brought to the marriage by Mrs. Reyes 400,000 Property acquired duriong marriage Income of property acquired during the marriage 100,000 TOTAL COMMUNITY PROPERTIES 900,000 5.
Exclusive Properties of Mr. Reyes Properties inherited during marriage by Mr. Reyes 200,000 .Income of properties inherited during marriage 20,000 TOTAL EXCLUSIVE PROPERTIES OF MR. REYES 220,000
6.
Exclusive Properties of Mr. Reyes Properties inherited during the marriage by Mrs. Reyes 500,000 Income of properties inherited during the marriage by Mrs. Reyes 50,000 TOTAL EXCLUSIVE PROPERTIES OF MRS. REYES 550,000
300,000
IP 2. The following information are gathered regarding the inheritance due to death of a married individual, Filipino and and a resident of Baguio City, Philippines: *Residential house and lot in Baguio, acquired at P1,000,000 with zonal value of P3,000,000 at the date of death. *Jewelry found on the body of the decedent at the date of death, with fair market value of P500,000. This asset is determined as exclusive property of the decedent.
*Real property in Mindanao, Philippines, bought 10 years ago, assessed at that time for P1,000,000. An interested buyer would like to buy this property a week before his death at P5,000,000. *Investment in Bonds, local and foreign, P600,000. *Shares of stock of various domestic corporations, listed in the local stock exchange at date of death at aggregate value of 400,000. *Real property located in Pangasinan, inherited from his father 3 years ago. This was taxed at 2,500,000 when transferred from his father to hi name. At that time, he assumed the unpaid mortgage of 500,000. This has 20% assessment level at declared fair market value of 2,600,000. The BIR zonal valuation stated a fair value of 2,800,000 at date of death. *Income from farm earned before the date of death, 800,000 (net of related income tax). *Commercial lot inherited by wife during marriage. This was valued at 6,000,000 when inherited by wife and it has a fair market value of 10,000,000 at the date of death, 3,000,000, (net of related income tax). *Property brought to marriage by his wife, 6,000,000. Deductions claimed by the executor: Actual funerla expenses 180,000 Judicial expenses 900,000 Medical expenses 1,000,000 Unpaid mortgage on property in Pangasinan 200,000 Various claims of creditors 8,000,000 Claims against insolvent person 800,000 Required: A.
Under the regime of conjugal partnership of gains, compute the following: 1. The gross exclusive estate. 2. The gross conjugal estate. 3. The total gross estate.
B.
Under the regime of absolute community of property, compute the following: 1. The gross exclusive estate. 2. The gross conjugal estate. 3. The total gross estate.
SOLUTION to IP 2 Conjugal Partnership of Gains Properties: Residential house and lot in Baguio City Jewelry Real property in Mindanao, Philippines Investment in bonds Shares of stock Inheritance from the decedent father Income from farm Income from wife’s exclusive property Claims against insolvent person TOTAL
Absolute Community of Property Properties: Residential house and lot in Baguio City Jewelry Real property in Mindanao, Philippines Investment in bonds Shares of stock Inheritance from the decedent father Income from farm Claims against insolvent person Prperty brought to marriage by wife TOTAL
IP 3.
(1) Exclusive
(2) Conjugal 3,000,000
500,000
2,800,000 _________ 3,300,000
(4) Exclusive
5,000,000 600,000 400,000 800,000 3,000,000 800,000 13,600,000
(5) Community 3,000,000
500,000
2,800,000 _________ 3,300,000
5,000,000 600,000 400,000 800,000 800,000 6,000,000 16,600,000
(3) Total 3,000,000 500,000 5,000,000 600,000 400,000 2,800,000 800,000 3,000,000 800,000 16,900,000
(6) Total 3,000,000 500,000 5,000,000 600,000 400,000 2,800,000 800,000 800,000 6,000,000 16,900,000
1999. Mr. H through his labor acquired personal properties valued at 4,000,000. Mrs. W acquired real properties, valued at 1,000,000 and inherited commercial buildings worth 2,000,000 from her grandparents. 2000. Mr. H and Mrs. W got married. 2001 to 2004. Through their joint income, they were able to acquire their residential house and lot at 3,000,000. Mr. H received house and lot in Tarlac as inheritance from his father, valued at 1,000,000; H & W used this as their family home. Mrs. W earned rent income of 200,000 from the commercial building she had inherited from here grandparents. In November 2004, Mr. H died of heart attack. Mr. H?
Which of the above properties should be included in the gross estate of
Property ownership of H & W is governed by Absolute Commnity under the Family Code because the couple was married after August 3, 1988, and as such, the properties to be included in the gross estate of Mr. H are: Community Property: H’s personal properties acquired in 1997
400,000
Properties of W acquired before marriage (1M+2M) 3,000,000 Residential house and lot Rent Income Total Community Property Add: Exclusive Property of H, inheritance from his father TOTAL GROSS ESTATE OF MR. H
3,000,000 200,000 6,600,000 1,000,000 7,600,000
Note: 1. The properties acquired by the wife during marriage through gratuitous transfer reamain exclusive property of the wife and should not be included in the gross estate of the husband. 2. The gross esatate should be valued at their FMV, fair market value at the date of death. 3. Exclusive property does not become a community property just beacause it is used as family home. 4. Fruits or income due during the marriage coming from exclusive property is an exclusive property under the absolute community property regime. 5. As a rule, the earnings of the exclusive or conjugal properties have been subjected o income taxes which is different from estate tax. Hence, thse earnings will still be subjected to transfer taxes. IP 4. Concepcion, married to Domingo Jugalab on June 12, 1995 died in 1999 leaving the following properties: Car purchased in 1990
63,000
250,000
House and lot acquired during marriage from conjugal funds 800,000 Savings deposit with Banco Filipino, obtained through labor and industry of Domingo Fishpond in Pangasinan, acquired through the income from Concepcio’s Goto House Lotto winnings by Domingo Yamaha wonderbike purchased by Concepcion out of her exclusive property Riceland brought into marriage by Domingo 200,000 Shares of stocks inherited by Concepcion from her mother who died two weeks ago
90,000 200,000 5,000,000 50,000
Required: Compute the gross estate. Conjugal Property: House and lot Savings deposit Fishpond in Pangasinan Winnings in Lotto Exclusive Poperty: Car Yamaha wonderbike Shares of stocks GROSS ESTATE
800,000
90,000 200,000 5,000,000
250,000 50,000
63,000
6,090,000
363,000 6,453,000
IP5. Dante Pugante, Filipino, married to Ada Maganda on February 10, 2000, died March 20, 2004 leaving the following properties: Real properties: Riceland bought by Dante in 2002 – 720,000 House and lot which he brought into the marriage – 3,400,000 Subdivision lot inherited by Dante from his father in 2002 – 1,300,000 Coconut land inherited by Ada from her father who died in 1995 – 1,200,000 Personal Properties: Computer set given as birthday gift to Ada by her mother in 2003 – 240,000 Rolex watch owned by Dante – 200,000 Cash in bank earned by the spouses during the marriage – 3,800,000
Required: Compute the gross estate of Dante if the marriage was under the absolute community of property regime. Community Property: Riceland House and Lot Cash in Bank Coconut land 9,120,000 Exclusive property: Rolex watch Subdivision lot 1,500,000 GROSS ESTATE 10,620,000
720,000 3,400,000 3,800,000 1,200,000 200,000 1,300,000
AKLAN STATE UNIVERSITY School of Management Sciences Second Midterm Quiz VILLANUEVA Business and Transfer Taxes
-O .
Name: ___________________________________ Course/Yr: __________ Score: _____ PROBLEM I Direction. If the property is includible in the gross estate, write A on the blank, if community property, and B on the blank, if exclusive property. If the property is not ncludible in the gross estate, write X. _______ a. Property inherited before the marriage. ________b. Property received as gift during the marriage. ________c. Income from property inherited in (a) above. ________d. Income from property received as gift during the marriage in (b) above. ________e. Property inherited by the spouse during the marriage.
________f. Property received as gift by the spouse during the marriage. ________g. Income received from the property in (e) above. ________h. Assets before marriage with decendants from previous marriage. ________i. Assets rceived as gift by spouse during marriage which was subsequently donated to a charity inter-vivos. PROBLEM 2 Dante Pugante, a Filipino, married to Ada Maganda on February 10, 2000, died March 20, 2004 leaving the following properties: Real Properties: 1. Riceland bought by Dante in 2002 – 720,000 2. House and lot which he brought into the marriage – 3,400,000 3. Subdivision lot inherited by Dante from his father in 2002 – 1,300,000 4. Coconut land inherited by Ada from her father who died in 1995 – 1,200,000 Personal Properties: 1. Computer set given as birthday gift to Ada by her mother in 2003 – 240,000 2. Rolex wathch owned by dante – 200,000 3. Cash in bank earned by the spouses during the marriage – 3,800,000. Required: How much is the 1. Community Property under Absolute Community Property Regime for Dante: ____________ 2. Exclusive Property under Absolute Community Property Regime for Dante: ____________ 3. Gross Estate under Absolute Community Property Regime for Dante: ____________ 4. Conjugal Property under Conjugal Partnership of Gains for Dante: ____________ 5. Exclusive property under Conjugal Partnership of Gains for Dante: ____________ 6. Gross Estate under under Conjugal Partnership of Gains for Dante: ____________ 7. Exclusive property under Conjugal Partnership of Gains for Ada: ____________ PROBLEM 3. . Concepcion, married to Domingo Jugalab on August 3, 1987 died leaving the following properties: Car purchased in 1980 House and lot acquired during marriage from conjugal funds 800,000 Savings deposit with Banco Filipino, obtained through labor and industry of Domingo Fishpond in Pangasinan, acquired through the income from Concepcio’s Goto House Lotto winnings by Domingo Yamaha wonderbike purchased by Concepcion out of her exclusive property Riceland brought into marriage by Domingo 200,000 Shares of stocks inherited by Concepcion from her mother who died two weeks ago 63,000 Required: 1. Compute the exclusive property of Concepcion: ________________ 2. Compute the gross estate of Concepcion: _______________ PROPBLEM 4. Spouses Tyrone & Jane Reyes have the following assets: a) Properties inherited by Mr. Reyes before the marriage 100,000 b) Properties brought to the marriage by Mrs. Reyes 400,000 c) Properties inherited during the marriage by Mr. Reyes 200,000 d) Income of the properties in (c) 20,000 e) Properties inherited during the marriage by Mrs. Reyes 500,000
250,000
90,000 200,000 5,000,000 50,000
f)
Income from properties in (e) 50,000 g) Property acquired during the marriage 300,000 h) Income of the property in (h)
100,000
Required: Compute the following: 1. Total Exclusive Properties under Absolute Community Regime: _________________ 2. Total Exclusive Properties under Conjugal Partnership of Gains: _________________ 3. Total Community Properties: _________________ 4. Total Conjugal Properties: __________________ 5. Total Exclusive Properties of Mr. Reyes under Absolute Community Regime: _________________ 6. Total Exclusive Properties of Mrs. Reyes under Absolute Community Regime: _________________ 7. Total Exclusive Properties of Mr. Reyes under Conjugal Partnership of Gains: _________________ 8. Total Exclusive Properties of Mrs. Reyes under Conjugal Partnership of Gains: _________________ PROBLEM 5. The following data pertain to the death of a resident alien: Property acquired by decedent prior to marriage 600,000 Property acquired by surviving spouse prior to marriage 700,000 Property inherited by decedent during marriage 800,000 Property inherited by the surviving spouse during marriage 900,000 Property acquired through labor during marriage 1,000,000 Income derived from property inherited by the surviving spouse During marriage inclusive of income tax of 50,000 450,000 Time deposit (excluding interest before death, 90,000 and interest After death, 60,000) 850,000 Required: Determine the gross estate under the following property relationships: 1. Conjugal partnership of gains regime: _______________ 2. Absolute community of property regime: _________________ PROBLEM 6. Concepcion, married to Domingo Jugalab on June 12, 1995 died in 1999 leaving the following the properties: Car purchased in 1990
63,000
House and lot acquired during marriage from conjugal funds 800,000 Savings deposit with Banco Filipino, obtained through labor and industry of Domingo Fishpond in Pangasinan, acquired through the income from Concepcio’s Goto House Lotto winnings by Domingo Yamaha wonderbike purchased by Concepcion out of her exclusive property Riceland brought into marriage by Domingo 100,000 Shares of stocks inherited by Concepcion from her mother who died two weeks ago
250,000
90,000 200,000 5,000,000 50,000
Required: 1. Compute the exclusive property of Concepcion: ________________ 2. Compute the gross estate of Concepcion: _______________ ======================================================== =====================================+
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