TRANSFER TAXES

Transfer taxes are taxes imposed upon the gratuitous disposition of private properties or rights.
Gratuitous transfer is one that neither imposes burden nor requires consideration from transferee or
recipient. The transfer of ownership is free because of the absence of financial consideration. Hence,
gratuitous transfers are essentially donations. The applicable taxes on gratuitous transfers are as follows:

Effectivity Type Tax Object of Taxation Nature

Upon death of the donor mortis causa Estate Tax Privilege to

DONATION transfer Excise Tax

During the lifetime of the inter-vivos Donor's Tax gratuitously

donor and the done.

ESTATE TAX

Estate Tas is a tax imposed on the privilege that a person is given in controlling to a certain extent,
the disposition of his property to take effect upon death. As shown in the table above, Estate Tax is an
excise tax imposed on the act of passing the ownership of property at the time of death and not on the
value of the property or right.

◾ Accrual: It accrus as of the death of the decedent, notwithstanding the postponement of the
postponement of the actual possession or enjoyment of the estate by the beneficiary. Upon the death of
the decedent, succession takes place and the right of the "State" to the tax the privelege to transmit the
estate vests instantly upon death(RR 2-2003).

◾ Filling of Estate Tax Return:

♦ Decedent died before 2018: within 6 months after death

♦ Decedent died upon/during effectively of TRAIN Law: 1 year from date of death

◽ The accrual of the tax is distinct from the obligation to pay the same(filing period)

◽ Under meritorious cases (to be determined by the BIR), filing of estate tax return may

be extended for a period of not more than 30 days

◾ Taxpayer: The "estate" of the decedent as a juridical person, represented by the administrator,
executor or legal heirs.
◾ Personal obligation to file and pay the applicable taxes:

♦ Primarily liable: Administrator or executor

♦ Secondarily liable: Any of the heirs

◾ Law to be applied: The law/statue in force as of the date of death of the decedent.

Kinds of Heirs

1.) Compulsory Heirs. They inherit with or without a will.

◾ Primary Compulsory Heirs

♦ Legitimate children and descendants

♦ Illegitimate children

♦ Widow or widower

◾ Secondary Compulsory Heirs

♦ In default of legitimate children and descendants, legitimate parents and

descendants.

◽ The compulsory heirs are entitled to their legitime, with or without a will, unless

validly "dis-inherited".

2.) Voluntary Heirs. They inherit only if they are in the will.

3.) Intestate Heirs

• The compulsory heirs in restatement succession are also heirs in intestate succession.

They are entitled to their legitime. However, as to the free portion of the estate, it shall

be distributed to the following intestate heirs as follows(order of priority):

a.) Legitimate children

b.) Legitimate parents

c.) Illegitimate children

d.) Spouse

e.) Brothers or sisters

f.) Relatives by consanguinity up to 5th civil degree

g.) State
Survivor Legitime Notes

LC 1/2 divide by the number of LC, whether they survive alone or with

concurring compulsory heir(CH)

1 LC 1/2

SS 1/4

2 or more LC 1/2

SS Equal to 1 LC

LC 1/2 All the concurring CH get get from the hail free portion, the

SS 1/4 share of the SS having preference over that of the IC, whose

IC 1/2 of 1 LC share may suffer reduction pro-rata because there is no

LPA 1/2 preference among themselves.

LPA 1/2 Whether they survive alone or with concurring CH

IC 1/4 IC succeed in the 1/4 in equal shares

LPA 1/2

SS 1/4

LPA 1/2

SS 1/8

IC 1/4

IC 1/2 Divide equally among the IC

SS 1/3

IC 1/3

1/2 1/3 if marriage is in articulo mortis and deceased spouse dies

Within 3 months after the marriage

IP 1/2

IP Excluded Children inherit in the amounts established in the foregoing rules

Any child It depends

IP 1/4 Only the parents of IC are included. Grandparents and other

SS 1/4 ascendants are excluded.