Someone dies, without leaving a will and testament—or that will is contested, by heirs who feel they didn’t get their rightful share. What happens next? Lawyers explain the legal options, and what they can expect in the long and often frustrating wait for the case to be resolved in the courts.
The first step is to determine the gross value of the estate by making an inventory of the properties left by the deceased, getting the current market value of real and personal tangible or intangible property wherever located in the case of citizens and resident aliens.
If a family disagrees on the partition of the assets, they can hire a lawyer who will draw up an extrajudicial settlement/partition of the estate.
If the deceased head of the family left a will (even a holographic one or a handwritten will), and was able to appoint an executor or administrator of the estate, then he shall take charge of payment of the tax and the preparation and filing of the estate tax return. This may be provided in the will of the deceased (in case there is one) or the amount of the tax to be paid may be advanced by any or all of the heirs. If there is no executor or administrator, the heirs may appoint one.
In instances where the head of the family decides to give properties and any of his assets to his heirs prior to his impending death, the transfers of property in contemplation of death are still subject to estate tax. The property transferred will still form part of the gross estate of the decedent for purposes of the estate tax.
With the high cost of the estate tax, the head of the family can set aside some cash, put it in an escrow account (a conditional fund to be released only upon his death and only for the purpose of paying the estate tax) or in the bank account of one of his children.’ This fund can be used by the heirs to settle the taxes.
Probably the most helpful advice in dealing with legal issues on inheritance and taxes is for the head of the family to do some estate planning. Atty. Pascual suggests the transfer of the assets/properties to the heirs long before one’s old age or anticipated dying years (while the parents are still of sound mind and relatively good health). This will entail payment of either capital gains tax (if done through a deed of sale) or donor’s tax (if done via a donation or a sale for less than the market value of the property), but at least the parent can set aside money for such taxes. Usually when a parent dies, the heirs are left scrambling for cash to pay the estate taxes. By then, the value of the assets would be higher, too, thus entailing higher taxes.