What is Estate Planning?

“Frankly, for Die Broker this isn’t estate planning, it’s premature death planning.”

Stephen M. Pollan and Mark Levine, authors of “Die Broke: A Radical, Four-Part Financial Plan”

By Realttorney®

Estate planning is the process of making decisions regarding the ownership and distribution of assets upon death, and taking proactive steps to increase and maximize the value of the estate while minimizing legal costs, taxes, and other expenses associated with death. It is a necessary process for everyone, no matter their age or financial situation.

Creating an estate plan is a significant part of financial planning for any individual. Creating an effective and comprehensive estate plan is a critical step for anyone looking to secure and protect their assets after death. As such, a comprehensive estate plan is composed of several components, which typically include a will, powers of attorney, health care directives, tax planning, and beneficiary designations.

A will is a formal document that dictates how the assets will be divided by the compulsory heirs upon the decedent’s death. Powers of attorney is a document executed that appoints someone to handle financial and medical decisions in the event the individual is incapacitated. Health care directives is a document written to provide instructions for medical care in the event of incapacity or death. In addition, tax planning should be taken into account to minimize the estate’s tax liabilities. Lastly, beneficiary designations should be established to ensure that the assets are distributed according to the individual’s wishes.

When creating an estate plan, it’s important to tailor the plan to the individual’s specific needs. Every person’s assets, family structure, and personal preferences are unique. Estate plans should be created with these specific needs and situations in mind in order to ensure that the individual’s wishes are properly executed upon his/her passing.

Estate planning services can be provided by a variety of professionals, depending on the complexity of the plan. Attorneys have the legal understanding to create the necessary documents and ensure that they are legally binding. Financial advisors can provide advice on how to maximize the value of the estate, as well as minimize taxes. Life insurance agents can provide advice on insurance policies that can help to protect the estate and/or the beneficiary-heirs. And, depending on the complexity of the estate plan and the individual’s needs, other professionals may also be consulted – investment bankers, and real estate brokers, among others.

In other words, estate planning can also be defined as a multi-disciplinary endeavor for designing a program for the effective management, enjoyment, and disposition of property – personal and real – of the planner at the least possible tax cost and avoidance of probate.

Therefore, it is important to find a professional who is qualified and experienced in estate planning, so that the estate plan put in place is wide-ranging and personalized to the individual’s particular needs.

On a final note, I leave you with an important insight of Atty. Edson T. Eufemio on why estate planning is not widespread and acceptable among Filipinos. He said: “In the Philippines, legal concerns are not the only ones that stand in the way of bringing the benefits of estate planning to the public. Cultural factors also exist since people rarely enjoy discussing mortality, especially their own. Further, children bringing up the benefits of estate planning to parents will seem like eager gold diggers.

It does not matter if you own several or merely one real property. Learn more about estate planning. Research. Ask around. And find the best professional suitable to your needs and personal circumstances.


Atty. Jojo is a real estate attorney, an estate planning attorney, a licensed real estate broker, and a PRC-accredited Lecturer/ Speaker for Training Programs in Real Estate. He is a Chartered Trust and Estate Planning (CTEP®) professional who is committed to educating Filipinos about the value and importance of having an estate plan in their lives.

What is an Estate Planning Attorney?

“Death is not the end. There remains the litigation over the estate.”

Ambrose Bierce, American short story writer, Journalist & Poet

By Realttorney®

An estate planning attorney is a special type of attorney who specializes in helping individuals and families plan for the orderly distribution of their assets after death or incapacity. He or she is a certified professional that creates an estate plan that will ensure the wishes of the individuals and families concerning their finances and properties are carried out after death or in the event of incapacitation.

Also known as an estate planner, some websites say that an estate planning attorney is someone who specializes in “end-of-life planning” or premature death planning. But, most importantly, an estate planning attorney helps inform and educate the general public about the estate planning process, as well as the laws, rules, and regulations that affect the transfer, partition, distribution, and taxation of one’s estate.

Why do you need an estate planning attorney?

Estate planning attorneys create an enduring legacy.

Estate planning attorneys review current estate laws and regulations to advise clients of their rights and duties, and suggest options for reducing taxes on their inheritance, providing for the care of family members, and creating an enduring legacy.

The role of an estate planning attorney is to provide clients with knowledgeable, compassionate advice that helps them make informed decisions regarding their financial and personal welfare. Moreover, the estate planner can help the clients properly administer the estate of a deceased family member or friend.

In this capacity, he can provide guidance on the tasks involved in settling an estate such as filing the necessary court documents, locating and appraising assets, and distributing the deceased’s property in accordance with the wishes of the client.

It is important to note that the benefits of working with an estate planning attorney are numerous. These include asset protection, avoidance of probate court proceedings, tax savings, and peace of mind. The process of estate planning involves a deep understanding of existing laws and interpretation of those laws with the purpose of developing an estate plan that works for the individual or family. Once the estate plan is in place, it is important to execute the documents and communicate any changes in laws that may impact the plan.

What do estate planning attorneys do?

An estate planning attorney is among several professionals (tax advisors, financial planners, and life insurance agents, among others) that assist individuals to create estate plans based on their unique situations and concerns.

Depending on the unique situation or circumstance of each client, the estate planner provides an array of services that include –

1. Identifying legal or compulsory heirs, legatees, or devisee;

2. Preparing or drafting a will, powers of attorney, and other estate planning documents;

3. Creating healthcare directives and plans for long-term care;

4. Assist in determining the best kind of trust for the client, creating such a trust that will protect the assets, and funding the trust to provide for the financial needs of the beneficiaries in the future;

5. Coordinate with the financial advisor to reduce estate tax and other tax burdens through effective tax planning; and

6. Identifying ways to avoid probate proceedings.

The cost of working with an estate planning attorney varies greatly depending on the complexity of the estate and the expectations of the client. Generally, legal fees range from a few thousand pesos to many thousands of pesos.

Yet, working with a trusted estate planner who has experience preparing estate planning documents is worth the investment in order to get the outcome desired. He is a treasured and reliable resource as one works through the process of estate planning.


Atty. Jojo is a real estate attorney, an estate planning attorney, a licensed real estate broker, and a PRC-accredited Lecturer/ Speaker for Training Programs in Real Estate. He is a Chartered Trust and Estate Planning (CTEP®) professional who is committed to educating Filipinos about the value and importance of having an estate plan in their lives.

How to Legally Not Pay VAT for the Ordinary Asset of a Corporation?

By Realttorney®

Most seasoned CRBs know the difference between an ordinary asset and a capital asset classification of real properties owned by different persons. And, most all know the types of internal revenue taxes that are due on the sale of the different asset classes.

As a review, the sale, barter or exchange of a real estate classified as a capital asset necessitates the payment of capital gains tax (CGT) and documentary stamp tax (DST) only. Meanwhile, if the parcel of land is defined as an ordinary asset of the registered owner then payment of creditable withholding tax (CWT), DST and value-added tax (VAT) is in order.

The biggest percentage of all three taxes is the 12% VAT. And, often, it is the deal breaker in a transaction with both seller and buyer refusing to shoulder the hefty amount of VAT. But, there is a way to avoid paying VAT for a real property defined as an ordinary asset of the registered owner. But, this can only be done if the registered owner is a single-asset corporation.

A common estate planning tool in the 1990s, real properties registered in the name of Family Holding Corporations are typically considered ordinary assets by the Bureau of Internal Revenue (BIR). But, if the deal can be structured where the buyer will purchase the shares of the single-asset family corporation then the payment of VAT can be dispensed with altogether.

Under BIR Revenue Regulation No. 6-2013, the value of the shares of stock at the time of sale shall be the fair market value (FMV) using the Adjusted Net Asset Method. Almost always, using the ANA method of RR No. 6-2013 increases the FMV of the share of stock of the corporation because the BIR would always look for the latest Appraisal Report to determine the current value of the real property and use this value in the computation of the BOOK VALUE of the shares of stock. In its simplest equation, book value is computed as such: total assets minus total liabilities plus retained earnings over the total outstanding number of shares. The value in the appraisal Report is inputted in the asset category.

However, BIR Revenue Regulation No. 20-2020, dated 3 August 2020 changed the rules again to determine the FMV of shares of stocks of corporations not listed and traded in the local stock exchange. Upon the effectivity of the latest Revenue Regulation, the following rule shall apply: “For common shares of stock, the BOOK VALUE based on the latest available financial statements duly certified by an independent public accountant prior to the date of sale, but not earlier than the immediately preceding taxable year, shall be considered as the prima facie fair market value.” What is the effect of this latest regulation?

Since BIR will no longer require the latest Appraisal Report then the FMV of the shares of stock of a single-asset corporation will definitely be lower versus the previous rule using the ANA Method. Finally, please remember that RA 10963 (TRAIN Law) increased the 5%-10% tax rates to a single 15% single tax rate on net capital gains realized by a person or domestic corporation from the sale, barter, exchange, or other disposition of shares of stock in a domestic corporation not traded in the local stock exchange.

Now, the manner and propriety of using a Family Holding Corporation as a wealth-preservation tool in the current regulatory environment is a totally different matter. But, it is observed that setting up a Family Holding Corporation is still somewhat popular among estate planners in today’s setting, “despite its dubious ability to actually save on taxes and transfer fees,” as Atty. Edson T. Eufemio said in his 2004 article in the Philippine Law Journal.


Atty. Jojo is a real estate attorney, an estate planning attorney, a licensed real estate broker, and a PRC-accredited Lecturer/ Speaker for Training Programs in Real Estate. He is a Chartered Trust and Estate Planning (CTEP®) professional who is committed to educating Filipinos about the value and importance of having an estate plan in their lives.

Things To Consider Before Purchasing a Parcel of Land Covered by an Emancipation Patent

Land has spawned countless disputes because man is inexorably bound to it from cradle to grave for domicile, life sustenance, and other fundamental needs.

Mr. Justice Presbiterio Velasco, in Del Castillo v. Orciga, G.R. No. 153850, August 31, 2006.

By Realttorney®

Before we answer the question above, we need to know what is an Emancipation Patent, who are qualified to receive such a patent, and how is it issued to a qualified beneficiary by government.

Presidential Decree No. 27 ordered the emancipation of all tenant farmers of private agricultural lands primarily devoted to rice and corn under a system of sharecrop or lease-tenancy, whether classified as landed estate or not as of October 21, 1972.

Under the same Decree, “tenant farmer, whether in land classified as landed estate or not, shall be deemed owner of a portion constituting a family-size farm of five (5) hectares if not irrigated and three (3) hectares if irrigated.”

Furthermore, it stated that “[i]n all cases, the landowner may retain an area of not more than seven (7) hectares if such landowner is cultivating such area or will now cultivate it.”

According to Del Castillo v. Orciga, G.R. No. 153850, August 31, 2006, “a Certificate of Land Transfer (CLT) is a document issued to a tenant-farmer, which proves inchoate ownership of an agricultural land primarily devoted to rice and corn production. It is issued in order for the tenant-farmer to acquire the land. This certificate prescribes the terms and conditions of ownership over said land and likewise describes the landholding its area and its location. A CLT is the provisional title of ownership over the landholding while the lot owner is awaiting full payment of the land’s value or for as long as the beneficiary is an ‘amortizing owner’”.

Land transfer under Pres. Decree No. 27 is effected in two (2) stages: (1) issuance of a CLT to a farmer-beneficiary as soon as DAR transfers the landholding to the farmer-beneficiary in recognition that said person is a “deemed owner”; and (2) issuance of an Emancipation Patent as proof of full ownership of the landholding upon full payment of the annual amortizations or lease rentals by the farmer or beneficiary.

On July 17, 1987, former President Corazon C. Aquino issued Executive Order No. 228 which provides that as of October 21, 1972, all qualified farmer-beneficiaries are now “deemed full owners” of the land they acquired by virtue of Pres. Decree No. 27, with the assumption that the farmer-beneficiary has fully paid the amortization prescribed by existing law.

In Maylem vs. Ellano, G.R. No. 162721, July 13, 2009, the Supreme Court stated that “No principle in agrarian reform law is indeed more settled than that the issuance of an emancipation patent entitles the farmer-beneficiary to the vested right of absolute ownership of the landholding, and it constitutes conclusive authority for the issuance of an original or transfer certificate of title in his name. It presupposes that the grantee or beneficiary has, following the issuance of a Certificate of Land Transfer, already complied with all the preconditions required under Pres. Decree No. No. 27, and that the landowner has been fully compensated for his property.

And upon the issuance of title, the grantee becomes the owner of the landholding and he thereby ceases to be a mere tenant or lessee. His right of ownership, once vested, becomes fixed and established and is no longer open to doubt or controversy.” Inescapably, the farmer-beneficiary becomes the owner of the subject property upon the issuance of the Emancipation Patent and, as such, enjoys the right to possess the same – a right that is an attribute of absolute ownership.

Having understood how an Emancipation Patent is issued, we now go to the issue at hand. Can you legally buy a land that is covered by an emancipation patent?

To answer, we seek guidance from DAR Opinion No. 70-97 dated July 1, 1997. It addressed the query on whether an awarded land covered by Emancipation Patent (EP) be the subject of a contract of sale.

DAR Opinion No. 70-97 answered the query in this manner:

“Please be informed that awarded lands covered by Emancipation Patents (EPs), undoubtedly, can be the subject of a contract of sale. As elucidated by the Supreme Court in the Case of Engracia Vinzons-Magana vs. Hon. Conrado Estrella, et al., 201 SCRA 536, the issuance of Emancipation Patent confers on the farmer-grantee a vested right of absolute ownership in the landholding — a right which has become fixed and established and is no longer open to doubt and controversy. Thus, Emancipation Patent is a proof of ownership which can be the subject of a contract of sale in the exercise of one’s right of ownership without violating the prohibitions embodied in Section 27 of R.A. No. 6657 (Comprehensive Agrarian Reform Law) relative to sale or disposition of awarded lands for a period of ten (10) years from their award because said provision of law solely applies to awarded lands under R.A. No. 6657 covered by Certificates of Land Ownership Award (CLOAs) and not to PD 27 lands covered by EPs.” [Underlining, italicizing, our for emphasis]

“Moreover, DAR Administrative Order No. 08, Series of 1995 further supports the view relative to sale or disposition of awarded lands under P.D. No. 27. Specifically, transfer of awarded lands under P.D. No. 27, as amended by Executive Order No. 228 may be allowed, provided the following shall be observed:

  1. that the productivity of the land shall be maintained;
  2. that the buyer will not exceed the landowner ceiling provided by law; and
  3. that the ownership ceiling of five (5) hectares shall be imposed.”

Therefore, it is unmistakable that a Filipino can purchase a parcel of land covered by an EP. However, there are several things that a prospective buyer will have to consider.

First, an EP is a land title covering a rice land or land devoted to planting corn. Therefore, it is more likely that the parcel of land is highly arable and irrigated, or found near an irrigation facility of the National Irrigation Administration (NIA). Hence, when a prospective purchaser is considering buying such a parcel of land, it is a must that “productivity of the land shall be maintained by the new owner.”

Second, the prospective buyer must not exceed the landowner ceiling provided by law. What is the ceiling? Before Commonwealth Act No. 141 [the Public Land Act] was amended, the landowner celling of agricultural lands was 24 hectares. Then this was reduced by Rep. Act No. 6940 to 12 hectares. This limit is for the application of an agricultural free patent covering lands of the public domain, which are alienable and disposable.

Third, the prospective buyer must also respect the ownership ceiling of 5 hectares imposed by Rep. Act No. 6657. Prior to this, under Pres. Decree No. 27, the ceiling on agricultural land ownership was 7 hectares for agrarian reform beneficiaries.

What is the difference between the ceiling imposed by the Public Land Act vis-à-vis the Comprehensive Agrarian Reform Law (CARL)?

The CARL covers all public and private agricultural lands which include other lands of the public domain devoted to or suitable for agriculture. Emphasis should be given to the phrase “devoted to or suitable for agriculture” in describing the type of lands, whether private or public lands in order that it may fall under the operation of the CARP.

Such phrase is used to describe the public lands that fall within the coverage of CARP as opposed to the public lands that are the subject of the Public Land Act, as amended, which is the law to be followed in the issuance of Homestead and Free Patents with respect to agricultural land of the public domain.

The Public Land Act governs only such lands of the public domain as are not timber or mineral lands. The term “public lands“, as used in the Public Land Act refers only to what was used to be known as public agricultural lands or what are otherwise known as alienable or disposable lands of the public domain.

Having said all these, in my opinion, the guiding principle here is that since lands that are covered by EPs fall under the coverage of the agrarian reform law, then the ceiling for the landholding will be the 5-hectare limit. But, this limit should not be counted as part of the ownership ceiling if the prospective buyer will be applying for an agricultural free patent for up to 12 hectares.

Fourth, the prospective buyer should take into account that if he or she will purchase a land covered by an EP then there is a possibility that the said land will remain as an agricultural land. Why? Because the land covered by the EP is irrigated or near an irrigation facility. If this is the case, then the same lot can never be converted into another classification, except agriculture.

Under the current rules on land conversion, it expressly provides that the following shall not be subject to and are non-negotiable for conversion: (1) all irrigated lands where water is available to support rice and other crop production, and all irrigated lands where water is not available for rice and other crop production but are within areas programmed for irrigation facility rehabilitation by the Department of Agriculture and NIA; and (2) all irrigable lands already covered by irrigation projects with firm funding commitments at the time of the application for land use conversion.

As a final word, the best buyer of an agricultural land covered by an Emancipation Patent is one who has the heart and fortitude of a farmer. Someone who has the passion for farming and the skill of a modern-day digital marketing professional. If the purchase is intended to convert the land into a farm tourism estate then such plan may not materialize due to the strict rules on land conversion.


Atty. Jojo is a real estate attorney, an estate planning attorney, a licensed real estate broker, and a PRC-accredited Lecturer/ Speaker for Training Programs on Real Estate. He is a Chartered Trust and Estate Planning (CTEP®) professional who is committed to educating Filipinos about the value and importance of having an estate plan in their lives.

Is a Notarized Post-Nuptial Agreement Legal in the Philippines?

“The Family Code itself provides in Article 76 that marriage settlements cannot be modified except prior to marriage.”

Mr. Justice Roberto A. Abad, in Pana v. Heirs of Jose Juanite, Sr. et al. G.R. No. 164201, December 10, 2012

By Realttorney®

I was referred to an online article entitled “What is a Post Nuptial Agreement in the Philippines?” last year, which when read by non-lawyers gives an impression that is contrary to legal tenets based on the Family Code of the Philippines.

The article gives sound estate planning advice when it stated that couples should consider prenuptial agreements before getting married and discuss amongst themselves their income and financial objectives. However, it gets dicey after that.

The article states the following:

“A postnuptial agreement is a contract you and your spouse sign after you are married to resolve marital trouble. It is comparable to a prenuptial agreement. However, it takes place after the Marriage. For couples who marry without a prenuptial agreement, it is not too late to establish a postnuptial agreement that addresses concerns of property division, financial management, spousal support, and business split in the event of a divorce or annulment.”

In fairness, the article recommends that couples seek the guidance of a lawyer. It says that lawyers “can counsel you and will know what must be done for your jurisdiction.” Now, when I read this, I know that this article was written by someone living in the United States. And, the person who posted this article on the Philippine-based website, did not even bother to cite the source.

On the whole, the article gives the layman the impression that married couples can just visit a lawyer and ask him/her to prepare or draft an agreement that will divide their assets, pay the marital debt, child support, spousal support, and asset distribution in case of annulment, etc. Thereafter, when every provision is in order and to the satisfaction of the couple, they will sign the agreement, have it notarized and keep it somewhere safe where it can be accessed when the need arises.

To make things absolutely clear for unsuspecting couples, there is no such thing as a postnuptial agreement in the Philippines. If the couples married without a prenuptial agreement then, depending on the date of their marriage, their property regime can be the conjugal partnership of gains or the absolute community of property.

The conjugal partnership of gains or absolute community of property that govern the marriage of couples cannot be modified except before the celebration of that marriage.

Post-marriage modification of such property regimes can take place only where: (a) the absolute community or conjugal partnership was dissolved and liquidated upon a decree of legal separation; (b) the spouses who were legally separated reconciled and agreed to revive their former property regime; (c) judicial separation of property had been had on the ground that a spouse abandons the other without just cause or fails to comply with his obligations to the family; (d) there was judicial separation of property under Article 135; (e) the spouses jointly filed a petition for the voluntary dissolution of their absolute community or conjugal partnership of gains.

Hence, if the married couple wants to modify their property regime to take into account the division of assets, payment of child and spousal support, and division of assets during the lifetime of the marriage or when it is terminated or annulled, they have to seek the imprimatur of the Family Court to do it. It is not as simple as asking a lawyer to draft a contract that the couple will sign and produce legal effects after its execution.

I hope this article clarifies the issue of postnuptial agreements in the Philippines. There are numerous effects of the Family Code on ownership of properties by married couples, common law spouses, and their children. One just has to seek property guidance and advice from a reputable professional.


Atty. Jojo is a real estate attorney, an estate planning attorney, a licensed real estate broker, and a PRC-accredited Lecturer/ Speaker for Training Programs in Real Estate. He is a Chartered Trust and Estate Planning (CTEP®) professional who is committed to educating Filipinos about the value and importance of having an estate plan in their lives.