Extra judicial settlement

Dear attorney,

Both my parents are deceased but the title of the property is still under their names so an extra judicial settlement was processed in order to pay the estate tax and to have the title transferred to my name. I have two siblings who waived their rights to me which is indicated on the extra judicial settlement.
My question is do my siblings have to pay the donor tax?

I am quite confused here. Are you referring to payment of estate tax?

I'm sorry if my question was not clear. I understand that the estate tax has to be paid first in order for the title to be transferred to my name but since my siblings waived their rights to me as the sole beneficiary do they have to pay the donor tax?

Donor’s Tax is a tax on a donation or gift, and is imposed on the gratuitous transfer of property between two or more persons who are living at the time of the transfer. It shall apply whether the transfer is in trust or otherwise, whether the gift is direct or indirect and whether the property is real or personal, tangible or intangible.

Based on the law definition of donor's tax, the same does not apply in a case of your siblings considering that there is merely a waiver of rights over the property which is supposed to be owned equally by you and your siblings.

A simple extrajudicial settlement with waiver of rights will suffice.

Thank you for your prompt reply, Atty. Lawddesign. I appreciate it.

Hi.
I just want to followup on this case 'cause we have the same situation.

When I inquired about Estate Tax requirements and mentioned about our Extrajudicial Settlement with Waiver of Rights, the BIR personnel said that there is still DONOR's TAX to be paid. According to him, the waiver is considered an act of donation.

I haven't returned there, yet, as I would like to investigate further.

Is this really true?

Thank you and hoping for clarifications.

Never mind.
Found the answer here.

http://www.pinoylawyer.org/t3789p15-deed-of-donation-question


Thanks.

That is not subject to donors tax because the waiver was done gratuitously and indiscriminately. It would go to the same person upon whom it would otherwise accrue by way of accretion. In effect there is no acceptance on the part of the heirs who waived their rights to the inheritance and since there is no acceptance, there is no transfer from them to the other and hence, there is no donation.

"Article 1050. An inheritance is deemed accepted:

xxx

(3) If he renounces it for a price in favor of all his co-heirs indiscriminately; but if this renunciation should be gratuitous, and the co-heirs in whose favor it is made are those upon whom the portion renounced should devolve by virtue of accretion, the inheritance shall not be deemed as accepted."

You can also waive the conjugal share of the surviving spouse in favor of all the other heirs and it will not be subject to donors tax -- only estate tax but take note that the rate of estate tax is higher than donors tax, so in effect the taxes due thereon will be higher.

the waivers are donations if they are waived in favor of a particular person. but a general waiver will not be subject to donor's tax.

particular: i waive my rights in favor of "A"
general: "i waive my rights"

hi sir, align with this topic about the extrajudicial settlement. i would like to ask about something. Heres the question, The name in the certificate is the couple. but the man died and he didnt made any testament. whet they did was they just made a inhertitance thing and deed of donations for the siblings to give power to a certain person. They also did a Extra Judicial settlement which includes all the properties. The thing is theyre now selling all the properties in different areas. How can we sell the house in malabon since there are only 1 extra judicial that mentioned all the property there. The value of the inheritance tax will include all the porperties included in the judicial right? but the seller wants to sell the property in malabon and she want the buyer to shoulder the inheritance tax. of course its unfair if the buyer buy the house and pay all the inheritance tax of all the properties. is there any way we can separate the lot here in malabon? so the buyer will only pay the inheritance tax of Malabon property? please advise me thanks

bbatpip wrote:Dear attorney,

Both my parents are deceased but the title of the property is still under their names so an extra judicial settlement was processed in order to pay the estate tax and to have the title transferred to my name. I have two siblings who waived their rights to me which is indicated on the extra judicial settlement.
My question is do my siblings have to pay the donor tax?

This may help you which I quoted from: REVENUE REGULATIONS NO. 2-2003
SUBJECT : Consolidated Revenue Regulations on Estate Tax and Donor’s Tax
Incorporating the Amendments Introduced by Republic Act No.
8424, the Tax Reform Act of 1997. A part of Section 11 says "Renunciation by the surviving spouse of his/her share in the conjugal partnership or absolute community after the dissolution of the marriage in favor of the heirs of the deceased spouse or any other person/s is subject to donor’s tax whereas general
renunciation by an heir, including the surviving spouse, of his/her share in the hereditary
estate left by the decedent is not subject to donor’s tax, unless specifically and
categorically done in favor of identified heir/s to the exclusion or disadvantage of the
other co-heirs in the hereditary estate.
Where property, other than a real property that has been subjected to the final
capital gains tax, is transferred for less than an adequate and full consideration in money
or money’s worth, then the amount by which the fair market value of the property at the
time of the execution of the Contract to Sell or execution of the Deed of Sale which is
not preceded by a Contract to Sell exceeded the value of the agreed or actual
consideration or selling price shall be deemed a gift, and shall be included in computing
the amount of gifts made during the calendar year."

attyLLL wrote:the waivers are donations if they are waived in favor of a particular person. but a general waiver will not be subject to donor's tax.

particular: i waive my rights in favor of "A"
general: "i waive my rights"

Tama po si attyLLL.
Confirmed po ung sa amin sa BIR.
Walang Donor's Tax since hindi naman nga naka-specify kung kanino "specific" mapupunta ung waived share nung isang heir.

Kahit hindi rin pantay ang hatian, as long as lahat naunawaan ang Extrajudicial Settlement of the Estate at pumirma, wala ring Donor's Tax.


Thank you sa inyo.

Hi Atty.

We also have a similar problem involving waiver of inheritance. Actually, the properties are still under the name of my deceased maternal grandparents. They have 2 siblings one of them is our mother. Her sister (our maternal aunt) died. Subsequently, our mother died also. During the lifetime of my mother, our cousins who are in the States waived that share of the inheritance of their mother. This waiver was signed by all my cousins and legally notarized in the US in addition to the extra-judicial settlement. My question 1. do we consider this portion waived by my cousins still part of the estate of my deceased grandparents since the title until now is under their name and therefore there was no actual transfer yet. 2. Since there was no actual transfer yet, that portion waived merely reverts back to the undivided estate and became part of inheritance of my mother, and therefore we should pay estate tax? Kindly give your advice Thanks Atty.

manzguevara@gmail.com

Hi Atty.

Follow up po on my letter of 3-29. As I said my mother and my Aunt are the only heirs of my deceased grandparents. But title to the property still under the name of my grandparents until now. In 2004, my Aunt died with her wish to relinquished her inheritance share to my mother. In 2005, all my cousins (children of my Aunt) who are all doing financially well in the US and following the wishes of my Aunt executed the said Waiver of Inheritance with SPA for one of my cousin to sign for all of them. In 2006, my mother died. There is no problem between us cousins because they respected and recognized their Waiver. Is it correct to say that the effect of the Waiver of my cousins placed my mother as the sole heir of the estate, therfore when my mother died in 2006, we their children are the only heirs to my grandparents estate and that estate tax should be paid? Please,we badly need your advice before going to BIR. Thanks.

What about those ricelands who were already at the hands of the farmer beneficiaries and Emancipation title issued to them by DAR long before death of my grandfather in 1986, I think these ricelands no longer part of the estate which can be transferred to his heirs (my mom and aunt) and therefore should not be imposed estate tax by the BIR. Pls advise Atty., we are confused as the current heirs. Thanks again.

manzguevara@gmail.com

>manzguevara
There are two main types of taxes concerning your situation:
/Property tax. Such are ment to be paid YEARLY. When it isn't. then the dept has to be paid to get the title transfered to new owner. I BELIEVE the dept is only counted for maximum 5 years back though.
/Estate tax. Such are paid ONE time when INHERIT. (I don't know though if BIR will count yours as two steps and by that demand estate tax for two times.)

"What about those ricelands who were already at the hands of the farmer beneficiaries and Emancipation title issued to them by DAR long before death of my grandfather in 1986, I think these ricelands no longer part of the estate which can be transferred to his heirs (my mom and aunt) and therefore should not be imposed estate tax by the BIR. "
Have your family USED the riceland all years?
Then I BELIEVE it's a type you "own" now, and can sell the user rights to,
and if/when your family have paid PROPERTY tax for it at least 10 years, then you can apply to get an owning title.
So you inherit this too, with the same tax types as for the other property.

manzguevara@gmail.com wrote:Hi Atty.


What about those ricelands who were already at the hands of the farmer beneficiaries and Emancipation title issued to them by DAR long before death of my grandfather in 1986, I think these ricelands no longer part of the estate which can be transferred to his heirs (my mom and aunt) and therefore should not be imposed estate tax by the BIR. Pls advise Atty., we are confused as the current heirs. Thanks again.

manzguevara@gmail.com

If the titles have been issued to the farmer beneficiaries through DAR CARP and LBP, you must have been already compensated for the surrendered farmlots. Before you can be compensated, you already updated your property tax payments. Property taxed after the transfer should already be paid by the farmer beneficiaries as you no longer own the lot.

As as these are not under your title, it is no longer part of the estate unless there are still lots not completely turned over to DAR for instance you opted for a 5 hectare retention. Check the updated records with the Registry of Deeds.

centro wrote:

manzguevara@gmail.com wrote:Hi Atty.


What about those ricelands who were already at the hands of the farmer beneficiaries and Emancipation title issued to them by DAR long before death of my grandfather in 1986, I think these ricelands no longer part of the estate which can be transferred to his heirs (my mom and aunt) and therefore should not be imposed estate tax by the BIR. Pls advise Atty., we are confused as the current heirs. Thanks again.

manzguevara@gmail.com

If the titles have been issued to the farmer beneficiaries through DAR CARP and LBP, you must have been already compensated for the surrendered farmlots. Before you can be compensated, you already updated your property tax payments. Property taxed after the transfer should already be paid by the farmer beneficiaries as you no longer own the lot.

As as these are not under your title, it  is no longer part of the estate unless there are still lots not completely turned over to DAR for instance you opted for a 5 hectare retention. Check the updated records with the Registry of Deeds.

Oh I missunderstood.
I thought you had GOT land by the reform,
but you LOST land by you had more than the allowed 5 hektares riceland (?) Then it isn't either property or Estate tax at that part.

Hi Atty.'s

I thank you all for the useful response and advise. Yes i believe we have paid the realty taxes of the estate. So what is remaining to be paid is the estate tax. The BIR Region 5 have required us to file separate estate tax returns for every decedent, meaning my grandma, grandpa, my mother and even my Aunt (my mother sibling) who became a US citizen way way before her death. Notwithstanding that my Aunt, no longer a Filipino, have no existing properties here in the Phil. except that portion of the inheritance which she waived and relinquished, is this correct?

With regard to the ricelands, actually the weird situation is this: the farmer beneficiaries had already their emancipation titles issued by the DAR but the mother title (OCT) still under the name of my deceased grandparents. They are now paying the realty taxes and the tax declarations are now in their names. The EP titles are merely annotated in the mother title. We asked the ROD Region V for the cancellation of the mother Title but according to them, certain requirements have to be complied first such as the EJS, payment of estate taxes, etc., is this also correct. Also, we have not been compensated for the acquired ricelands until now as these requirements have to be complied with before payment according to LBP. Please advise, thanks much.

manzguevara@gmail.com

manzguevara@gmail.com wrote: I thank you all for the useful response and advise. Yes i believe we have paid the realty taxes of the estate. So what is remaining to be paid is the estate tax. The BIR Region 5 have required us to file separate estate tax returns for every decedent, meaning my grandma, grandpa, my mother and even my Aunt (my mother sibling) who became a US citizen way way before her death. Notwithstanding  that my Aunt, no longer a Filipino, have no existing properties here in the Phil. except that portion of the inheritance which she waived and relinquished, is this correct?

Well. This is a mess, which need to be clearified.
BUT I BELIEVE there is a 5 year time limit how long time back BIR can demand tax depts. (I did read about such time limit, but I don't remember if it was in a law/official website or if it was in a forum.)
IF there are such time limit, it's waste to fill forms for earlier periods. Ask BIR if they realy need that old forms.

manzguevara@gmail.com wrote: With regard to the ricelands, actually the weird situation is this: the farmer beneficiaries had already their emancipation titles issued by the DAR but  the mother title (OCT) still under the name of my deceased grandparents. They are now paying the realty taxes and the tax declarations are now in their names. The EP titles are merely annotated in the  mother title. We asked the ROD  Region V for the cancellation of the mother Title but according to them, certain requirements have to be complied first such as the EJS, payment of estate taxes, etc., is this also correct.
Also, we have not been compensated for the acquired ricelands until now as these requirements have to be complied with before payment according to LBP. Please advise, thanks much.

Are the DAR land at SAME title as the land you have left,
or are they separate?
I know PROPERTY tax depts (max year?) need to be paid before title is TRANSFERED to new owner.
I SUPPOUSE the Inherit Estate taxes has to be paid too to get the corect new title.

The rest I don't know anything about.

Good day, Attorney.
About untitled lot for sale or covered only by tax declaration under the name of decedent. May na-execute na extra-judicial settlement with partition dated Sept. 2014 (notarized) pero hindi pa na-register or na-transfer sa name ng mga heirs ang tax declaration until now. My questions po ay even untitled ang property or only tax declaration need pa ba magbayad ng estate tax sa BIR when selling a portion of the partitioned property and kelangan din ba ng publication for 3 consecutive weeks because we want to process it until Titling. And Agreement ay all expenses will be shouldered by the buyer. The only documents the sellers have are sketch plan/cad map but not approved, extra-judicial settlement with partition proof of payment of real estate tax & certificate of non-delinquency from Municipal Treasurer. The property is in Sto. Tomas, Batangas and categorized as agricultural as per Tax Dec. Bibilhin po ba namin to or magkakaron kami ng problem sa Titling pagdating sa BIR and RD. Salamat po ng marami.