Why you Need an Estate Plan? – Guide when and why you will need an Estate Planning

By Danica Esguerra Masangcay I December 17, 2017

Estate Plan is not just for wealthy People and especially not limited to elderly people - As it has been a misconception that you will only need an Estate plan when you get old.

Your Estate figure is everything that you own under your name minus you debt. Your Estate is not limited only to the real estate you own, but also including your house, car, businesses, bank accounts and even your stocks and mutual fund investments.

A person should start with her Estate Planning the moment when she starts receiving substantial assets other than her steady income stream from work. When we say substantial considering the Estate Tax System here in the Philippines – Estate Tax will begin to apply to you if your gross estate is more than P200,000.00 – (Starts computing now, I’m sure you do have more than that).

Let’s have you as an example to illustrate the significant of Estate Plan.

Let’s say you died with a P200,000.00 in your savings account. Basically your family can just withdraw the money without paying for the estate tax.

However, if it did exceed more than that the bank account gets frozen. Your family can not withdraw the money unless estate taxes and other requirements are met.

That’s when the issues and concern arises because unless the estate tax is paid, the properties and assets of the deceased will never be passed down and enjoyed by the beneficiaries. - (Imagine how hard it must be for your family to have the right to receive your hard earned wealth. And you must be not at eased yet in heaven if it is not certain yet whether your family will get any penny from your wealth)

Estate Tax is not a tax on the owned Property but rather a tax imposed on the right of the deceased person to transmit his/her estate to his/her lawful heirs and beneficiaries at the time of death and on certain transfers.

Now that you know what will happen if you do not have an Estate Plan, let’s now discuss how we are going to deal with it.

One of the most recommended solutions in Estate Planning is to buy a Variable Universal life insurance (VUL). It will not just help you while you’re still alive due to its streams of Cash Values. It also helps in covering your Estate Tax and can provide an additional wealth to your Beneficiaries.

Why? and How?

First you may be glad to hear that the proceeds of life insurance policies paid to the heirs or beneficiaries upon the death of the insured is excluded from gross income and not subject to Philippine Income Tax – provided that the beneficiary is other than the estate, executor or administrator, and the designation is irrevocable.

So let’s say you have an Estate of P15M, Based on the BIR table, for an estate over P10M, then the tax will be P1,215,000 

Plus 20% of the excess which is P5M (since the total estate is P15M), so the additional tax will be: P2,215,000 

If you have a VUL/Life Insurance with Sum Assured/Death Benefit of P5M, the P2,215,000 will be paid to your Estate Tax and the remaining P2.785,000 to your Family! – See you just removed the worry and hustle to your Family and leave an amount that can make them easily financially recover. 

Starting with your Estate Plan now can have a tremendous impact on your life as well on your family. Put a plan in place now, before it’s too late. 

So if you’re curious how much Estate Tax is due given your current assets today and how much fund is required to settle your Estate Tax, and you do or do not have an insurance plans solely for Estate Planning. I can calculate this for you in an instant! Contact me here for an appointment. ;)

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To making life better,

Danica Masangcay

PruLife UK Licensed Financial Consultant

??639056410629 I [email protected]

Easy Investment I #ManFromThePru I #PruLifeUK

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