The following article is a guest post by Joel Olave. He is an engineer and blogger based in the Philippines. He is formerly a life insurance agent and writes about personal finance in his blog – Pera ko ‘to ~ Invest in Your Future.
Now that the Philippine economy is showing signs of renewed vigorous performance, we expect people to be better off. Maybe not all of us but a majority should experience the benefits of growth. This could mean that more and more Filipinos will acquire wealth or property.
That makes basic knowledge about personal finances critical more than ever. It is to our best interest that we are able to manage our wealth for our own and our family’s happiness and well-being.
An often overlooked but important part of this process is passing wealth or property to the next generation. In the world of personal finance, we call it estate planning. It’s basically boils down to managing one’s wealth after death.
I know it’s morbid for most people to talk about this. But there’s no way around it. We have to deal with this head on if we want to make this right. Just as being born is a natural order of things, its end is inevitable. It’s financial consequences, whether we like or not, will stay.
Last Will & Testament
There are several things that concerns estate planning. But the most basic part which experts in law and finance advice is for people to have a last will and testament. Like most of you, I didn’t believe it was that important. I figured I had too few properties to worry about such things. Or some may think this is for old people or for anyone who knows his time is near.
Obviously, I’ve since changed my mind about it. I was convinced that it is important to have as soon possible. No one really knows when death will come. Accidents happen so being prepared is always good.
But don’t take my word for it. Let’s discuss what it would mean to have or not to have a will. Hopefully, you can decide for yourself and act based on what we’ll discuss. Let’s consider some of the implications for each scenario.
Without a Will
- Since a will is a document that states specifically how you want your wealth to be distributed, not having one means who gets what will be a matter of law. This means that the courts will decide the distribution based on what it deems to be compliant with the law. It will most probably be in contrast to what you wish to happen.
- If you have minor children, not having a will mean the courts will have to find a suitable guardian which could to handle the inheritance until they are of legal age. That could present some problems especially if the guardian chosen proved ill-equipped to do the job.
- If you have a living partner, but are not married, your partner will inherit nothing from you.
- If you have no immediate family, your distant relatives will claim your inheritance and not your close friends or life partner.
- If you are separated but not legally, your estranged spouse will have claim to your properties.
- Not having a will can result to personal animosities and even legal battles between relatives and family members.
With a Will
- As I have mentioned, having a will shall ensure your wishes are followed. Transfer of wealth to your beneficiaries will be easier with less drama. Your wealth will go to persons you value and those you know need the inheritance.
- One of the most desirable effects of leaving a will is it preserves the peace in the family. Fights among relatives can easily start and go on indefinitely when share of a property is in dispute. It brings out the worst in people that you should help avoid by expressing your wishes very clearly in a will.
- If you have minor children, you can designate the guardian that you trust to take care of the inheritance until they come of age.
- If you are living with a partner, you can make sure he or she is left with the share you think is appropriate which would otherwise be deprived if left for the courts to decide.
- With proper planning, you can design the transfer of your property so that you’re beneficiaries are not overburdened by tax liabilities. You can discuss the strategies with tax lawyers or financial advisors.
How to Prepare a Will
There are two types of wills acknowledged in the Philippines. One is notarial while the other is called holographic. Notarial wills can be prepared with the aid of a lawyer who can help in making sure everything is done correctly. It requires three credible witnesses when the will is signed by the owner. It should also be notarized.
Holographic wills, on the other hand, must be written, dated and signed entirely by the owner. It doesn’t need a witness, could be written in and out of the country, and is not subject to any prescribed form.
With holographic wills’ validity, there’s no excuse for Filipinos not to have a will in the Philippines. It costs nothing to prepare but it has all the benefits those that will be left behind will get, which could possibly help them avoid emotional and financial difficulties.
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