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Benjamin Franklin once said, "By failing to prepare, you are preparing to fail."
An Estate is the net worth of a person at any point in time alive or dead. Your Real Estate, Investments, Savings Accounts, Personal Property and Business Interests.
On the other hand as per described by the Bureau of Internal Revenue (BIR), Estate Tax is a tax 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, which are made by law as equivalent to testamentary disposition. It is not a tax on property. It is a tax imposed on the privilege of transmitting property upon the death of the owner. The Estate Tax is based on the laws in force at the time of death notwithstanding the postponement of the actual possession or enjoyment of the estate by the beneficiary. Estate tax is calculated by first determining the value of the deceased’s net estate or net value.
Net Estate/Value = Gross Estate/Value – Deductions
In layman's term, it is the tax paid in order to transfer your cash, bank accounts, investments, collectible items, personal possessions, and real property to your family or beneficiary.
Here's the table Tax Rates from the Bureau of Internal Revenue (BIR)
Effective January 1, 1998 up to Present
If the Net Estate is
Based on the table, if the net value of the estate of someone who died does not exceed Php 200,000.00 then the beneficiaries are exempted to pay the estate tax.
If the net value of the estate to be inherited is valued at Php 1,000,000.00, the estate tax shall be Php 15,000.00 plus Php 40,000.00 (or eight percent of Php 500,000), which totals Php 55,000.00.
Php 500,000.00 x 8% = Php 40,000.00
Total Estate Tax = Php 15,000.00 + Php 40,000.00 = Php 55,000.00
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ABOUT THE BLOGGER
Ralph "Rap" was born and raised in the Philippines. A Financial Literacy Advocate. An I.T. by Profession. An Investor. A Business Minded. An Introvert. A Photography Enthusiast. A Travel and Personal Finance Blogger (Lakbay Diwa and Kuripot Pinoy). A Traveler. An Adventurous. A Mountain Hiker. A Dreamer.
Currently works his way towards time and financial freedom.