JERU V.

SAGAOINIT November 06, 2020

Taxation I

Is Estate Planning tantamount to Tax Evasion?

No. Estate Planning is not tantamount to tax evasion.

Tax Evasion refers to the willful attempt to defeat or circumvent the tax law in order
to illegally reduce one’s tax liability. In contrast, Tax Avoidance delves into the act of taking
advantage of legally available tax-planning opportunities in order to minimize one’s tax
liability. (Black’s Law Dictionary, Ninth Edition, p. 1599).
In the case of Delpher Trades Corp. v. Intermediate Appellate Court, G.R. No. L-
69259, the Court held that, “The records do not point to anything wrong or objectionable
about this "estate planning" scheme resorted to by the Pachecos (petitioner). The legal
right of a taxpayer to decrease the amount of what otherwise could be his taxes or
altogether avoid them, by means which the law permits, cannot be doubted." Hence, by
virtue of the pronouncement made in the Delpher case, it is clear that estate planning is an
accepted form of tax avoidance; not tax evasion. The element of fraud that exists in tax
evasion is lacking in tax avoidance.

Thus, Estate Planning is the legal way to reduce administration costs and transfer
tax liability.

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