BUSINESS AND TRANSFER TAXATION

Succession and Estate Tax (Students’ Handouts)

SUCCESSION AND ESTATE TAX

Succession is a mode of acquisition by virtue of which the property, rights and obligations to the extent
of the value of the inheritance of a person are transmitted through his death to another or others either
by his will or by operation of law. (Art. 774, Civil Code)

Types of Succession
1. Testamentary succession
2. Intestate succession
3. Mixed succession

Will is an act where by a person is permitted, with the formalities prescribed by law, to control to a
certain degree the disposition of his estate, to effect after his death.

Types of Will
1. Holographic will
2. Notarial will
3. Codicil

Elements of Succession
1. Decedent
2. Estate
3. Heirs

Types of Compulsory Heirs

1. Primary heirs: legitimate children and their direct descendants
2. Secondary heirs: legitimate/illegitimate parents and ascendants
3. Concurring heirs: the surviving spouse and illegitimate descendants

Legitime part of the testators property which cannot be disposed of because the law has reserved it
for certain heirs who are, therefore, called compulsory heirs.

*Disinheritance and Repudiation

Other Persons in Succession

1. Legatee – gifts of personal property are given
2. Devisee – gifts of real property are given
3. Executors – person named by the decedent who shall carry out the provisions of his will
4. Administrators – person appointed by the court to manage the distribution of the estate of the
decedent

ESTATE TAXATION
-refers to the taxation of gratuitous transfer of properties of the decedent to the heirs upon his death

Nature of Estate Tax

1. Excise tax
2. Revenue or general tax
3. Ad valorem tax
4. National tax
5. *Proportional tax

Classification of Decedents for Taxation Purposes

1. Resident or citizen decedents
2. Non-resident alien decedents

Estate Tax Model

Gross Estate xxx
Less: Deductions from gross estate xxx
Net taxable estate xxx

Based on R.B.Banggawan’s Business and Transfer Taxation (2019) Page 1 of 1