As I have been working with clients lately, I experienced that there are a lot of ways of managing properties without fear of paying huge amount of estate taxes and lawyer's fees for probate. The principle that I am going to share is the principle of LIVING TRUST.
By way of introduction, trust is defined as a legal arrangement by which the assets of one person are transferred to another person or institution for the benefit of a third party. In a trust, the person with the assets (known as the settlor) transfers ownership of his property to someone (the trustee) who promises to administer the property for a third party (the beneficiary) according to the settlor's wishes. Under the Civil Code of the Philippines, "A person who establishes a trust is called the trustor; one in whom confidence is reposed as regards the property for the benefit of another person is known as the trustee; and the person for whose benefit the trust has been created is referred to as the beneficiary." (Art. 1440)
In a living trust, the settlor transfers ownership of his property to a trustee who manages it throughout the settlor's lifetime. Upon the death of the settlor, the trustee distributes the trust to the beneficiaries in accordance with the settlor's instructions.
In most cases under US jurisdiction, the settlor of a living trust reserves the right to modify or revoke the trust as long as he lives. This type of living trust is known as revocable trust. If you are creating a revocable living trust, you can name yourself as a trustee, but you will have to name a successor trustee to manage your estate if you become incapacitated and to distribute your assets when you die. In this kind of trust, property will pass automatically to the beneficiaries without the delay and expenses involved in probating a will. Living trusts do not have to be probated.
In the Philippines, banking institutions are designated as trustees for a fee.
This concept will be very useful for people to cut cost on probate expenses and estate taxes.
If you are a beneficiary of a trust, set up in the Philippines, and have become a U.S. Citizen (naturalized) will this have an impact on my rights as a beneficiary of the trust?
ReplyDeleteI don't think so, except when your citizenship is one of the disqualifications under Philippine and U.S. Law or as specified in the Trust.
ReplyDeleteHi. Do we have Phil. Regulation if living trusts are probate free? If so, are UITFs (trust product) also probate-free? T.i.a.
ReplyDeletehi. what happens if the trust agreement has expired and the bank trustee has not finalized transfer of ownership back to the original owner?
ReplyDeleteThank you Christine Aldeguer, for your living trust principle.
ReplyDeleteSofar I have learned in particular asset management - living trust is the most lucrative. But, before doing it each individual should meet and have the right advice from the experienced living trust attorney's. Thanks again for sharing a big issue.
good
ReplyDeleteThis posting is nice.
ReplyDeleteSettlor