By: Atty. Marivel Zialcita

For Filipino-Americans, estate planning encompasses more than just deciding how assets should be distributed upon death. It’s about understanding and navigating the complexities of estate laws across two nations: the United States and the Philippines. This dual legal landscape presents unique challenges and opportunities for those with assets or heirs in both countries.

Understanding the legal landscape

The U.S. and the Philippines have distinct legal systems and tax implications affecting estate planning. In the U.S., estate planning often involves setting up trusts, wills, and health care directives to manage and distribute assets. The U.S. estate tax applies to all U.S. assets, and for Filipino-Americans, understanding how these laws impact their estate is crucial.

In contrast, the Philippines follows a system of “forced heirship,” which mandates certain portions of an estate must go to specific heirs, primarily to the children and the surviving spouse. Additionally, the Philippines imposes estate taxes on all properties located in the country, regardless of the deceased’s residency.

Challenges Faced by Filipino-Americans

One of the primary challenges is the potential for double taxation. Without proper planning, an estate may be taxed both in the U.S. and the Philippines, significantly reducing the inheritance left for heirs.

Another challenge is the legal requirement in the Philippines for estate settlement before property transfer, which can be time-consuming and complex. This process often requires navigating the Philippine legal system, which can be daunting for those unfamiliar with it.

Strategies for effective estate planning

To overcome these challenges, Filipino-Americans should consider several strategies:

Seek Professional Advice: Consult with estate planning attorneys who are knowledgeable about both U.S. and Philippine laws. This expertise is invaluable in developing an estate plan that minimizes tax liabilities and legal hurdles.
Utilize Dual Wills: Consider having one will for U.S. assets and another for assets in the Philippines. This approach can help address the specific legal requirements and optimize tax benefits in each country.
Explore Trusts and Other Legal Instruments: In the U.S., trusts can be an effective way to manage and protect assets. While trusts are less common in the Philippines, other legal mechanisms can achieve similar goals.
Consider Tax Implications: Be proactive in understanding and planning for the tax implications in both countries. Strategies such as gifting or transferring assets during your lifetime can significantly reduce the estate tax burden.
Maintain Open Communication with Heirs: Ensure your heirs understand the complexities of your estate plan. Open discussions can prepare them for the legal processes in both countries and the responsibilities they may inherit.

Conclusion

Navigating estate planning across the U.S. and the Philippines requires careful consideration and strategic planning. By understanding the unique challenges and employing effective strategies, Filipino-Americans can ensure their legacy is preserved and passed on according to their wishes. Remember, the key to successful estate planning is early and informed preparation, guided by expert advice.

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The opinions, beliefs and viewpoints expressed by the author do not necessarily reflect the opinions, beliefs and viewpoints of Asian Journal, its management, editorial board and staff.

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Atty. Marivel Zialcita has been an attorney for over 20 years and is the founder of MMZ Law, A Professional Corporation. Atty. Zialcita is a frequent speaker on trust and estate matters for the National Business Institute and contributing editor to Continuing Education of the Bar. She currently sits on the Board for her alma mater, California Western School of Law Alumni Board, the Estate Planning Council of Pomona Valley, and Aging Next. In 2018, Atty. Zialcita brought in Atty. Soo Myland as Partner at MMZ Law. MMZ Law offers a variety of services which includes trust and estate, elder law, Medi-Cal asset protection planning, veterans’ affairs benefits, conservatorship, special needs, trust administration, and probate. To contact MMZ Law, call (909) 256-6702. Visit www.mmzlawyer.com for more details. None of the information presented above should be considered as establishment of a lawyer-client relationship and is not intended to give legal advice for specific situations.

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