Estate planning tool for Filipinos that’s simple and effective

Estate planning is one of the most important — yet most overlooked — aspects of personal finance in the Philippines. Many Filipino families face disputes, delays, and unexpected tax burdens simply because their loved ones passed away without a clear plan. This primer introduces the essential concepts you need to understand to protect your assets and ensure peace of mind for your family.

Chapter 1: Introduction to Estate Planning

Estate planning is the process of organizing how your assets will be managed, protected, and eventually transferred to your heirs. In the Philippines, it often goes beyond just writing a will. It includes anticipating taxes, clarifying ownership, preparing documents*, and choosing the right legal tools to avoid conflict and unnecessary expenses.

For Filipinos, estate planning matters because:

• Estate settlement is required before heirs can sell or transfer property.

• Estate taxes must be paid before any title transfer can occur.

• Without a plan, families may face legal disputes, prolonged court cases, or estranged family members.

• Many assets remain stuck for decades because documentation was incomplete or no settlement was done.

Estate planning ensures that your wishes are honored and your family is shielded from avoidable stress at a difficult time.

Chapter 2: Fundamentals of Estate Planning

Understanding the basic tools and concepts of estate planning can significantly simplify the process.

1. Wills

A will allows you to specify who inherits your assets. It must follow Philippine formalities, including being written, witnessed correctly, and signed. Even then, Filipino law imposes “compulsory heirs,” who are legally entitled to a fixed portion of your estate.

2. Donation (Gift Giving)

You may transfer assets while still alive. This can reduce your estate and future taxes but may trigger donor’s tax and must follow legal formalities.

3. Trusts

A trust allows a third party (trustee) to manage assets for the benefit of your chosen beneficiaries. This can be useful for minors, elderly parents, or special situations requiring long-term management.

4. Life Insurance

Life insurance proceeds can provide liquidity for estate taxes or serve as financial protection for your family. Some insurance plans can be placed under a trust or assigned beneficiaries outside the estate.

5. Proper Documentation

Many Filipino estate problems arise from missing titles, lost deeds, wrong names on IDs, or outdated marital records. Ensuring all documents align — titles, IDs, birth certificates, marriage certificates — is a foundational aspect of estate planning.

6. Liquidity Planning

Estate taxes must be paid within a specific period. Planning how heirs will fund these taxes (e.g., through savings, insurance, or sale of assets) prevents delays and penalties.

Chapter 3: Philippine Estate Laws

Estate planning in the Philippines must follow specific legal rules.

1. Compulsory Heirs

The Civil Code mandates that certain heirs cannot be deprived of their inheritance:

• Legitimate children

• Legitimate parents (if no children exist)

• The spouse

• Illegitimate children

You may freely dispose of only part of your estate — called the free portion.

2. Estate Tax

Estate tax is imposed on the transfer of assets upon death. Under the TRAIN Law:

• Estate tax is 6% of the net estate, nationwide.

• The estate enjoys ₱5 million standard deduction and ₱10 million for family home (if applicable).

• Unpaid estate taxes can accumulate penalties and interest unless covered by tax amnesties.

3. Settlement of Estate

There are two main ways to settle an estate:

• Extrajudicial Settlement (if all heirs agree and no will exists)

• Judicial Settlement (if there is a dispute or a will must be probated)

Properties cannot be sold or transferred until the estate is settled and the taxes paid.

4. Proof of Ownership

Land titles, tax declarations, IDs, and other documents must be consistent. Courts and government agencies strictly verify identities and succession rights.

Summary

Estate planning is not just for the wealthy — it is for every Filipino who wants to spare their family from future conflict and financial burden. Understanding the fundamentals, using the right legal tools, and being aware of Philippine estate laws can help ensure a smoother, faster, and less stressful transfer of your assets.

By taking time today to prepare your estate plan — from organizing documents to drafting a will or establishing a trust — you set your family up for stability, clarity, and peace of mind in the years ahead.

*Here is a checklist of essential documents needed for estate planning:

• Death Certificate of the decedent

• Marriage Certificate

• Birth Certificates of children and heirs

• Tax Identification Numbers (TINs) of decedent and heirs

• Titles of Real Property (Transfer Certificate of Title, Condominium Certificate of Title)

• Tax Declarations for real properties

• Bank book/passbook and Bank Certifications for account balances

• Insurance policies and beneficiary designations

• Vehicle Certificate of Registration (CR) and Official Receipt (OR)

• Last Will and Testament (if any)—should be notarized and properly filed

• Deeds of Donation or Sale relating to lifetime asset transfers

• Loan documents and receipts to prove debts and payments

• Financial statements for businesses or corporations owned by the decedent

• Inventory of assets and liabilities (including stocks, bonds, digital assets)

• Estate Tax Return (BIR Form 1801) and proof of payment or receipt of estate tax clearance

• Any Power of Attorney documents or Advance Medical Directive, if applicable

• Contracts or legal agreements relating to the estate

This checklist ensures that all legal and financial documents are organized for smooth estate administration, probate processes, and tax compliance under Philippine law.

Source: Ziggurat Real Estate

Over 60% of Filipinos targeted by financial scams

Over 60% of Filipino adults experience financial scams each year, with attempts happening nearly every other day and average losses per person amounting to nearly P12,000, according to a survey.

The State of Scams in the Philippines 2025 Report, which is based on a survey conducted by the Global Anti-Scam Alliance (GASA) in collaboration with Mastercard and Whoscall, said 65% of the 1,000 respondents claimed to have been scammed from February 2024 to February 2025, with each victim experiencing an average of 2.3 scams.

Meanwhile, 77% said they encountered a scam in the period for an average of 239 scam attempts per year.

Some 31% of the respondents said they lost an average of P11,896.30 per person to scams, with a total of P280.5 billion stolen for the period.

The GASA said that e-wallets (74%) are typically used by fraudsters to receive illicit proceeds of fraudulent activities, followed by wire or bank transfers (14%).

“When nearly one in three Filipinos loses money to a scam, it’s not just a digital safety issue. It’s a household stability issue. People are cutting back on daily needs, doubting the tools they rely on, and carrying the emotional weight long after the scam is over.

Solving this requires partners working together instead of fighting the problem in silos,” GASA Asia-Pacific Director Brian D. Hanley said in a statement.

The report showed that scams involving investments (65%), unexpected money (64%), and shopping (58%) were the most prevalent type of attacks experienced by Filipino adults.

The GASA said 85% of scam attempts in the Philippines in the period occurred on platforms that have a direct message function, with the top channels being used by scammers being text/SMS message (75%), instant messaging apps (50%), and social media (50%).

“Facebook and Telegram were identified as the top platforms where scams occur, while TikTok and Instagram were the hardest places for victims to immediately recognize fraudulent activity,” it added.

“The study also highlighted who is most vulnerable. Gen Z consumers were found to be the least confident in spotting scams, while Millennials lost the most money on average, at over P14,000 each. Seniors in the Silent Generation (76%) and residents in suburban areas (72%) reported the highest prevalence of scam exposure.”

However, even as they encountered several scams, only 73% of victims said they report these attempts, with 59% of these people saying that either no action was taken (40%) or they aren’t sure what the outcome was (19%).

“No loss of money is the main reason scam encounters don’t get reported,” the GASA said. “Being unsure whom to report scams to was the main reason for not reporting encounters.”

“Almost three quarters reported their scam to the payment service, and one tenth said their money was at least partially recovered,” it added.

Almost half of those scammed said it impacted their well-being (48%), and the majority said it made them feel stressed (88%).

While this resulted in increased vigilance for about half (57%), others had to reduce normal spending behavior (23%) or take on additional debt or loans (20%).

In a sign of improving financial literacy, the survey found that 98% of Filipinos said they take at least one step to check if an offer is real or a scam by checking a brand or seller’s social media page, reading online reviews, or confirming activity on official accounts.

“However, experts warn that these surface-level checks can only go so far, as scammers are increasingly able to clone profiles, fabricate engagement metrics, and mimic verified pages to appear credible. Hence, combatting scammers is not an issue that should fall on consumers alone, but should be supported by the ecosystem at large,” the GASA said. “This calls for an effort among banks, digital platforms, telecom operators, and regulators to improve protections for ordinary consumers.”

It said that to empower consumers, authorities should launch permanent national campaigns to raise scam awareness, establish national helplines for scam victims, and create integrated victim support systems offering financial, legal, and psychological help.

They should also take steps to create a safer digital world by building infrastructural protections with telecoms and tech providers to block scams before they reach consumers and  improving fraud traceability across borders by requiring transparency from sellers, platforms, and payment providers.

“As scams grow more sophisticated, they are no longer isolated incidents — they are a perpetual digital threat, inflicting both financial loss and social trauma. Protecting Filipinos requires systemic cooperation between industries and government to restore trust in the digital economy,” Mastercard Philippines Country Manager Jason Crasto said.

Source: Business World

How to enjoy your money without regret

Many people work hard to save and invest, yet when it comes to spending, they often feel guilty. For some, every purchase feels like a dent in their financial future. For others, impulsive buying leads to regret the next day. Either way, money becomes a source of stress rather than enjoyment.

Behavioral finance helps explain why. Studies show that people do not always spend rationally. Emotions, habits and mental shortcuts influence our decisions, sometimes leading to happiness and sometimes to regret. By understanding these patterns, we can use our money with less guilt and fewer regrets.

Traditional economics once assumed that people act rationally and that they weigh costs and benefits before making decisions. But research in psychology and behavioral finance shows that reality is far more complex.

Money is more than a way to pay for things. It carries emotions, which explains why people feel outraged when they see politicians misuse public funds on lavish lifestyles. Every choice to spend or save reflects our fears and hopes.

One reason spending feels complicated is what psychologists call anticipated regret.

Studies led by Thomas Gilovich of Cornell University in 1998 on anticipated regret show that people often avoid spending because they imagine regretting it later. They picture a future where they wish they had saved instead.

Ironically, the same thing happens in reverse for impulsive spenders. They focus only on the excitement of buying and forget the regret that may come later. This push and pull is why spending often feels more emotional than logical.

Mental accounting

Another reason is what researchers call mental accounting, a concept popularized by Richard Thaler in 1985. His study, published in the journal Marketing Science, showed that people divide money into separate mental “accounts,” such as essentials, savings and discretionary use.

Take dividends or bonuses as an example. Many people see them as money that is safe to spend, while selling investments feels more like taking money out of your nest egg. The money may be the same, but the psychology is very different.

If money is meant to make life better, then the real question is how we spend it in a way that truly makes us happy.

Back in 2013, behavioral researchers Elizabeth Dunn and Michael Norton explained in their book “Happy Money” that happiness has less to do with how much you spend and more with what you spend it on.

Their research showed that experiences such as a vacation, a family celebration or even a simple day out with friends tend to create deeper and longer lasting joy than material purchases.

A brand new gadget or luxury item might thrill you at first, but the feeling fades quickly while memories often grow more valuable with time.

Meaningful spending

Another study by Cassie Mogilner Holmes of UCLA and her colleagues in 2016 found that spending brings the most satisfaction when it matches personal values.

People who used money to strengthen relationships, pursue growth or support meaningful goals reported higher life satisfaction than those who saved too much or spent without purpose.

What this tells us is simple. Happiness is not about the size of your bank account but about how well your money supports the life you want to live.

Imagine three retirees with the same savings. The first is so worried about running out of money that he barely spends. He skips the trips he dreamed of and avoids hobbies he once wanted to try.

When his health finally slows him down, he realizes the real loss was not the money but the memories he never made.

The second goes the other way. He spends too much on luxuries and drains his savings too fast. By the time he gets older, the lifestyle he once enjoyed becomes impossible to sustain. What remains is stress instead of comfort.

Then there’s the third. She sets aside enough for essentials and long-term security but also reserves a portion for enjoyment. She books trips early, savors the excitement of looking forward to them and creates memories with her family. By striking this balance, she avoids both the regret of holding back too much and the pain of spending too much.

Live without regrets

These examples show what research has been saying all along. Regret usually does not come from spending money, but from spending it without purpose. If you save only out of fear, money does not protect you, it just traps you.

If you spend it carelessly, it leaves you feeling empty. But if you use it for experiences and relationships that truly matter, it gives life more meaning.

The psychology of spending teaches us that financial success is not just about building wealth. It is about using money in ways that create both security and fulfillment.

Research by Gilovich, Thaler, Dunn, Norton and Holmes all point to the same truth that happiness with money is never about the total you keep, but about whether it supports the life you want to live.

Source: Inquirer