Estate Tax Implications for Inherited Property After the Death of a Spouse in the Philippines

Question: If a property is inherited from a parent while married, and the title indicates "married to" the now-deceased spouse, is it necessary to pay estate tax for the deceased spouse and include the names of the children in the title?

In the Philippines, when a property is inherited during the marriage, it is important to consider how the property's ownership is classified under the law. The classification affects whether or not the property is part of the conjugal or community property and how it is treated upon the death of a spouse.

1. Classification of Inherited Property:

• Under the Family Code of the Philippines, property inherited by either spouse during the marriage is considered exclusive property and does not form part of the conjugal or community property unless expressly stated otherwise in a marriage settlement. This means that the inherited property remains solely owned by the spouse who inherited it.

2. Estate Tax on the Deceased Spouse's Share:

• If the title of the inherited property indicates "married to" and the spouse has passed away, there is no estate tax due for the deceased spouse concerning this property. Since the property is exclusive and not part of the conjugal or community property, it does not pass on to the heirs of the deceased spouse.
• However, if the deceased spouse had any share in other properties classified as conjugal or community, estate taxes may apply to those assets.

3. Transfer of Title and Inclusion of Children:

• After the death of a spouse, the surviving spouse does not need to include the names of the children on the title of the inherited property, as the property was exclusively inherited and is not subject to the rules of succession pertaining to the deceased spouse's estate.
• The title remains in the name of the surviving spouse, who retains full ownership of the property. The children would only become involved in the title transfer if the surviving spouse were to pass away, triggering the rules of succession.

Conclusion: The estate tax for the deceased spouse does not apply to the inherited property if it was classified as exclusive property during the marriage. There is no requirement to include the children’s names on the title, as the property does not form part of the deceased spouse's estate. It is essential to differentiate between exclusive property and conjugal/community property to understand the estate tax implications fully.