Below is a comprehensive overview of reviewing property investment contracts and estate planning for non-traditional families in the Philippines. This discussion covers the legal framework, practical considerations, and common strategies used by individuals and families who do not fit the traditional mold under Philippine law (i.e., married heterosexual spouses with legitimate offspring). Please note that this article is for informational purposes only and does not substitute for individualized legal advice from a qualified attorney.

1. Introduction

Non-traditional families in the Philippines include various domestic arrangements that are not expressly or formally recognized under the Family Code or other Philippine laws. Examples include:

Unmarried cohabiting couples (opposite-sex or same-sex).
Single parents living with children.
Couples in marriages or partnerships solemnized abroad (particularly same-sex marriages or unions not recognized under Philippine law).
Blended families (where one or both partners have children from previous relationships).
Extended family arrangements (grandparents, siblings, or relatives pooling resources to purchase property).

Although Philippine law does not yet recognize same-sex marriage or common-law marriage with the same legal effects as a legally solemnized marriage, these non-traditional families often share assets, invest jointly in properties, and have estate planning goals. Because the legal protections afforded to these arrangements differ significantly from those for legally married couples, it is crucial for such families to proactively address property ownership, contractual obligations, and estate distribution.

2. Philippine Legal Framework for Property Ownership

2.1 Constitutional Restrictions on Property Ownership

Under the 1987 Philippine Constitution, land ownership is generally restricted to Filipino citizens or corporations/associations at least 60% owned by Filipinos. Foreign nationals are prohibited from directly owning land but may own condominium units (up to 40% of the total project). This restriction can affect couples or families where one partner is a foreign national.

2.2 Family Code Property Regimes

The Family Code of the Philippines (Executive Order No. 209, as amended) provides specific property regimes—such as Absolute Community of Property (by default for marriages without a pre-nuptial agreement) or the Conjugal Partnership of Gains (if opted via a valid pre-nuptial agreement). However, these regimes apply only to legally recognized marriages. Non-traditional families—particularly unmarried, cohabiting, or same-sex partners—cannot avail themselves of these automatic property regimes.

2.3 Co-ownership Under the Civil Code

Non-married individuals who purchase property together often fall under the co-ownership provisions of the Civil Code. Each co-owner generally has the right to:

Use the property in proportion to his/her share.
Dispose of his/her share independently (though the other co-owner’s consent is required for decisions impacting the entire property).
Demand partition of the property (in which case the property may be divided physically if feasible or sold to distribute proceeds).

Without a formal written agreement outlining each person’s share or clarifying management/control, disputes may arise. To minimize conflicts, it is advisable for non-traditional families to execute a Co-Ownership Agreement or other contracts that set out contributions, shares, decision-making protocols, and what happens if one co-owner wants to sell or passes away.

3. Reviewing Property Investment Contracts

When non-traditional families invest in real property—such as buying a house, condominium, or commercial space—they should carefully review:

Documentation of Ownership and Title
- Check the Transfer Certificate of Title (TCT) or Condominium Certificate of Title (CCT) for any liens, encumbrances, or adverse claims.
- Ensure the parties listed reflect the intended owners accurately.
Contract to Sell and Deed of Sale
- Verify the parties listed in the contract (e.g., if two partners are paying for the property, both names should appear).
- Check the purchase price, payment schedule, interest rates (if on installment), and penalties for late payments.
- Look for any clauses covering default, cancellation, or forfeiture of payments.
Property Development Contracts (if applicable)
- In cases of pre-selling or off-plan condominium projects, review the Master Deed and Declaration of Restrictions to understand your rights and obligations, as well as rules on transfers, mortgage, and use restrictions.
Co-Ownership or Joint Ownership Agreements
- If two or more non-traditional partners/family members are buying jointly, draw up a separate Co-Ownership Agreement.
- This agreement should clarify the percentage of each person’s share, responsibilities, how decisions are made, and what happens if one owner decides to sell.
Mortgage or Financing Agreements
- When property is financed through a bank or lending institution, the loan documents will list the borrower/s.
- Ensure that the borrower, co-borrower, or guarantor is consistent with the ownership structure you intend.
Escrow Arrangements (Optional)
- In high-value transactions or cross-border transactions, an escrow arrangement can ensure funds are held safely until all contract conditions are met.
Property Insurance
- Confirm who will be the named insured and beneficiary of the policy. In non-traditional setups, you may consider adding all co-owners as payees/beneficiaries.

4. Estate Planning Considerations for Non-Traditional Families

Because Philippine succession law imposes forced heirship (i.e., certain family members have a legitime that must be reserved under a will), estate planning for non-traditional families can be complex. Below are key considerations:

4.1 Forced Heirship Rules

Under the Civil Code, the following are generally considered forced heirs:

Legitimate children and descendants
Illegitimate children (though with a smaller legitime compared to legitimate children)
Surviving spouse (legally recognized spouse)
Parents and ascendants (in the absence of children)

For non-traditional families, an unmarried partner is not a forced heir and has no automatic inheritance rights. This means if one partner dies intestate (i.e., without a will), the other partner typically inherits nothing, unless recognized as a co-owner or designated as an heir in a will.

4.2 Last Will and Testament

A valid will can provide for individuals who are not forced heirs, but only up to the disposable free portion of the estate (the portion not reserved by law for forced heirs).
If you want to give your partner or certain non-traditional family members a share of your property, the will must comply with the formalities under Philippine law (e.g., notarial will or holographic will).
Even with a will, remember that forced heirs cannot be deprived of their legitime except under specific grounds for disinheritance.

4.3 Trusts and Other Instruments

Living trust (inter vivos trust): You can transfer assets into a trust during your lifetime, naming beneficiaries (such as a non-traditional partner or children from previous relationships). This can help bypass certain aspects of forced heirship if structured correctly, but it must be set up carefully, ensuring compliance with Philippine law.
Donations inter vivos: You can donate property to your partner or other intended beneficiaries during your lifetime. However, note the reservation of legitime and the rule that you cannot donate more than what you can give by will. Donations are generally final and cannot exceed the portion allowed by law if you have forced heirs.
Life insurance: In the Philippines, life insurance proceeds generally go directly to named beneficiaries and are not part of the estate for distribution (subject to certain exceptions). Naming a non-traditional partner or co-parent as beneficiary is one way to provide for them outside the forced heirship rules.

4.4 Estate and Donor’s Taxes

Estate Tax
- Upon death, estate tax is imposed on the net estate (worldwide property of a Philippine resident).
- As of the Tax Reform for Acceleration and Inclusion (TRAIN) Law, the estate tax rate is a flat 6% on the net estate.
- If the estate plan involves multiple beneficiaries or foreign assets, more detailed tax planning may be required.
Donor’s (Gift) Tax
- Donations to strangers (i.e., not a relative up to the fourth civil degree) are taxed at 6% based on the total gifts in a calendar year exceeding the exempt amount of PHP 250,000.
- A non-traditional partner who is not related by blood or law would generally be considered a “stranger” for donor’s tax purposes.

5. Common Strategies and Best Practices

5.1 Execute a Clear Co-Ownership Agreement

If you and your non-traditional partner or family member intend to buy property together, a Co-Ownership Agreement should detail:

The contributions (who pays how much).
The percentage of ownership for each party.
Decision-making authority (e.g., how to handle improvements, rentals, or sale).
Dispute resolution (arbitration, mediation, or filing in court).
Procedures upon death or incapacity of one co-owner.

This written agreement reduces future conflicts and can clarify intentions for all parties.

5.2 Prepare a Will or Trust Early

Given the strict forced heirship regime in the Philippines, proactive planning is essential:

Last Will and Testament: Use a notarial will with witnesses for maximum reliability. Name your non-traditional partner or other family members as heirs of the free portion.
Trust Arrangement: Evaluate inter vivos trusts or other trust structures to protect the interests of your partner or other intended beneficiaries.

5.3 Use Life Insurance Beneficiaries

To ensure immediate financial support and bypass many of the complexities of forced heirship, consider substantial life insurance coverage. Name your non-traditional partner or children from a prior relationship as primary beneficiaries. Life insurance proceeds normally do not form part of the estate subject to estate tax or forced heirship if properly designated.

5.4 Consider Donations or Deeds of Sale During One’s Lifetime

Donations: If you do not have forced heirs or your forced heirs’ legitimes are already satisfied, you could donate property to your partner while alive. Keep in mind donor’s tax and legitime restrictions.
Simulated Sale: In some cases, individuals enter into a real Deed of Sale (i.e., a genuine sale for value) to transfer property to their partner. However, an ostensible or simulated sale lacking genuine payment can be legally attacked.

5.5 Corporate or Condominium Setup for Foreign Partners

Where a foreign partner is involved, you may consider:

Buying a condominium unit (since up to 40% foreign ownership in a condo project is allowed).
Forming a Philippine corporation to purchase land, provided Filipinos own at least 60% of the shares. This is more complex and must strictly comply with anti-dummy laws.

5.6 Prenuptial or Cohabitation Agreements (If Applicable)

If the couple is planning to marry (in a heterosexual union recognized in the Philippines) but wish to retain a specific regime (e.g., Complete Separation of Property), they must execute a valid prenuptial agreement. Though Philippine law does not formally recognize cohabitation agreements for same-sex or unmarried opposite-sex couples, such an agreement can still reflect mutual intentions on property arrangements.

6. Common Pitfalls

Failing to Document Contributions
- Without clear documentation, disputes over who contributed what are common, especially after a breakup or death.
No Will or Estate Plan
- If you die without a will (intestate), your partner or non-traditional family members may be entirely left out of inheritance.
Overlooking Forced Heirship
- Even a valid will cannot override legitimes. Failing to account for forced heirs can lead to the nullification or reduction of bequests to a non-traditional partner.
Tax Consequences
- Ignoring donor’s tax (for lifetime transfers) or estate tax can lead to large tax liabilities and possible penalties.
Improper Execution of Legal Instruments
- Wills that do not comply with formalities are subject to denial of probate. Trusts or deeds that are improperly executed or filed can be invalidated.
Misuse of Corporate or Legal Entities
- If you form a corporation or use a Filipino “dummy” to hold title for a foreign partner, this can violate the Anti-Dummy Law (Commonwealth Act No. 108), leading to severe legal consequences.

7. Conclusion and Practical Steps

For non-traditional families in the Philippines, early and proactive planning is key to protecting each other’s interests. While Philippine law provides limited automatic protections for non-traditional unions (especially in the absence of legal recognition), several contractual and testamentary tools can safeguard property ownership and ensure orderly succession. Here are practical action steps to consider:

Consult a Lawyer
- Engage a Philippine-licensed attorney who specializes in family law, property law, or estate planning.
Execute Necessary Agreements
- If acquiring property jointly, sign a Co-Ownership Agreement or related contracts clarifying ownership shares and management.
Draft a Will / Trust
- Prepare or update a will to identify your desired beneficiaries and comply with forced heirship rules. Consider a trust, particularly for complex or high-value estates.
Review and Update Beneficiary Designations
- Keep life insurance, retirement plans, and other financial instruments updated to name the intended beneficiaries.
Consider Tax Implications
- Factor in donor’s tax for gifts, and ensure a plan to settle potential estate taxes.
Maintain Proper Documentation
- Keep official receipts, proof of payments, and signed contracts, especially for jointly owned properties.
Review Plans Regularly
- Circumstances change over time (e.g., new children, property acquisitions, or changes in relationship status). Update your legal and financial documents accordingly.

With careful legal guidance, non-traditional families can protect their investments, ensure each partner or member’s wishes are respected, and minimize legal disputes. Planning is essential to navigate both the recognized legal frameworks in the Philippines and the nuances specific to each family arrangement.