Exit strategies: Last wills, estate-planning and life insurance

"Death is a very dull, dreary affair, and my advice to you is to have nothing whatever to do with it," said British playwright W. Somerset Maughm. Every year during the Undas holy days, Filipinos commemorate human mortality by remembering to honor the dead. Death is a part of living – as much as its terminal counterpart, birth. A person’s legal duties can and usually does extend into the future even after having departed from this life. While every newborn baby has no legal right, duty, nor obligation before birth – due partly to the lack of “legal personality" or “juridical capacity" under the law – all of the newly-dead, however, get to retain their personalities beyond the grave, if only to settle accounts left unattended by reason of their demise. This personality of the departed that survives his or her death is called the "estate of the deceased." Writing one’s last will and testament, the planning out one’s estate, and taking out life insurance are all legal devices meant to give one peace of mind in this world before moving on. Estate of the deceased Aside from bestowing inheritance on the heirs of the deceased, the estate answers for all the deceased’s unpaid debts — with top priority given to unpaid taxes owed to the State. When a person dies with debts left outstanding, his or her creditors will go after the properties of the estate in order to recover what is due them. Only after paying the debts of the deceased can his or her heirs get their inheritance. Obviously, a person and the estate of that person are not the same. A person acts out of his or her own free will, while the estate — as an artificial person created by law — can only act through a court-appointed administrator or else the executor named in the last will and testament of the deceased. Administrators handle the estates of those who died without a valid last will and testament, following the Rules of Court in "intestacy proceedings." Executors handle the estate of those who died leaving a valid will authenticated in "probate proceedings" where interested parties can contest the will. Wills and testaments In the Philippines, only three types of wills are recognized. The Civil Code provides for notarized wills as well as handwritten or "holographic" wills; while the Code of Muslim Personal Laws adds the third type — oral or "nuncupative" wills. The easiest type of will to prove as being authentic is the handwritten will, which does not have to conform to the strict requirements of a notarized will, nor to the requisite sworn testimony of witnesses as regards a Muslim oral will. Only someone familiar with the handwriting of the deceased need testify that the deceased did actually put pen to paper his or her desired distribution of properties to heirs. In other countries, videotaped wills are recognized as a form of oral wills. Out of the 11 states in the US that accept oral wills – Florida, Indiana, Kansas, Mississippi, Missouri, New York, North Carolina, Ohio, Tennessee, Texas, Vermont, and Washington – some do accept as valid any video will, recorded by the testator (deceased) as he spoke, but such a will must follow narrow and exacting criteria. Legitimes and life insurance Property and wealth are passed on to heirs as their inheritance transmitted by reason of death of the decedent, distributed either upon instruction of the decedent through last will and testament or else by operation of law if there be no such will. Notably, however, anyone who writes a will cannot dispose of all of his or her properties as he or she deems fit. The law reserves portions of the decedent’s property – called “legitimes" – for his or her legal heirs, mandating that these not be impaired by the will. Life insurance also involves transmission of wealth by reason of death of the decedent, whose life gets insured by whomever takes out an insurance policy and pays the insurance premiums for coverage against that risk of death. But the policy-holder or beneficiary must have “insurable interest" over the life of the insured such that death would result in some sort of damage to the beneficiary. In other words, the proceeds from the insurance policy are paid out by the insurance company – and not the insured deceased – to the beneficiaries who may or may not be the heirs. Insurance proceeds are not inheritance. — RSJ/HS, GMA News