Planning ahead

Many services nowadays encourage our behavior and mindset to plan ahead. We are incentivized with promotions, discounts, premium seats, and other marketing come-ons to entice us to make quick decisions to take up the services way ahead of time. We are effectively motivated to plan ahead given the monetary gains we can get as a result of this change in behavior.

The ever popular seat sale of airline companies is always a big hit with everyone, with a lot even staying up late at night to be early in the digital queue. Conferences, workshops and other seminars across industries usually do the early bird rate as well to sell slots at a cheaper cost to fill up seats at the earliest possible time.

In real estate, property developers pre-sell and would do so at a discount as well. Even government services adopt this kind of come-on. Real estate tax is usually discounted if settled on or before November of any calendar year.

These examples not only highlight our penchant for monetary incentives, but also reflect the fact that there’s benefit in planning ahead of time. This is evident across all facets of our lives. From our careers to activities in our social calendars to business succession and estate planning, among others.

One of the key benefits of properly planning ahead is in the area of business succession. In our recently concluded estate planning seminar to a select number of business owners, it became all the more apparent to utilize available resources and tools to ensure the succession plan is sound and relevant.

Not many people know that estate tax and donor’s tax rates are at its lowest at this point due to the Train Law, which is pegged at six percent. This helps in giving ease to business owners and family patriarchs to transfer properties to their heirs or to avoid putting a property under one’s corporation which may have multiple owners, causing unnecessary conflict and stress later on.

Companies such as Sun Life can transfer properties without having to pay for the entire tax amount. Insurance policies can be the vehicle to pay for such estate tax without necessarily burning one’s pocket in the event the inevitable arrives.

More importantly, by planning ahead and utilizing this approach, one avoids paying for additional tax because insurance benefits are tax-free.

Placing properties under a corporation and without any estate plan in place poses a risk in the event of untimely death. If the main shareholder of a company passes away unexpectedly, not only will the other shareholders have to work on filling up that void but the properties placed under that corporation would have to be sorted out too.

Such exercise is also time bound as BIR only gives a certain period of time for tax to be settled, otherwise hefty penalties are in the horizon. At some point in time, the penalty becomes so huge it doesn’t make business sense anymore to take on the property. This is why sometimes you see abandoned buildings, houses and offices in some parts of the city.

It’s then essential to be aware of the tools and resources available to start planning ahead. It becomes a smart approach in dealing with the inevitable, and at the same time protecting the legacy you already built – business and otherwise – and pass it on to your family and future generations to come.

An upcoming estate plan seminar will be held on 22 September 2018, Saturday at Novotel Hotel Quezon City. For inquiries please message the author.

Kay Calpo Lugtu is the COO of Hungry Workhorse, Co-Founder of Caucus, Inc. and Deputy Director of Global Chamber Manila. Her advocacies include data privacy, financial literacy, and nation-building. The author may be reached at or, to the more cautious now, at