5 Steps to Avoid Depletion of Your Estate


By Joel Barretto, CFPⓇ | via Negosentro.com |

In my last article, we talked about what happens to your assets when you die without a plan.  In financial jargon, we call it dying intestate.  This is one of the worst things you can do to your family after you have passed on.  It’s bad enough that they will be mourning your loss, let alone leaving them a mess to deal with, as they try to sort out how to efficiently and effectively distribute your material belongings.

Of course there’s always going to be that someone, who will think that he/she is entitled to the same thing the other one wants.  So how do we avoid conflicts between your loved ones after you have passed on?  How do we prevent them from dragging each other to court, only to let a total stranger (the judge) decide what goes to whom?  How do we avoid the depletion of your estate from unnecessary expenses like attorney fees, excessive estate taxes, penalties, probate fees, etc.?

The process of planning for the proper distribution of your estate and the survival of your family upon your death, should start from the time you create wealth.  It takes a lot of time, knowledge and experience to properly plan an estate.  Therefore, you will need a team of professionals composed of a financial planner (preferably a Certified Financial Planner or someone of equal credentials), attorney (one who specializes in estate planning), and accountant (preferably a Certified Public Accountant).

These professionals handle different segments of your estate from a financial, legal and tax standpoint.  Beware of people who claim to cover all those bases on their own, due to conflicts of interest and lack of competence in areas they don’t necessarily specialize in.  It’s like having your physician fix your teeth.  There’s just too much to learn and keep up with, for one person.

Once you have identified your team of competent professionals, you may proceed with the following steps:


  • Line your ducks up in a rowA qualified financial planner can assist you with identifying, managing and optimizing the assets within your estate.  Together with a good accountant, they can help you project the growth of your estate and estimate future taxes and expenses necessary to settle your estate.  This will also prepare you for the amount of liquidity required to settle your estate, so your heirs won’t be forced to liquidate assets to pay for final estate taxes (due within 6 months of death, otherwise huge penalties will apply) and other expenses.
  • Identify your rightful heirs – Unlike the United States gift and transfer laws, the Philippines gift and transfer laws require that your spouse and children are compulsory heirs.  In other words, you may not disinherit your estranged children.  It even gets more complicated with illegitimate children and second marriages.  You may also identify charitable institutions and non-family members to inherit a portion of your estate.  Your qualified estate attorney can guide you in sorting this out.
  • Create your will or trust – A qualified estate attorney will assist you in preparing the proper legal documents and identifying the best legal tools to ensure the orderly distribution of your estate and avoid unnecessary probate, taxes and expenses.
  • Allocate your assets – Through proper allocation, you will not only optimize your assets, but you will also realize how you want your assets to be distributed upon your death.  You will also develop the ability to plan how you may legitimately title your assets, while lowering or eliminating some expenses and transferring wealth to your rightful heirs.
  • Periodic check up – You will need to review your plan at least once a year to make sure you are up to date with current estate planning rules, taxes and changes to your situation (i.e. Should one of your heirs predecease you).


Author Bio

Joel Barretto, CFP sold his financial planning practice in Irvine, California U.S.A. to promote financial literacy and awareness in the Philippines.  He is a respected Certified Financial Planner practitioner with over 24 years of experience in helping people optimize, manage and protect their wealth.  

He is a public speaker and lecturer on a variety of financial planning issues and strategies.  With a passion for entrepreneurship, Joel dabbles in venture capital projects and mentors up and coming entrepreneurs on growing their start-up companies.  He is a 2nd degree black belt in the martial art of Kempo and enjoys performing and directing stage musicals for community fund raisers. You can reach Joel at ask@joelbarretto.com.


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