The Myth of Andor

Everyone HATES paying taxes. Especially to our government. Which is why it is completely understandable that people resort to various means to lower their tax obligations. Now, there are legal ways to do this but you better be sure you know what you are doing because the BIR will not relent if you make a mistake.

Take the case of estate taxes for example. The law is very clear that the assets of a deceased person are to be assessed a tax BEFORE any of those assets can be transferred to the legal heirs. The top tax bracket here is roughly 20% of the estate’s value. This therefore means that, in its simplest interpretation, an estate worth 10 million pesos will pay close to 2 million pesos in estate taxes – and those taxes will generally have to be paid WITHOUT liquidating the assets of the deceased.

Now, the legal way to handle situations like this would be to have an estate plan. But since we Pinoys hate the idea of paying for something we believe “should” be free, we instead base our financial strategies on the bits and pieces we find floating on the Net. And one of these is the belief that creating joint “And / Or” accounts can bypass these taxes.

Hate to break it to you, but when it comes to bank accounts at least, that belief can end up costing you a LOT of money – and even jail time.

First, most financial institutions will require you to specifically state if you will have a joint “And” account or a joint “Or” account. This is because there are significant legal differences between the two – especially when it comes to who can withdraw.

For example: CLICK HERE

Now examine, Section 14-g-d of that page.

Yup, perjury. And the suggested penalty for that can include up to six months in jail.

So, if you think that by creating a joint account and later on withdrawing your dead relatives funds via ATM is a good way to beat the system, please reconsider. All it would take for the BIR to catch you would be to ask for a record of ALL transactions of the deceased’s bank account.

Lastly, if you are NOT a joint account holder and you withdraw the funds via ATM AFTER the account holder’s death, well, I believe there is a legal term for people who get things that do not legally belong to them.