High Cost of No Divorce in the Philippines
A Case for Divorce: Its effect on Estate Tax and Transfer of Titles Computation
My parents never meant to cause difficulties in my life. Nevertheless, they left a paperwork mess that I’ve been untangling ever since they died. One of them centers on their marriage and divorce. In this post, I will share how the status of their marriage and the absence of divorce in the Philippines affected estate and transfer of title filing and computations.
Divorced in the USA, Still Married in the Philippines
My dad filed for a divorce in Nevada in the 70s. It was granted and was recognized in the USA but wasn’t in the Philippines. Their marriage, which occurred in the Manila during the 1960s, was still valid and legal when I filed for estate tax amnesty for my mother’s properties in 2022. Moreover, it is still valid today when I filed for transfer of title tax computation. Valid and subject to taxation! Because of this painfully paperwork-laden and costly experience, I want to share another aspect of the divorce debate in the Philippines. Let’s take a look at the divorce issue in the Philippines from the point of view of estate and inheritance taxes.
The Philippines is “the only country in the world besides the Vatican where divorce is still illegal…” said Albay Representative Edcel Lagman, the author of the Philippine divorce bill. This bill was passed by Congress on May 2024 and is now on waiting for the Senate vote. In the meantime, Catholics are praying against it and scheduled a prayer rally in Cebu on July 27th. Majority of Filipinos are Catholics including my mother. Being a devout Catholic, my mom never recognized her US-based divorce and still carried her married name until the day she died. Bless her but she did not anticipate the hurdles and high tax computation of her decision for her heirs.
Actual vs Paperwork (Legal) Reality
Like most Filipinos with unfinished inheritance paperwork, I filed for Estate Tax Amnesty for my mother’s properties. I was taken aback when all the computations included my father’s portion even though he never contributed a cent in acquiring my mother’s properties. Let’s zoom in on the details.
Philippine inheritance paperwork defined the state of my parents’ marriage differently from reality. Here’s what really happened:
My parents were physically separated while I was in kindergarten. My dad went to the USA and never stepped on Philippine soil again.
They got divorced in the USA approximately when my mom was in her late-30s .
Dad got married again in the USA shortly after the divorce.
Mom still recognized their marriage until the day she died but put “abandoned” when asked about the state of her marriage in all her property paperwork in the Philippines
My parents died in their 80s and qualified for the Estate Tax Amnesty.
However, when I filed for estate and title transfer taxes, here is how the Philippines looked at my parents marriage because their divorce is not recognized:
My parents died still married to each other and their decades of separation and their foreign divorce is not recognized.
All my mother’s properties went through all the inheritors including my father.
My mom never filed papers for legal separation or did not seek counsel about it. As a result, all real estate my mother bought was also “bought” by my father even though he never gave a centavo towards the payment of those properties.
Effects of No Divorce in the Philippines to Heirs
The ongoing debate for or against divorce in the Philippines highlight only moral or religious issues. I think it is time to think about how it affects the inheritors. Even though I am a dollar earner, it was still costly.
I paid for my dad’s portion in the eCAR or Electronic Certificate Authorizing Registration of all my mother’s inheritance and property she bought while separated with my dad.
I paid for my dad’s portion for all Title Transfer tax of each property in each local government agency where they were located.
I had to put together Philippine paperwork for my dad even though he has not stepped on Philippine soil from the 1960s to the day he died.
I hate to think how Philippine inheritance taxation and paperwork will affect others, especially those with multiple heirs. So what should you do now?
If you own properties, fix your titles now and decide who you want to be named on it. I would have saved a lot of time and resources if my parents did.
Tell your elected officials what you need in the area of marriage, divorce and inheritance taxation and paperwork.
If your parents are separated but are still married in paper, tell them my story and how they could have saved time and resources if they do something now. Start by reading about the Estate Tax Amnesty Extension.