There are several ways in which parents can transfer real property to their children
Q: Is inheritance the only way I can transfer ownership of my property to my child?
A: This is a common question many Filipinos ask about real estate. And the answer to this is no—a real property could also be transferred through other ways.
In the Philippines, the most common mode of property transmission from parents to children is succession—the automatic passage of ownership to the children at the death of a parent or both. The provisions of the “Laws on Succession” (Articles 774–1105 of the New Civil Code or NCC) govern the different scenarios, whether the deceased died testate (with a testament) or intestate (without a testament).
2. Execution of Last Will and Testament probated while parties are still alive
The law also allows transfer of property when both the parent and the child are still living. The framers of the “Succession Code” provided such means to recognize the Filipino tendency for parents to ensure that their children are already provided for while the parents are still alive, and for the prevalence of domestic tranquility and peace because the properties have been disposed of in the desired manner with everyone’s interests considered and accounted for.
The parent can execute a Last Will and Testament and have it probated while he or she is still alive, so that the property partition that it mandates will already become binding.
Parents may execute a Deed of Absolute Sale in favor of their children. This mode implies that there is payment or consideration in the sale and transfer of property, which most of the time is only on paper. Notwithstanding, there are still tax matters that need to be settled, such as capital gains tax, documentary stamps tax, and other transfer taxes.
Parents can opt to execute a Deed of Donation, per Article 725 of the NCC:
Donation (which could either be “inter-vivos,” which takes effect at the lifetime of the donor, or “mortis causa,” which takes effect at the death of the donor) is a mode of property transmission where the donor transfers the ownership of his or her property to the donee. Such transfer is motivated by the donor’s love and affection for the donee. It is free and does not involve any monetary consideration. The donor should follow the requisites below:
• The donor must own the property, and must have the capacity to donate, as defined by law.
• He or she must have donative intent.
• There must be delivery to the donee.
• The donee must accept (Articles 735–747).
• If the property is movable and its value is more than Php5,000, the donation must be written in a public or private document. If less, a donation conveyed orally will suffice. (Article 748)
• If the property is immovable, the donation must be through a public instrument specifying the property donated, the responsibilities to be assumed by the done, and the conditions he or she must fulfill (if any). The acceptance of the donation by the donee may be made in the same instrument. But if such acceptance is made in a separate instrument, the donor must be notified in authentic form, and this step shall be noted in both instruments. Such a separate instrument must be executed within the lifetime of the donor. (Article 749)
After acceptance, the donee can transfer the donated property to his or her own and bind third parties, going through the following process:
• Tax assessment and zonal classification of the donated property by the Assessor’s Office
• Payment of any unpaid real property tax at the Treasurer’s Office, and the Donor’s Tax at the Bureau of Internal Revenue
• Proceed to the Registry of Deeds for the transfer of the title of property to his or her name
Main photo via Shutterstock