What Will Happen if the Investor Dies?

A client friend left me a personal message in Facebook asked me a very unusual question about his investment:

“Sir, what will happen to my investments if I die today?”

I was really unprepared on that question.  Really.  I took 15 seconds able to type the first letter of my reply.

“I …. ”

I realized I have to consult another friend and a colleague in the bank for better accuracy of the answer.  I thanked God for letting this question in Facebook messages only.

Again, What Will Happen to the Investment?

photo by pixabay.com
photo by pixabay.com

Fresh from my review courses on that day (I was a newly promoted officer on that year), I was able to gather information about the inquiry of my friend and that question really disturbs me.  Here are my takes:

  1. The investment is still in the institution.  If this is an UITF, the funds are still in the custody of trust/asset management of the bank;
  2. If this is an institution aside from banks, this should be a Mutual Fund.  The funds are still under management of fund managers.

What should we do? What are the requirements?

In reality, deposit products (such Savings/Current deposits and Time deposits) and investment products are have both tedious and stressful processes (Yep! many process) for able to claim the investment from sudden demise of the investor.

photo from Pixabay.com
photo from Pixabay.com

Unless the investor planned it well thru using joint accounts (OR accounts).  But not all doing that.  There are still many exceptions.

Here are the requirements for the surviving spouse/heir to be prepared and submitted in case sudden demise of the investor:

  1. Consult to the bank/company of the investment
  2. Death certificate
  3. Deed of Extra-Judicial Settlement of Estate with Affidavit of Self Adjudication
  4. Proof of publication with Affidavit of Publication of the Deed of Extra-Judicial Settlement
  5. Proof of payment of estate tax with tax clearance
  6. Certificate of marriage between spouses duly issued by the National Statistic Office
  7. Proof of identification of client and surviving spouse.

Hmmm.  Nahilo na ba kayo?  (Are you confused enough?).  Paying estate tax enough to be disappointing fact that you have to embrace in case it happened.  Here are my small explanations from the above requirements:

  • Death certificate is self explanatory.  It should be NSO copy.
  • The Deed of Extra Judicial Settlement of Estate with Affidavit of Self Adjudication is simply a clearance from the court on which the estate is free from any conflicts such other parties claiming their rights on the estate.  If the investment is an UITF, the bank manager will help you to provide forms in order to submit to the court.

    photo from pixabay.com
    The publication should be in top 3 broadsheet company photo from pixabay.com
  • The Proof of Publication with Affidavit of Publication of the Deed of Extra Judicial Settlement is also simply an evidence of newspaper publication stating the demise of the client/investor.  The publication should be the top 3 newspaper agency such Daily Inquirer, Philippine Star, and Manila Bulletin.
  • The costs of estate tax is ranging from 5% – 20%.  You should prepare the TIN of the investor.  Go to the nearest RDO for proper estate tax payment.

The process will be very very tedious and costly.  What if the surviving spouse will need the fund for expenses in wake, and for the burial?  Can they immediately liquidate the fund?  I don’t think so.

My Advice to my Friend

Finally, I drafted my reply to my friend.  I told him investing in UITF/Mutual Funds is very wise choice for securing the future,  but without enough protection to cover these investments during uncertainties, your investments will be a liability to your love ones.  Let other institution help you to fund your love ones immediately during difficult times.

Especially if you are investing for their future.

“The very foundation of investing is not choosing right investments.  It was started on getting life insurance to cover you during the time of difficulties.”

To get more information on about choosing right investment and insurance, you can send me SMS or email thru Contact Us.


Bureau of Internal Revenue: Tax information on Estate Law

Profile photo of Eleison Cruz

Eleison Cruz

Financial Consultant. Personal Finance and Investment advocate. Author of The Good Asset, a blog that educates people in investments, financial literacy, and life insurance. Visit www.thegoodasset.ph

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