Niko Villamor

Insolvency is not a legal panacea that will solve all debt problems. It has a long-term impact on your credit-worthiness. There are some debts that are not affected by the discharge of the insolvent. The following debts are not released by a discharge in bankruptcy: assessments due to the national and local governments, debts due to fraud embezzlement or defalcation by the debtor, debts with another where he is bound solidarily, alimony, corporate debts and debts not included in the schedule submitted by the insolvent debtor. Some strange occurrences have happened to some insolvent persons that have resulted in a large windfall to their families. It may seem that a man, even if insolvent, should be able to secure some protection for his wife and children by insurance. The old statutes in some American states allow this but they limit the amount that may be provided at the expense of creditors.

Writing a will is an act of love. You must deal with practical matters including asset protection to preserve your estate for future generations. You must devise ways to insure that the people or groups you love will receive the assets you want them to get. A well-written will is an effective instrument of asset protection and estate planning but it will take effect only at the time of your demise. A majority of Filipinos do not have wills. They die intestate. Why? Belli and Wilkinson explained that even in the United States, 70 percent or more of American adults do not have wills. The main reason is psychological in nature: people are apprehensive about thinking of their own demise. Or they believe their death will be accelerated if they made a will. You must care for your heirs unless you wish to follow Picasso’s example.

The will should have clear provisions on how your debts will be paid. Outstanding debts will expose your estate to lawsuits that could deplete your entire nest egg. In making your will, you should include provisions that would answer the following inquiries:
1) Who will be the executor of your estate?;
2) Who will serve as guardians to your minor children?;
3) Should your spouse be given the freedom to transfer your property if he or she remarries?;
4) Who will get the remainder of your estate after the legitimes and specific bequests have been made?;
5) Should your estate pay off real estate and chattel mortgages before your properties are transferred to your heirs?;
6) Should debts owed to you be canceled?;
7) Should there be a priority list to determine which property should be sold first in case assets will be sold to pay for your liabilities?; and
How should estate and inheritance taxes be paid? Your responses to these questions will provide a smooth transition of your assets to your heirs and could perpetuate the asset protection devices you have formulated. The downside to a will is the necessity of a probate before it could be given effect. Probate is expensive, not private, and could tie up your assets because of the length of the pro-
ceedings.