Nelson Morales

When your daughter gets married, here's how to ensure what’s hers stays hers

Article (news)

Aneth Ng-Lim

<p>Between my 20s and my 40s, my husband and I bought a lot of insurance.  In our 20s and 30s, they were mostly for us, including life insurance, term insurance and health insurance.  The higher our expenses went, which happens when you raise a family and take on a housing loan, car loan and cope with mounting tuition fees, the more insurance we bought so there will be enough to cover all these when the unexpected happens.</p><p>When we hit our 40s, we shifted to buying policies for our daughters.  This was one of our attempts to secure their future when they have to stand on their own financial feet as they reach adulthood.  But I must share that the shift happened after I had an eye-opening conversation with a financial planner.</p><p>As parents, we may take for granted that what we give to our children becomes theirs and stays as theirs. But our children marry, and when they do, their assets, liabilities and income become subject to Executive Order 209 or the Family Code, specifically Articles 88 to 104.</p><p>That means her house, her lot, her car, even jewelry that she received as gifts from her parents or saved up for become part of Absolute Community of Property.  That financial planner was sharing that many of his clients with daughters planned for their children to remain financially independent after the wedding and in the event that things go south and the couple go their own ways. </p><p>Now, nothing wrong with community property.  That’s why traditional wedding vows normally include a reference for richer and for poorer. But as we mark another International Women’s Day and Women’s Month, I wanted to draw the spotlight on an empowerment tool: having choices and making the best one for your daughter.  </p><p>Here is a checklist to ensure her &quot;mine&quot; never becomes &quot;ours.&quot;</p><div><strong>#1 No to Wedding Gift, but Gift After Marriage</strong></div><p>Let’s start with something I found strange.  Under the Absolute Community of Property, things owned before marriage usually become shared. But, gifts or inheritances received during the marriage can remain exclusive property.  So if you plan to gift your daughter a large sum or property, hold off on giving it as a wedding surprise.  It’s better to wait until after she is married.</p><div><strong>#2 Set up a &quot;Deed of Donation&quot;</strong></div><p>It’s not just the timing that matters.  You should also prepare it as a formal donation specifically to her.  Don&#x27;t just &quot;give&quot; her money or property; document it. A formal Deed of Donation ensures a paper trail and serves as &quot;clear and convincing evidence&quot; that the asset was acquired through gratuitous title.</p><p>Make sure that the deed explicitly states the gift is for her sole and exclusive use and that it is intended to be excluded from Absolute Community of Property.</p><div><strong>#3 Try a Prenuptial Agreement </strong></div><p>If you really want to protect your daughter’s property, the gold standard remains signing a Prenuptial Agreement.  Admittedly, this can make wedding planning awkward and for lovestruck couples, they are likely to say no.</p><p>There’s a misconception that this is only for the rich.  But you don’t have to own tens or hundreds of millions to make a conscious and practical choice for complete separation of property.  With a Prenuptial Agreement, you ensure that everything she earns, inherits, or is gifted stays hers 100 percent, regardless of when she got it. </p><div><strong>#4 Buy Insurance the Right Way for Her</strong></div><p>Remember that shift in my 40s?  That’s all because of this.  I found out that I can buy insurance policies where I am the owner but the insured are my daughters. Under the Insurance Code, if the parent owns a life insurance policy on her daughter’s life, the rights automatically vest or transfer to her when the parent passes away.</p><p>And because she will receive this as an inheritance (gratuitous), her future or current spouse has no legal claim to the policy’s cash value or proceeds.</p><div><strong>#5 Keep &quot;Exclusive&quot; Funds Separate</strong></div><p>Now it’s important to remember this, so all the planning you did for #4 does not go to waste: do not mix inheritance money with conjugal money.  In the Philippines, if that money from insurance proceeds is mixed with conjugal money (e.g., she deposits it into a joint bank account used for family expenses), it becomes &quot;commingled&quot; and presumed conjugal.</p><p>That’s why it’s important to have a personal bank account, separate from family members’ income and expenses.  Your daughter should have a private bank account solely for her inheritance or gifts, and to never use that account for shared household expenses.</p><div><strong>#6 How to Gift Land and Titles</strong></div><p>One of the popular gifts from parents is land, or a house and lot.  If you decide to buy real estate for her while she is single, make sure the Transfer Certificate of Title or TCT is in her name only.</p><p>Even when she marries later, having her name as the &quot;sole owner&quot; on a title acquired via donation or before marriage makes it much harder for a spouse to claim a share during a legal separation.</p><div><strong>#7. How to Keep the &quot;Fruits&quot;</strong></div><p>If she owns exclusive property, let’s say a house or apartments or buildings, you may think the income is rightfully solely hers.  Well, it turns out that’s not the case.</p><p>Under the Conjugal Partnership of Gains, the income, even from her property can sometimes be claimed by the marriage.  In this case, the only bulletproof solution is having a Prenuptial Agreement. Without one, she should reinvest the &quot;fruits&quot; immediately back into her exclusive accounts to ensure continued separation.</p>

<p>As parents, we may take for granted that what we give to our children become theirs and stay as theirs. But our children marry, and when they do, their assets, liabilities and income become subject to the Family Code.</p>

As parents, we may take for granted that what we give to our children become theirs and stay as theirs. But our children marry, and when they do, their assets, liabilities and income become subject to the Family Code.