Requisites for deductibility of claims against the estate

Here are the four (4) requisites so that claims against the estate may be validly deducted from the gross estate.

[1] EXISTENCE OF LIABILITY. The liability represents a personal obligation of the deceased existing at the time of his death;

[2] GOOD FAITH AND CONSIDERATION. The liability was contracted in good faith and for adequate and full consideration in money or money’s worth;

[3] VALIDITY AND ENFORCEABILITY. The claim must be a debt or claim which is valid in law and enforceable in court; and

[4] CONDONATION AND PRESCRIPTION The indebtedness must NOT have been condoned by the creditor or the action to collect from the decedent must NOT have prescribed. (Section 6. Computation of the Net Estate of a Decedent Who Is either a Citizen or Resident of the Philippines. Revenue Regulation No. 12-2018. January 25, 2018)

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