Estate tax

7 Things You Need to Know About Extrajudicial Settlement of Estate

When a person dies, he/she passes on his/her properties, if any, to his/her heirs. To distribute the properties amongst themselves, the heirs must settle the "estate" of the deceased. Should they agree on the division of the properties, they may do so without going to court in a procedure called "extrajudicial settlement of estate". This article discusses the 7 things you need to know about extrajudicial settlement of estate.

1. What is extrajudicial settlement of estate?

Extrajudicial Settlement of Estate is a private agreement between the heirs of the deceased person which sets out how the estate of the deceased will be divided or distributed among themselves. The terms of the private agreement to settle the estate of the deceased are set out in a document called “Deed of Extrajudicial Settlement of Estate”.

2. What is meant by “extrajudicial”?

It is “extrajudicial”, as opposed to judicial, in the sense that the heirs do not go to court to settle the estate.

3. What is meant by “estate”?

The term “estate” is the collective term for the real and/or personal properties left by the deceased.

4. What are the conditions in order for extrajudicial settlement of estate to be allowed?

Extrajudicial settlement of estate is allowed only when the following conditions are present:

1. the decedent died without a last will and testament;

2. the decedent has no debts or, if there are debts, such debts have been fully paid;

3. the heirs are all of legal age; in case there are minor heirs, they are duly represented by their judicial or legal representatives; and

4. A public instrument is duly executed by the heir or heirs and filed with the Register of Deeds.

5. What if there is only one surviving heir?

If there is only one surviving heir, he may execute an Affidavit of Self-Adjudication which adjudicates the entire estate to him/herself.

6. What are the steps involved in transferring the title of the properties to the surviving heir or heirs?

The transfer of title of specific properties into the names of the heirs involves two steps:

1. Settlement of the estate taxes with the Bureau of Internal Revenue; and
2. Registration of the transfer with the Register of Deeds where the property is situated

7. What are the documents needed for settlement of estate and transfer of title to the heirs?

Documentary Requirements for Settlement of Estate Tax with the Bureau of Internal Revenue (BIR)

1. Notice of Death
2. Certified true copy of the Certificate of Death
3. Deed of Extrajudicial Settlement of the Estate
4. Certified true copy of the land titles involved
5. Certified true copy of the latest Tax Declaration of real properties at the time of death
6. Statement of a Certified Public Accountant (C.P.A.) on the itemized assets of the decedent;
7. Certification from the Barangay Captain in cases of real property claimed to be a Family Home.

In case there are personal properties:

1. copy of Certificate of Registration of vehicles, if any, and other proofs showing their true value;
2. copy of certificate of stocks, if any;
3. proof of valuation of shares of stocks, whether listed or unlisted, at the time of death
4. proof of valuation of other types of personal property

Upon the submission of complete documents and payment of the estate taxes determined by the BIR, a Certificate Authorizing Registration (CAR) will be issued by the BIR. After which, the heirs may proceed to the Register of Deeds for the transfer of titles to their respective names.

Documentary Requirements for Transfer of Title of Land with the Register of Deeds

   

1. BIR Certificate Authorizing Registration (CAR) re: payment of estate taxes above
2. Real property tax clearance
3. Deed of Extrajudicial Settlement of the Estate (the same document above)

4. Proof of payment of transfer tax 
5. Affidavit of Publication from the publisher stating that the notice of settlement has been published once a week for three (3) consecutive weeks.

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