Extrajudicial Settlement of Estate in the Philippines

If you are a family member of a deceased person who resided in the Philippines, you may be wondering what the process is for settling their estate. In many cases, it is possible to do so through an extrajudicial settlement of estate. This article will provide an overview of what this process entails and some of the benefits of pursuing it.

What Is An Extrajudicial Settlement of Estate?

An extrajudicial settlement of the estate is a process in which the heirs or beneficiaries of a deceased person’s estate can agree to divide and distribute those assets among themselves without court intervention.

It may be done if the following circumstances are present:

No will left by the decedent
The decedent’s debts have been paid in full
Legal-age heirs or minors represented by their legal representative
A public instrument executed and filed with the Register of Deeds

Extrajudicial settling of an estate is quicker than a judicial settlement, which can take years. This process is used when the heirs need to resolve disagreements on dividing up the decedent’s properties and their share of them.

How Does An Extrajudicial Settlement Work?

Filing of Estate Tax in the BIR

The first step in the extrajudicial settlement of the estate process is filing the estate tax returns with the Bureau of Internal Revenue (BIR) within six months from death. To do so, a copy of the Death Certificate and other documents must be submitted to support the filing.

Dealing with the death of a loved one is always tricky, and unfortunately, there are legal implications accompanying the process. To ensure that you meet all of the requirements to settle their estate and account for their assets, here is a list of documents that you may need:

Notice of Death
Death Certificate (certified true copy)
Deed of Extrajudicial Settlement of the Estate
Land titles involved
Latest Tax Declaration of real properties at the time of death
Photocopy of Certificate of Registration of vehicles and other proofs showing their correct value
Certificate of stocks
Proofs for valuation for shares or stocks: For listed stocks – newspaper clippings or certification from the Stock Exchange. For unlisted stocks – latest audited Financial Statement of issuing corporation with computation of book value per share

Proofs for valuation for other types of personal property
CPA Statement on itemized assets, deductions made to the gross estate, and amount due if the gross value exceeds two million pesos
Certification from Barangay Captain for claimed Family Home

Execution of a Public Instrument

All heirs must sign an Agreement or Deed which shall include all details regarding the estate, including how it will be divided, who will receive what share, etc. This document needs to be notarized by a public notary and then filed with the Register of Deeds in the same area where the deceased resided before his death.

Administration and Distribution of Assets

After all, documents are filed, it is up to the heirs to divide and distribute the assets per their agreement in the public instrument.

Benefits of an Extrajudicial Settlement

There are many benefits of having an extrajudicial settlement of the estate, including:

Save Time and Money: The process is much faster than a judicial settlement, and it can be conducted without the costly involvement of lawyers.

Avoid Conflict: With an extrajudicial settlement, all parties involved can reach a mutual agreement without needing court intervention, which can help prevent disagreements among heirs or beneficiaries.

Secure Property Rights: An extrajudicial settlement ensures that each party in the estate receives their fair share of the assets, and property rights are securely transferred to them once the process is completed.

Conclusion

Extrajudicial settlement of the estate is a process that can be used when settling an estate of a deceased person. It involves filing the necessary documents, preparing and executing a public instrument, and distributing assets to all heirs or beneficiaries. This process is beneficial as it saves time and money, helps avoid conflict between parties involved, and secures property rights for each party.

Disclaimer: This information is not intended to be a substitute for legal advice or any other professional advice. It should not be relied upon as such. Always seek the advice of a lawyer qualified in your jurisdiction with any questions you may have regarding estate planning.

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