Extrajudicial settlement of an estate

When a person dies, what they owned passes to their heirs. If the heirs agree, they can usually divide it without a court case through an extrajudicial settlement (Rule 74 of the Rules of Court).

When it can be used

• The person left no will.
• The person left no unpaid debts, or the debts have been paid.
• All the heirs are of age, or the minors are represented by their guardians.
• All the heirs agree on how to divide the property.

If there is a will, or the heirs cannot agree, the estate has to be settled in court. If there is only one heir, an Affidavit of Self-Adjudication is used instead.

The steps

• Gather the documents: the PSA death certificate, the PSA birth and marriage certificates that show who the heirs are, the titles and tax declarations, bank certificates, and the TINs of the deceased and the heirs.
• Sign a Deed of Extrajudicial Settlement before a notary public. It lists the heirs and the property and says who gets what.
• Publish the deed in a newspaper of general circulation once a week for three consecutive weeks.
• File the estate tax return with the BIR and pay the estate tax. The return is generally due within one year from death; the rate is six percent of the net estate. Ask whether any estate tax amnesty is open when you file.
• The BIR issues a Certificate Authorizing Registration (eCAR) for each property.
• Present the deed, the eCAR and the proof of publication to the Registry of Deeds to transfer the titles, then to the Assessor's Office for new tax declarations. Banks release deposits against the eCAR.

Two things to know

• For two years after the settlement, an heir or creditor who was left out may still claim against it, and the titles carry a note saying so.
• Leaving out an heir — a child from another relationship, for example — can undo the settlement. Make sure everyone with a share is named.