Wednesday, March 14, 2018

You can settle your deceased parent's estate without going to court

Photo by Tirachard Kumtanom from Pexels

Has your parent passed away and left a house and lot, vehicle, bank account or shares of stock in his/her name and you as well as your siblings don't know what to do?

These properties form part of your deceased parent's estate which you cannot transact on unless the estate is settled. By "settled", I mean the distribution of the properties to the heirs. As a child of the deceased, your co-heirs would be your surviving parent and your brothers and sisters.

If you are governed by Philippine law, you can settle your deceased parent's estate without going to court if these three requirements under Philippine law are present:

1. There is no last will and testament;
2. There are no debts;
3. You and your co-heirs are all of legal age or, if there are minors, they are represented by their legal representatives.

If these requirements are not present, then you will have to file a court proceeding for settlement of estate.

For those who are citizens of another country or state, you must consult legal counsel on the requirements of your national or state law.

Under Philippine law, you and your co-heirs can execute a document known as "Extra-judicial settlement" (EJS) in which you specify how you would like to divide the estate among yourselves. It is always advisable to consult a Philippine lawyer about this just to make sure that the substance of the EJS complies with the law.

The EJS should be notarized and a copy submitted to the Register of Deeds (RD) where the land or real property is located. You must also post a bond with the RD equivalent to the value of personal property (such as shares of stock, vehicle, bank account and others that are not land, house, condominium unit or real estate). This bond is effective for two years and will answer for claims filed by excluded heirs or creditors.

You also need to publish a notice that the estate has been settled extra-judicially. This is a tiny notice in the classified ads section of a newspaper of general circulation, and it should appear once a week for three consecutive weeks. After three weeks, go to the newspaper company and get the publisher's Affidavit of Publication with three newspaper issues where the notice was published. Newspapers are familiar with this, so you don't have to give a lot of explanation. They will have this ready for you after three weeks.

You can now fill in the Estate Tax Return and submit this to the office of the Bureau of Internal Revenue in the city or municipality where your deceased parent last resided.

The estate tax is 6% based on the net value of the estate with a standard deduction of P5 million and exemption for the first P10 million for the family home.

Once the estate tax return is filed and tax due is paid, if any, the BIR will issue a Certificate of Authority to Register (CAR).

You can now transfer the title to your name and that of your co-heirs as co-owners by submitting these documents to the RD:
  1. Extra-judicial settlement
  2. Affidavit of Publication
  3. Estate tax return as filed with the BIR
  4. Official receipt to prove payment of estate tax, if any
  5. Certificate of Authority to Register.

Until next time!


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