Computing Estate Tax for Multiple Decedents in the Philippines
A practical guide for practitioners, executors, and heirs
1. Overview & Scope
Estate tax is imposed each time property is transmitted mortis causa. When deaths occur in quick succession—spouses dying years apart, ascendant‑to‑descendant transmissions, or entire family branches wiped out in an accident—the same property can be subjected to the tax more than once. Philippine law addresses the resulting double (or triple) burden through property partition rules, the vanishing deduction, and related special deductions. This article consolidates the doctrines, statutes, and administrative issuances that govern those scenarios, then walks through step‑by‑step computations.
Key sources: • National Internal Revenue Code (NIRC, as last amended by the TRAIN Law — RA 10963) §§ 84‑97 • Estate Tax Amnesty Act — RA 11213 (as repeatedly extended) • Revenue Regulations (RR) 12‑2018, RR 2‑2003, and relevant BIR issuances • Civil Code of the Philippines (property regimes & succession rules)
2. Fundamental Principles
| Concept | Practical meaning when more than one estate is involved |
|---|---|
| Separate juridical estates | Each decedent has a distinct tax base; BIR Form 1801 is filed per decedent. |
| Conjugal/ACP dissolution | On the first spouse’s death, the community/conjugal partnership is dissolved. Only ½ of conjugal/ACP assets enter the first estate. |
| Vanishing deduction (NIRC § 86 (A)(2)) | Mitigates double taxation when property included in a prior decedent’s gross estate passes again within five years. |
| Share of the surviving spouse | Always deductible from the gross estate of the first‑dying spouse (to avoid taxing the survivor’s own half). |
| One‑time 6 % rate | For deaths on or after 1 Jan 2018 the rate is a flat 6 % of the net estate, simplifying multi‑estate maths. Earlier deaths keep the graduated schedule. |
| “Simultaneous death” rule | Art. 43 Civil Code: If order of death cannot be proven, presume simultaneous; each estate includes only its separate property (no transmission between them). |
3. Step‑by‑Step Computation Framework
Determine the property regime active at each death
- Conjugal Partnership of Gains (CPG) for marriages before 3 Aug 1988 (default).
- Absolute Community of Property (ACP) otherwise.
- Separation of Property if validly agreed upon.
Segregate assets per regime
- Split conjugal/ACP equally first.
- Exclusive (paraphernal/capital) assets remain 100 % with their respective owner.
Construct the Gross Estate per decedent
- Philippine situs property of a non‑resident alien; worldwide property for residents/Citizens.
- Include transfers in contemplation of death, revocable transfers, transfers under general power of appointment, life insurance proceeds receivable by estate/executor.
Apply Statutory Deductions
Deduction Amount / Notes Relevance to multiple deaths Standard ₱ 5 million Claimed anew for each estate. Family Home Lower of FMV or ₱ 10 million May be used again if still qualified in later estate. Vanishing % of previous inclusion (table below) Critical when property inherited <5 data-preserve-html-node="true" yrs ago is taxed again. Expenses, Claims, Medical & Funeral Actual but capped (medical: last yr only, ≤ ₱ 500k) Unrelated across estates. Share of Surviving Spouse Exactly ½ of conjugal/ACP after liabilities Only in the first spouse’s estate. Transfers for Public Use, Charitable Bequests, Retirement Benefits Full amount if qualifying May vary per estate. Reciprocity for Intangibles of Non‑Residents If foreign country offers same exemption to Filipinos Applies individually. Compute Net Estate and multiply by 6 % (or graduated rate)
Claim the Vanishing Deduction (if applicable):
Interval between prior and current death Deduction % of prior cell’s value included in current gross estate Within 1 year 100 % > 1 yr ≤ 2 yrs 80 % > 2 yrs ≤ 3 yrs 60 % > 3 yrs ≤ 4 yrs 40 % > 4 yrs ≤ 5 yrs 20 % Conditions: - Property formed part of prior decedent’s gross estate and estate tax on that estate was finally paid.
- Deduction is pro‑rated if the current decedent held only a fractional interest.
File & Pay
- File BIR Form 1801 within 1 year of each death (extensions possible for meritorious cases).
- Attach certified copies of the earlier estate’s Notice of Payment/ATCA when invoking vanishing deduction.
4. Worked Example
Facts
- Juan and Maria are married under ACP.
- Juan dies 10 June 2021 (Estate 1).
- Maria inherits ½ of the family home (FMV ₱ 12 M) and a rental condo (FMV ₱ 8 M) from Juan, plus keeps her own ½ shares.
- Maria dies 5 May 2024 (Estate 2). All property passes to their son, Pedro. Estate tax for Juan was duly paid July 2022.
Estate 1 (Juan)
ACP dissolution ⇒ Conjugal assets (Home ₱ 12 M + Condo ₱ 8 M = ₱ 20 M) ÷ 2 = ₱ 10 M enters Juan’s gross estate.
Gross Estate = ₱ 10 M
Deductions
- Standard ₱ 5 M
- Family Home ₱ 10 M capped to ₱ 10 M × ½ interest = ₱ 5 M
- Funeral/medical etc (assume ₱ 0 for simplicity)
- Surviving spouse share (Maria’s half) already removed earlier
Net Estate = ₱ 10 M – ₱ 5 M – ₱ 5 M = ₱ 0 ⇒ No estate tax due (common in modest estates post‑TRAIN)
Estate 2 (Maria)
Maria’s estate consists of:
- Her original ½ ACP share → Home ₱ 6 M, Condo ₱ 4 M
- Property inherited from Juan (same figures) → subject to vanishing deduction
- Total gross estate = ₱ 20 M
Deductions
- Standard ₱ 5 M
- Family Home: Maria now owns full 100 % interest → FMV ₱ 12 M but deduction capped at ₱ 10 M
- Vanishing deduction (death‑to‑death interval ≈ < 3 years → 60 %) Inherited value included now = ₱ 10 M 60 % × ₱ 10 M = ₱ 6 M
- Assume no additional expenses.
Net Estate ₱ 20 M – (₱ 5 M + ₱ 10 M + ₱ 6 M) = ₱ ‑1 M (negative) ⇒ No tax.
Outcome: Neither estate triggers tax under the 6 % flat rate once deductions are maximized—a common result for estates under ~₱ 30 M when deaths are close together and the vanishing deduction is documented.
5. Special Scenarios & Doctrinal Notes
| Situation | Treatment |
|---|---|
| Common‑disaster deaths (plane crash, etc.) | If the chronological order is certain, compute estates sequentially; if indeterminate, treat as simultaneous (Art. 43 Civil Code) so no property passes from one to the other—each estate is taxed only on decedent’s own property. |
| Property sold by first heirs before second death | Vanishing deduction still applies to the extent of value that would have been included had property not been sold, but only up to the decedent’s interest at time of second death. |
| Qualified Domestic Trust (QDOT)‑type plans | Not recognized in PH; transfers to non‑citizen spouses are taxed normally (no marital deduction). |
| Intangible personalty held abroad by non‑resident alien decedent | Exempt if reciprocity = the foreign jurisdiction grants similar exemption to Filipinos. This must be tested separately for each decedent. |
| Estate Tax Amnesty filing | RA 11213 covers all unpaid estate taxes for decedents who died on or before 31 Dec 2021 (deadline currently June 14 2025, but check latest BIR advisory). Multi‑estate families may file a single amnesty return per decedent; amnesty does not waive documentary stamp or transfer fees. |
6. Compliance Checklist for Successive Estates
- Locate prior Estate Tax Return (BIR Form 1801) and proof of payment.
- Secure updated fair market values (zonal & assessor’s).
- Prepare sworn statement of the current estate enumerating inherited property with book/fair values at both dates of death.
- Attach computation schedule of vanishing deduction showing interval and percentages.
- File before the one‑year deadline (apply for extension if liquidation needs court approval).
- Settle DST, transfer taxes, and register titles promptly to preserve documentary evidence for future estates.
7. Practical Tips & Common Pitfalls
- Don’t miss the prior estate’s payment proof. The BIR disallows the vanishing deduction unless the earlier tax was actually paid.
- Allocate deductions wisely. For large families, the family home and standard deduction can be strategically shifted (e.g., first decedent claims family‑home, second claims standard) if values differ.
- Beware inter‑spousal donations. Transfers during the first spouse’s lifetime may trigger donor’s tax and alter the estate base.
- Update valuations near the actual date of each death, not at time of filing.
- Court‑supervised settlements (Rule 90, Rules of Court) delay deadlines; secure BIR extension approval early.
- Check local treasurer’s requirements. City or municipal clearances often demand proof of estate tax payment before issuing local transfer tax receipts.
8. Conclusion
When deaths strike a family in close succession, computing each estate separately while leveraging the vanishing deduction and other statutory allowances prevents unfair double taxation. The TRAIN Law’s flat 6 % rate plus generous standard and family‑home deductions mean many mid‑sized estates will owe little or no tax—if compliance is meticulous. Executors should gather prior returns, value assets accurately at each decedent’s date of death, and document timelines to substantiate deductions. Where liabilities remain, the Estate Tax Amnesty offers a final window to clear the slate at minimal cost.
This article is for educational purposes and does not constitute legal advice. For case‑specific applications, consult a Philippine tax lawyer or accredited estate tax practitioner.