Estate settlement in the Philippines involves the transfer of a decedent’s assets to the heirs or legatees. The two primary modes are extrajudicial settlement and judicial settlement. The choice between them dramatically affects cost, duration, and complexity. This article exhaustively discusses the costs associated with each mode under current Philippine law (as of December 2025), including taxes, government fees, publication costs, professional fees, and incidental expenses.

I. Common Taxes and Fees Applicable to Both Modes

Before comparing the two modes, note the taxes and fees that apply regardless of whether the settlement is extrajudicial or judicial:

Estate Tax (TRAIN Law – RA 10963, effective 1 January 2018 onwards)
– Flat rate of 6% on the net taxable estate.
– Deductions allowed:
• Standard deduction: ₱5,000,000
• Family home: up to ₱10,000,000
• Medical expenses incurred within 1 year prior to death (up to ₱500,000 with receipts)
• Amounts received by heirs under RA 4917 (retirement benefits)
• Share of surviving spouse
– Estates with gross value not exceeding ₱5,000,000 (after standard deduction) are often effectively tax-free.
– Payment deadline: 1 year from death (extendible by 6 months).
– BIR issuance of Electronic Certificate Authorizing Registration (eCAR) is required before any transfer of property titles.
Documentary Stamp Tax (DST) on Transfer of Real Property
– 1.5% of zonal value or fair market value, whichever is higher (Sec. 196, NIRC).
Local Transfer Tax
– Up to 0.75% of fair market value (varies per LGU; Metro Manila cities usually 0.75%).
Registration Fees with Register of Deeds
– 0.25% of fair market value + legal research fee + IT fee (approximately ₱1,000–₱3,000 per title).
Capital Gains Tax (CGT)
– Generally NOT imposed on pure inheritance transfers. CGT applies only if the heirs subsequently sell the inherited property.

II. Extrajudicial Settlement of Estate

Legal Basis and Requisites (Rule 74, Rules of Court)

Extrajudicial settlement is allowed only when ALL of the following concur:

Decedent died intestate (no will) OR all heirs agree to respect the will without need for probate (common but technically risky practice).
No outstanding debts of the estate (or creditors have been paid/notified).
All heirs are of legal age or minors are properly represented.
All heirs agree on the partition.

If any condition is absent, judicial settlement is mandatory.

Procedure

Drafting of Deed of Extrajudicial Settlement of Estate (DESE) or Deed of Extrajudicial Partition.
Notarization of the deed.
Publication of the DESE once a week for three consecutive weeks in a newspaper of general circulation.
Filing of estate tax return (if gross estate > ₱5M) and payment of estate tax.
Securing BIR eCAR.
Payment of local transfer tax and securing Certificate of No Improvement/Tax Clearance from LGU.
Registration of the DESE with the Register of Deeds and annotation/cancellation of old titles and issuance of new TCTs/OCTs in the names of the heirs.

Detailed Cost Breakdown (2025 estimates)

Item	Approximate Cost (₱)	Notes
Lawyer’s Acceptance/Professional Fee	50,000 – 250,000	1–3% of gross estate is common; some charge flat ₱80,000–₱150,000
Notarization of DESE	10,000 – 50,000	Based on value; usually 1–2% of estate value but capped in practice
Publication (3 weeks, newspaper of general circulation)	25,000 – 80,000	Philippine Daily Inquirer, Manila Bulletin, or provincial papers
Estate Tax	6% of net taxable estate	Often zero for estates ≤ ₱15M after deductions
BIR Processing Fee for eCAR	5,000 – 15,000	Includes certified copies
Documentary Stamp Tax (real property transfer)	1.5% of zonal/FMV	Per property
Local Transfer Tax	0.75% of FMV (Metro Manila)	Varies (0.5–0.75%)
Real Property Tax Clearance/Updating	5,000 – 20,000 per property	Depends on arrears and number of properties
Register of Deeds Fees	8,000 – 25,000 per title	Includes annotation, new TCT issuance, LRA fees
Bond (if required under Sec. 1, Rule 74)	50,000 – 200,000 (2-year bond)	Rarely required nowadays unless creditors appear
Miscellaneous (transport, photocopying, etc.)	10,000 – 30,000
Total Typical Cost (₱10M gross estate, Metro Manila)	₱250,000 – ₱650,000
Total Typical Cost (₱30M gross estate)	₱800,000 – ₱1,800,000	Plus estate tax of approximately ₱1.5M–₱2M

Extrajudicial settlement is almost always the cheapest and fastest option when it is legally available. Duration: 4–12 months.

III. Judicial Settlement of Estate

When Required

There is a will (testate succession requires probate).
Heirs disagree on partition.
There are unpaid debts/creditors.
Minors or incapacitated heirs are involved.
The decedent left a will that needs validation.

Judicial settlement may be either:

Intestate proceedings (Special Proceedings under Rule 75–77)
Testate proceedings (Probate of will under Rule 75–76, followed by settlement under Rule 78–90)

Procedure (Simplified)

Filing of petition for letters of administration (intestate) or petition for probate/allowance of will (testate).
Payment of docket/filing fees.
Publication of notice to creditors and hearing notice (3 weeks).
Appointment of administrator/executor.
Inventory and appraisal.
Payment of creditors.
Project of partition (if agreed) or court decision on partition.
Same tax compliance as extrajudicial (estate tax, DST, transfer tax).
Court approval of partition and order for transfer of titles.

Detailed Cost Breakdown (2025 estimates)

Item	Approximate Cost (₱)	Notes
Lawyer’s Acceptance Fee	150,000 – 600,000 (or 5–10% of gross estate)	Higher in testate cases with contested probate
Lawyer’s Appearance Fees	5,000 – 15,000 per hearing × 10–30 hearings	Can reach ₱300,000–₱500,000 in contested cases
Judicial Filing/Docket Fees	₱50,000 – ₱500,000+	Based on value of estate (Judiciary schedule: approx. 1–2% of estate)
Publication of Notice to Creditors & Hearing	40,000 – 100,000	3 consecutive weeks
Court-appointed Commissioner’s Fee (partition)	50,000 – 150,000	If court orders appraisal/partition by commissioner
Administrator/Executor’s Fee	2–5% of estate value	Court-approved; often taken from estate
Bond for Administrator/Executor	₱100,000 – ₱500,000 annual premium	2–5 years duration
Estate Tax & BIR Fees	Same as extrajudicial
DST, Local Transfer Tax, RD Fees	Same as extrajudicial
Transcript of Stenographic Notes (TSN)	50,000 – 200,000	Required for appeals or contested cases
Total Typical Cost (₱10M estate, uncontested)	₱800,000 – ₱1,800,000	Duration: 1–3 years
Total Typical Cost (₱30M estate, moderately contested)	₱2,500,000 – ₱6,000,000+	Duration: 3–8 years

Judicial settlement is significantly more expensive and time-consuming. Costs can easily triple or quadruple if the case becomes contentious.

IV. Cost Comparison Summary (2025)

Estate Gross Value	Extrajudicial (₱)	Judicial Uncontested (₱)	Judicial Contested (₱)
₱5M–₱10M	200,000 – 600,000	800,000 – 1,500,000	1,800,000+
₱20M–₱30M	600,000 – 1,500,000	1,800,000 – 3,500,000	4,000,000–8,000,000+
₱50M+	1,500,000 – 4,000,000	4,000,000 – 10,000,000+	10,000,000+

(Figures exclude estate tax itself, which is identical in both modes.)

V. Practical Recommendations to Minimize Costs

Always attempt extrajudicial settlement first if legally possible.
Execute a valid will to avoid intestate disputes.
Pay estate tax on time to avoid 12% interest + 25% surcharge + penalties.
Engage a lawyer experienced in estate settlement rather than a general practitioner.
For estates ≤ ₱15M–₱20M, extrajudicial settlement plus competent lawyer usually costs under ₱500,000 total.

In conclusion, extrajudicial settlement remains vastly cheaper (often 70–80% less expensive) and faster than judicial settlement when all requisites are present. The single biggest cost driver in Philippine estate settlement is not taxes but professional fees and delays caused by judicial proceedings. Proper planning during one’s lifetime dramatically reduces settlement costs for heirs.