Estate Planning in the Philippines — Wills, Heirship, and Estate Tax

This is a practical, comprehensive explainer under Philippine law (Civil Code, Family Code, Rules of Court, and the National Internal Revenue Code as amended by the TRAIN law). It’s written for planning purposes—specific facts can change outcomes, so consult counsel or your accountant for a tailored plan.

1) What “estate planning” really covers (PH context)

Estate planning is arranging your affairs so your property is transferred the way you want, with minimum delay, disputes, and taxes. In the Philippines that usually means:

choosing between a notarial will or a holographic will, or using lifetime transfers (donations, trusts);
understanding compulsory heirs and legitimes (the minimum shares the law reserves for certain heirs);
knowing the difference between testate (with a will) and intestate (no will) succession;
preparing for probate / settlement; and
minimizing and funding the 6% estate tax efficiently.

2) Property regimes & what’s actually part of your estate

Before you divide anything, determine what property is yours at death.

If married (Family Code marriages, i.e., on/after Aug 3, 1988)
- Default is Absolute Community of Property (ACP) unless you signed a prenuptial agreement.
- In ACP, most property owned at marriage and acquired during marriage is community; some are exclusive (e.g., personal/for personal use; property acquired by gratuitous title with stipulation; replacements).
- If your prenup says Conjugal Partnership of Gains (CPG) (common in older marriages), only gains acquired during marriage are conjugal.
- In both ACP/CPG, only your net half of the community/conjugal property forms part of your gross estate; your spouse keeps the other half.
- Separation of property (via marriage settlements or court decree) keeps estates fully separate.
If unmarried partners: Philippine law doesn’t create a “marital” community by cohabitation alone. Property is apportioned based on contribution rules (and may be complicated if either party was in a subsisting marriage). Plan via titling, contracts, and wills.
Co-ownerships: Only your share in a co-owned asset is included in your estate.

3) Wills in the Philippines

Who can make a will

At least 18 years old and of sound mind at the time of execution.
You may write your will in any language or dialect you know.

Two types of wills

A) Notarial (attested) will

Written and signed at the end by you.
At least three credible witnesses sign in your presence and in each other’s presence.
Each page is signed on the left margin by you and the witnesses; pages numbered; there must be an attestation clause stating compliance.
The will is acknowledged before a notary by you and the witnesses.
Special safeguards apply if the testator is blind or deaf/deaf-mute (e.g., required readings).

B) Holographic will

Entirely handwritten, dated, and signed by you (no witnesses, no notary).
Any insertions/erasures must be authenticated by your full signature.

Joint wills are prohibited in the Philippines—even if allowed in another country. Codicils (amendments) are allowed if executed with the same formalities.

Foreign elements (conflict of laws)

A Filipino abroad may execute a will following either Philippine formalities or those of the place of execution.
A foreigner may execute a will in the Philippines following his/her national law on form.
Intrinsic validity (e.g., who must inherit, legitimes) in testate or intestate succession is generally governed by the national law of the decedent, but Philippine real property remains subject to Philippine real property law for conveyancing and registration.

Revocation & republication

A will is inherently revocable until death. You can revoke by a later will/codicil, or by physically destroying the will with intent to revoke (or having someone do it in your presence and by your express direction).
A later will inconsistent with an earlier one revokes the earlier provisions.
Republication (e.g., by codicil) reaffirms a will.

Probate is mandatory

No will takes effect until allowed by a court (probate)—even a holographic will.
Venue: RTC where the decedent resided at death (or where property is if non-resident).
The probate court looks first at due execution and testamentary capacity; questions of title can be taken up when necessary.
Naming an executor in the will helps; otherwise, an administrator is appointed.

4) Compulsory heirs & legitimes (the heart of PH succession)

Compulsory heirs (in general):

Legitimate children and descendants (or, in their default, legitimate parents/ascendants);
The surviving spouse; and
Illegitimate children (as defined by the Family Code; the old sub-classes of illegitimacy are abolished).

A testator cannot deprive compulsory heirs of their legitime (reserved portion), except by valid disinheritance for legal causes.

Quick legitime map (typical scenarios)

With legitimate children/descendants present:
- Legitimate children (as a group): ½ of the estate (split equally among them).
- Surviving spouse: a legitime equal to the share of one legitimate child.
- Illegitimate child: legitime equal to one-half of a legitimate child’s legitime; taken from the free portion (the remainder after reserving the children’s ½), and reduced proportionately if the free portion is insufficient.
Implications:
- If there’s one legitimate child + spouse → children’s legitime = ½, spouse’s legitime = ½ → no free portion.
- If there are two legitimate children + spouse → children’s legitime = ½; spouse’s legitime = ¼; free portion = ¼.
No legitimate descendants; with legitimate parents/ascendants:
- Legitimate parents/ascendants: ½.
- Surviving spouse: ¼.
- Free portion: ¼ (subject to claims of illegitimate children if any).
Only illegitimate children (no legitimate descendants/ascendants):
- Illegitimate children (as a group): ½ (equal shares among them).
- Surviving spouse (if any): ⅓.
- Free portion: generally 1/6 in this concurrence.
Only surviving spouse: ½ legitime; ½ free portion.

Preterition (omitting a compulsory heir in the direct line, e.g., a child or parent) generally annuls the institution of heirs in whole or in part, to restore the legitime; legacies and devises may stand if they don’t impair legitimes.

Disinheritance

Allowed only for causes expressly listed by law (e.g., serious offenses against the testator/spouse/children, refusal of support, violence, etc.).
Must be made in a will, naming the heir and stating the legal cause; the cause must be true; otherwise, disinheritance is void.
Children of a disinherited child may inherit by representation if the disinheritance is valid.

Representation (who “steps into the shoes”)

Always in the descending line (grandchildren represent a predeceased child).
None in the ascending line.
In the collateral line, nephews/nieces may represent their predeceased parent (your sibling).

Accretion & substitution

If a co-heir or legatee cannot or does not take, the share may accrue to co-instituted heirs if the will so provides or legal conditions are met.
Substitution (naming a back-up heir) is allowed; fideicommissary substitution is tightly limited by degree of relationship and purpose.

Collation & reduction of inofficious donations

Lifetime gifts to compulsory heirs are brought into collation (added back notionally) when computing legitimes.
“Inofficious” donations (those that impair legitimes) may be reduced after death to restore legitimes.

Reserva troncal (special)

Property that ascends by operation of law to an ascendant (e.g., parent) may be “reserved” for relatives within the third degree in the line from which the property came. This can complicate later transfers—seek advice if your family tree triggers this.

5) Intestate succession (no will)

Very simplified share patterns (real cases can be fact-specific):

Spouse + legitimate children → divide equally, with the spouse getting a share equal to one child.
Spouse + legitimate parents (no descendants) → typically ½ to spouse, ½ to parents/ascendants.
Spouse + illegitimate children (no legitimate descendants/ascendants) → generally ½ to spouse, ½ to illegitimate children (equal among them).
Only siblings/other collaterals (no spouse/descendants/ascendants/illegitimate children) → nearest relatives up to the 5th degree inherit; if none, escheat to the State.

6) Settling an estate: probate vs. extrajudicial

With a will: must go through probate. Court appoints the executor (if named and qualified) or an administrator.
Without a will: heirs may file for letters of administration (judicial settlement).
Extrajudicial settlement (EJS): allowed only if (i) no will, (ii) no outstanding debts (or they’ve been fully settled), and (iii) all heirs are of legal age (or minors are duly represented). Must be in a public instrument, published once a week for 3 consecutive weeks, and filed with the Register of Deeds (plus bonding requirements in certain cases). Practically, estates with real creditors or disputing heirs shouldn’t use EJS.

Small estates: The Rules of Court allow summary settlement for small estates—thresholds and practice are technical; ask counsel if your case qualifies.

7) Philippine estate tax (TRAIN-era fundamentals)

Rate & base

Flat 6% estate tax on the net estate of the decedent.
Gross estate includes:
- Your exclusive property plus your net share of community/conjugal property;
- Transfers in contemplation of death, revocable transfers, and transfers with retained life interest (classic inclusion rules);
- Life insurance proceeds if the beneficiary is the estate, executor/administrator, or the designation is revocable.
  - If the beneficiary is irrevocably designated and not the estate/its legal rep, proceeds are generally excluded.
- Real property at fair market value (BIR zonal value or assessor’s FMV—whichever is higher).
- Shares and securities at valuation date (listed shares by market quotation; unlisted common typically at book value; unlisted preferred commonly at par—per BIR rules).
- Personal property (vehicles, jewelry, bank deposits, receivables).
- Worldwide assets for Philippine citizens/residents; for non-resident aliens, generally Philippine-situs property only, with intangibles subject to reciprocity.

Key deductions (high level)

Standard deduction: ₱5,000,000 (resident citizens/aliens).
- For non-resident aliens, a ₱500,000 standard deduction typically applies (and other deductions are prorated by PH-property fraction).
Family home deduction: up to ₱10,000,000 (excess value is taxable).
Surviving spouse’s net share of community/conjugal property.
Claims against the estate and unpaid mortgages (subject to strict substantiation; e.g., notarized instruments, creditor certifications).
Losses (e.g., casualty) meeting NIRC criteria.
Vanishing deduction for property previously taxed (estate/donor’s tax) within 5 years before death (percentage relief declines with time).
Ordinary funeral/medical/judicial expense deductions under pre-TRAIN rules were replaced by the standard deduction (i.e., no separate itemized caps under TRAIN).

Filing, payment & practicalities

Estate Tax Return (BIR Form 1801) is generally due within one (1) year from death. The CIR may grant limited filing and payment extensions in meritorious cases (installments and bonds are common in judicial settlements).
TIN of the Estate is required; the old “notice of death” requirement has been removed under TRAIN, but check current BIR issuances for procedural updates.
Bank deposit rule (post-TRAIN): Banks may allow withdrawals from a deceased person’s account subject to a 6% final withholding tax on the amount withdrawn (creditable against the estate tax). Expect temporary holds until documentary requirements are satisfied.
You’ll need valuation documents (zonal value certifications, tax declarations), bank certifications, stock certifications, vehicle CR/OR, proof of debts, etc.
Electronic Certificate Authorizing Registration (eCAR) is necessary to transfer titles (land, condo, shares) to heirs or buyers.

Time-bound measures

Congress passed estate tax amnesty laws in recent years (e.g., RA 11213 and later extensions). These were time-limited; if you’re considering amnesty or late compliance, verify current availability before acting.

8) Lifetime planning tools (beyond wills)

Donations (gifts)
- 6% donor’s tax on total taxable gifts each calendar year in excess of ₱250,000 (TRAIN).
- Formality:
  - Immovables: public instrument (notarized deed) + acceptance (in the same or a separate notarized document).
  - Movables: oral if value ≤ ₱5,000; otherwise in writing.
- Gifts to compulsory heirs are collatable and may be reduced if inofficious (impair legitimes).
- Spousal/community rules: Neither spouse may donate community property without the other’s written consent (save modest charitable gifts).
Life insurance
- Designate irrevocable, individual beneficiaries (not the “estate” or “executor”) if you want proceeds excluded from the gross estate and to bypass probate. Coordinate with your legitime math.
Trusts
- Recognized in PH law (express, implied, constructive). Irrevocable transfers to trusts may trigger donor’s tax now; revocable/retained-interest trusts often pull assets back into the gross estate. Draft carefully.
Business entities & titling
- Family corporations/holdcos and clear titling simplify settlement. Beware that unlisted shares have book-value valuation—keep books clean.
Liquidity planning
- Match expected estate tax with readily available cash (insurance, cash reserves, sellable assets) to avoid distressed sales under time pressure.

9) Worked examples (for intuition)

These are simplified; they ignore special deductions like vanishing deduction and assume resident decedents and compliant paperwork.

Example A — Testate estate with spouse + 2 legitimate children

Gross estate (your side only): ₱40,000,000
Deductions: Standard ₱5,000,000; Family home deduction ₱10,000,000 (assume qualifies); Debts ₱0
Net estate for tax: ₱25,000,000
Estate tax (6%): ₱1,500,000

Legitime math:

Children’s legitime (group): ½ of free patrimony at death → ½ of the hereditary estate (not the tax base): 50%.
Spouse’s legitime: equal to one child’s legitime → with 2 children, each child’s legitime is ¼; spouse also ¼.
Free portion: ¼. Your will may dispose of that ¼ (subject to any illegitimate children’s legitime, if any, coming from the free portion).

Example B — Intestate: spouse + legitimate parents (no descendants)

Estate divided roughly ½ to spouse, ½ to parents/ascendants (ascendants per stirpes).
Estate tax computation still applies on the net estate after TRAIN deductions.

Example C — Only illegitimate children (two) + spouse

Illegitimate children’s group legitime: ½ (so ¼ each).
Spouse’s legitime: ⅓.
Free portion: 1/6 (you may allocate by will, observing legitimes).

10) Practical settlement checklist

Secure documents: Death certificate; TINs; marriage certificate; children’s birth certificates; titles (TCT/CCT); tax declarations; bank/stock certifications; vehicle CR/OR; loan documents (preferably notarized before death); proof of payments; last two sets of financial statements for corporations.
Inventory & classify: Separate exclusive vs community/conjugal, and within co-owned assets, your share only.
Select path: Probate (if there’s a will); letters of administration (if none); EJS only if allowed (no will, no debts, all heirs of age/represented).
Valuation: Determine FMV at death (zonal/assessor for realty; market/book/par for shares; appraisals where helpful).
File estate tax return (generally within 1 year); arrange extensions/installments if needed.
Pay & obtain eCARs; retitle assets; settle RPTs, DST where applicable.
Partition & distribute (by project of partition, deed of adjudication, or per court order).

11) Frequent pitfalls (and how to avoid them)

No probate plan for a holographic will → delays (it still needs probate).
Inofficious donations to favored heirs → lawsuits; compute legitime first.
Unsubstantiated debts → disallowed deductions; notarize and keep creditor certifications.
Tangled titles (lost owners’ duplicates, unregistered deeds) → very long timelines; clean up early.
Insurance beneficiary = “Estate” (or revocable) → proceeds taxable and pass through probate.
Ignoring conjugal/community split → overstated estate and tax.
No liquidity for the 6% → forced sales at a discount.
Missed publication for EJS → vulnerability to later claims.

12) Quick answers to common questions

Do I need a lawyer to write a will? Not legally required (especially for a holographic will), but strongly advisable to avoid formal defects and to plan legitimes.
Can I disinherit a child because of a falling out? Only for legal causes and with strict formalities in a will.
Can I leave everything to my spouse? Usually no if you have compulsory heirs; they must receive their legitime.
Will a foreign will work in the Philippines? Often yes if it meets conflict-of-laws rules; it still needs probate here to affect PH property.
Is there still an estate tax amnesty? Amnesty windows have been time-limited; confirm current availability before relying on one.

13) Actionable planning tips

Pick your instrument: If you prefer simplicity and privacy, consider a holographic will (but keep originals safe and handwriting samples). For complex dispositions, use a notarial will with counsel.
Run the legitime math now (with your actual family tree) to see what’s truly discretionary.
Title clean-up: Make sure assets are in the intended name(s); fix annotations, estate/loan mismatches, and missing tax declarations.
Beneficiary designations: Consider irrevocable beneficiaries for insurance (coordinated with legitimes).
Lifelong gifts: Use the ₱250k annual donor’s-tax shield, but watch collation and inofficiousness.
Liquidity plan: Target the 6% with insurance or a cash buffer so heirs aren’t forced to sell hard-to-value assets.
Documentation discipline: Keep notarized debt instruments and contemporaneous records.

Final note

Laws and revenue regulations evolve (especially around procedural rules and amnesty periods). The framework above reflects mainstream Philippine rules under TRAIN and the Civil Code/Family Code. For anything time-sensitive (filing dates, BIR forms, ongoing amnesty windows), verify the current rule before acting.