This article walks through the full lifecycle—from death of the decedent, to estate settlement and tax clearance, to registering title in the heirs’ names, and finally to moving the property into a Philippine holding company. It’s written for founders, family offices, in-house counsel, and private clients planning a clean, tax-efficient structure.

1) First principles

What “estate settlement” means

When a person dies, all their assets and obligations form an estate. Before any transfers, the estate must be identified, valued, taxed, and settled (i.e., debts paid or provided for). Only then can legal title pass to heirs or legatees—and subsequently into a corporation.

Two distinct transfers

Decedent → Heirs/Estate beneficiaries (through succession).
Heirs → Holding company (through sale, exchange for shares, or other conveyance).

Treat these as separate legal and tax events. Skipping step (1) usually blocks the Registry of Deeds (ROD) from cancelling the title and prevents a clean transfer into a corporation.

2) Settling the estate

2.1. Choose the correct settlement track

Judicial settlement (probate/intestate proceedings) is required if there is a will, if there are disputes, minors without a legal guardian, unknown heirs, or complicated creditor claims.
Extrajudicial settlement (EJS) is available only if:
- There is no will,
- All heirs are of legal age (or minors are duly represented), and
- No outstanding debts, or debts are paid/assumed and provided for.
Common EJS instruments:
- Deed of Extrajudicial Settlement (by multiple heirs), or
- Affidavit of Self-Adjudication (single heir), with the statutory newspaper publication (once a week for three consecutive weeks). Expect a two-year window during which creditors may still pursue claims against the distributed properties.

Practical tip: If there are debts, you may still do EJS provided the heirs expressly assume and earmark assets for payment; otherwise, consider judicial settlement.

2.2. Inventory and valuation

Prepare a detailed schedule of:

Real property (TCT/CCT, lot/area, tax declarations, fair market value and/or zonal value),
Personal property (cash, securities, vehicles, shares, receivables),
Liabilities (claims against the estate, taxes due, funeral and other allowable expenses),
Deductions (standard deduction, family home deduction, claims, vanishing deductions where applicable), and the net estate.

2.3. Estate tax and deadlines

Estate Tax Return (ETR): due within 1 year from death, extendable for meritorious reasons.
Estate tax rate: a single rate of 6% on the net estate (post-TRAIN), after allowable deductions (e.g., standard deduction and family home up to statutory caps), plus deduction for the share of the surviving spouse in community/conjugal property.
TIN of the estate: secure a separate Estate TIN and, if necessary, an estate bank account for receipts/disbursements.
Penalties/interest apply if late; consider applying for installment payment where cash is tight (subject to requirements).

2.4. BIR One-Time Transactions (ONETT) workflow

Typical documentary set (varies by RDO and asset type):

Death certificate; IDs of heirs;
EJS/Self-Adjudication (notarized) with proof of publication;
Affidavit of No Debt or heirs’ assumption of debts (as applicable);
Schedule of assets and liabilities; appraisals for unique assets;
Tax clearances: Real Property Tax (RPT) and barangay treasurer’s certifications as needed;
Estate tax computation and proof of payment.

Outcome: BIR Certificate Authorizing Registration (CAR) per property class, and eCAR in newer rollouts.

2.5. Title transfer to the heirs

With the CAR/eCAR:

Registry of Deeds: cancel the decedent’s title and issue new TCTs/CCTs in the name of the heirs (either in co-ownership or by partition).
Assessor/Treasurer: update Tax Declarations and pay Local Transfer Tax as required by the LGU (rates and deadlines vary; many LGUs impose a modest transfer tax payable within a fixed period after the deed/ETR).
RPT: ensure current; obtain tax clearance.

Key takeaway: The ROD normally requires the BIR CAR first. Do not attempt to register a deed to a corporation without completing the estate transfer step unless you’ve pursued a judicial route allowing direct conveyance from the estate.

3) Philippine succession constraints that can affect the plan

Compulsory heirs and legitimes: The law reserves minimum shares (legitimes) for the legitimate/acknowledged children and descendants, the surviving spouse, and, in default, ascendants. You cannot defeat these by private agreements.
Collation/reduction: Lifetime gifts may be brought back to the estate (collated) if they impair legitimes.
Foreign heirs and land: Aliens may inherit land by hereditary succession, but corporations that own land must be at least 60% Filipino-owned. If your holdco will own land, ensure compliance with the 60-40 nationality rule. A foreign-majority holdco cannot hold Philippine land (it can hold condos subject to the Condominium Act’s 40% foreign ownership limit).

4) Moving the property into a holding company

There are three common pathways, each with different tax and regulatory footprints. Choose based on objectives (liability segregation, control, gearing, dividends policy), cash needs, and foreign ownership limits.

Path A — Tax-free exchange (property for shares)

Concept: Heirs transfer the property to a corporation in exchange for shares, and gain is not recognized if statutory conditions are met (commonly referred to under Section 40(C)(2) of the NIRC).
Core requirement: The transferors, acting as a group, gain control (typically understood as at least 51% of voting power) immediately after the exchange. If the corporation already exists, new issuances must result in the transferors’ group acquiring/control (or already having) at least 51% post-transaction.
Who can be the transferor: Either the heirs directly (after they receive title), or the estate represented by the executor/administrator (subject to settlement status and practical registration constraints).
Consideration: Shares must be issued to the transferors (or as they direct). If the value of shares issued is less than the property’s fair value, the shortfall may be treated as a donation (triggering donor’s tax). Keep the share issuance proportionate to avoid deemed gifts.
Taxes typically avoided (on qualifying exchange): Capital Gains Tax (6%) for capital assets and ordinary income tax/VAT for ordinary assets (depending on facts).
Taxes/costs that often still apply:
- Documentary Stamp Tax (DST) on original issue of shares;
- Registration fees and LGU transfer charges;
- Notarial and publication costs;
- SEC filing fees (if contributing to paid-in capital).
Paperwork & process highlights:
- Deed of Assignment (property to corporation for shares);
- Board approvals; check Authorized Capital Stock (ACS) and unissued shares or implement an ACS increase;
- Valuation: obtain a third-party appraisal for non-cash subscriptions; the SEC may require a BOA-accredited/PRC-licensed appraiser report and a Treasurer’s Affidavit confirming actual receipt of the property as paid-in capital;
- BIR filings for the exchange (confirmatory processes and tax-type returns as required by your RDO);
- ROD: register the deed and issue a new title in the corporation’s name after BIR issuances.

Planning note: If the heirs already control an existing company, confirm whether the post-exchange control test will still be satisfied. If not, consider forming a new holdco or adjusting subscriptions so the group meets the threshold.

Path B — Sale to the corporation

Concept: Heirs sell the property to the holding company (for cash or partially for cash/shares).
Tax: Capital Gains Tax (6%) for capital assets (based on the higher of zonal value, fair market value, or gross selling price), plus DST on the deed, local transfer taxes, and registration fees. If the property is an ordinary asset in the hands of a real-estate dealer, income tax (and possibly VAT) could apply instead of CGT.
Use case: When you need step-up basis in the corporation (depending on accounting policies), or to move cash to the heirs.

Path C — Contribution to additional paid-in capital (APIC) / quasi-reorganization variants

Concept: Non-cash property is contributed to equity without issuing shares (booked to APIC).
Warning: Without share consideration, the value shift may be treated as a gift to existing shareholders; donor’s tax risks arise. Use with care and obtain tailored tax advice.

5) Corporate formation and compliance specifics

Incorporation: Draft a primary purpose broad enough for asset holding, leasing, financing and intra-group services. Consider a board-controlled dividend policy and share classes (e.g., non-voting preferred) to line up economics with family governance.
Nationality rule for land: If the holdco will own land, ensure ≥60% Filipino ownership. If not feasible (e.g., foreign heirs), consider:
- Lease the land to a foreign-owned OpCo/PropCo;
- Own condominium units (subject to the 40% foreign cap at both unit and building corp levels);
- Use a Philippine trust or long-term lease structures where appropriate (observing Anti-Dummy Law).
Thin-cap & related-party: If the holdco will gear the asset, anticipate transfer pricing and interest deductibility reviews; maintain contemporaneous TP documentation.
Post-CREATE environment: Keep an eye on minimum corporate income tax, NOLCO rules, and improperly accumulated earnings tax (IAET) risks (where applicable to closely-held corporations). Maintain a credible business purpose for the holdco (asset protection, ring-fencing liabilities, financing platform, succession governance).

6) Titles and registration sequence (practical checklist)

Estate phase
- Secure Estate TIN → open estate file with BIR.
- Prepare EJS/Affidavit of Self-Adjudication; publish in a newspaper for 3 consecutive weeks.
- Compile asset inventory, appraisals, RPT clearances.
- File Estate Tax Return within 1 year; pay estate tax or obtain an installment arrangement where available.
- Obtain BIR CAR/eCAR.
Heirs’ titling
- Register EJS and CAR at ROD → new TCTs/CCTs in heirs’ names (in co-ownership or by partition).
- Update tax declarations at the Assessor; settle LGU transfer tax; update Treasurer records.
Transfer to holdco
- Determine path: Tax-free exchange vs Sale.
- If exchange:
  - Confirm control test and proportional share issuance; check ACS/unissued shares; prepare Deed of Assignment and Subscription Agreements; get appraisal.
  - File BIR forms and pay applicable DST (shares) and fees; secure any required BIR confirmations under your RDO’s practice.
- If sale:
  - Execute Deed of Absolute Sale; pay CGT (6%)/withholding as applicable; pay DST and LGU transfer tax.
- ROD: register deed (assignment or sale) with the BIR CAR/eCAR issued for that transfer; obtain new title in the corporation’s name.
- SEC: if non-cash property as paid-in capital, file the capitalization documents, appraiser’s report, Treasurer’s Affidavit, and pay fees. If increasing ACS, file the amendment and stockholders’ approvals.

7) Heir equality, donor’s tax, and pricing discipline

Proportionality matters. If three heirs contribute a ₱90M property but the corporation issues ₱90M of shares only to one heir, the other two have made a donation to that heir equal to their economic sacrifice. That can trigger donor’s tax (6%) on the net gift.
Use a defensible valuation (zonal value, assessor’s FMV, and an independent appraisal). Align the subscription price (par plus share premium/APIC) with the fair value to avoid deemed gifts and to strengthen your business purpose narrative.

8) Special asset classes

Family home: Protected under the Family Code; deductible up to a statutory cap in the estate. Check occupancy status and evidence (utility bills, IDs).
Condominium: Transfer is simpler than land with alien participation constraints, but the 40% foreign cap at the corporation/project level still applies.
Shares and receivables: If moving these to the holdco, review stock transfer book processes, DST on share transfers, and assignment of receivables formalities.
Agricultural or special-use land: Check DAR clearances, land conversion restrictions, and right of way annotations.

9) Governance and family-office considerations

Shareholders’ agreement: lock-ups, tag/drag rights, dispute resolution, pre-emptive rights, and family council mechanisms.
Board composition: include independent advisors (tax/legal/valuation) especially if asset-heavy.
Succession: use estate planning tools (testamentary dispositions, life insurance, trusts, inter-vivos gifts within allowances) to avoid future gridlock.
Risk management: carry adequate property insurance; if leasing, ensure E&O and public liability coverage; register leases to protect priority.

10) Common pitfalls (and how to avoid them)

Trying to transfer directly from the decedent to the corporation without an estate CAR/title in heirs’ names (or a court order): likely to be rejected at the ROD.
Missing the 1-year estate tax filing window: penalties and interest snowball quickly.
Overlooking the control test in a tax-free exchange, resulting in unexpected CGT/income tax.
Ignoring foreign ownership limits for land at the corporate level.
Under-issuing shares versus appraised value → deemed donations.
Unpublished EJS → later challenges and ROD issues.
Unpaid RPT → no CAR issuance.

11) Worked example (illustrative)

Facts: Juan dies owning a residential lot (FMV/zonal ₱50M). Heirs: spouse and two adult children. No debts.
Estate: File ETR within 1 year; apply standard and family home deductions (subject to caps); pay 6% estate tax on net estate.
Title: With the CAR and published EJS, ROD issues a new TCT to the three heirs in co-ownership.
Holdco: The three heirs form ABC Holdings, Inc., authorized capital sufficient to receive the property.
Tax-free exchange: Heirs execute a Deed of Assignment in favor of ABC in exchange for shares worth ₱50M total, split pro-rata to their vested shares in the property; post-exchange, the three heirs own >51% of ABC voting stock.
Filings: Appraisal on file; DST on original share issue paid; BIR requirements for the exchange completed; deed registered at ROD; new TCT issued to ABC.

12) Quick reference checklist

Estate phase

☐ Estate TIN created
☐ Asset & liability schedule + appraisals
☐ EJS/Self-Adjudication notarized and published 3×
☐ ETR filed within 1 year; estate tax paid/arranged
☐ CAR/eCAR obtained

Heirs’ titling

☐ ROD: titles in heirs’ names
☐ Assessor/Treasurer: tax declarations updated
☐ LGU transfer tax & RPT current

Holdco transfer

☐ Choose tax-free exchange or sale
☐ If exchange: control test satisfied; shares issued pro-rata to value
☐ Appraiser report; SEC/ACS sufficiency; Treasurer’s Affidavit
☐ BIR processes + DST (shares) paid
☐ ROD: title issued to corporation

13) Final guidance

The cleanest route for most families is: (a) complete estate settlement → (b) issue titles to heirs → (c) perform a tax-free exchange into a properly capitalized holdco with robust documentation.
Keep contemporaneous evidence of FMV, business purpose, and control.
Where there are minors, foreign heirs, land, or legacy debts, expect additional court or regulatory steps—plan early and keep a paper trail.

This article is for general information only and is not legal or tax advice. Facts and rules change; consult Philippine counsel and a tax advisor for a written opinion tailored to your situation.