Estate Tax Payment Without Executing an Extrajudicial Settlement
Philippine legal framework • Updated as of 9 June 2025
1. Overview
When a Filipino dies, two parallel legal tracks open:
- Settlement of the estate – the process of identifying heirs, liquidating debts, and distributing property (either judicially through probate or extrajudicially under Rule 74 of the Rules of Court); and
- Payment of estate tax – a national tax imposed on the privilege of transmitting property at death (Title III, National Internal Revenue Code [NIRC], as last amended by the TRAIN Law / R.A. 10963).
The Bureau of Internal Revenue (BIR) repeatedly clarifies that estate-tax liability exists from the moment of death, whether or not the heirs have settled the estate, and regardless of the mode of settlement they eventually choose. An extrajudicial settlement (EJS) is only one way to settle—and it is not a statutory pre-requisite to filing and paying estate tax.
2. Statutory and Regulatory Bases
| Instrument | Key points relevant to paying estate tax before or without EJS |
|---|---|
| NIRC (as amended by R.A. 10963) | §84 imposes the tax on the net estate; §90 fixes the filing deadline at one (1) year from death (extendible for meritorious cause); §91(B) allows installment payments (up to two years from statutory due date) even before settlement; §95 treats the estate as a separate taxpayer. |
| Revenue Regulations (RR) 12-2018 | Implements the 6 % flat estate-tax rate; lists documentary requirements for the Certificate Authorizing Registration (CAR). It does not mandate presentation of a Deed of EJS when the estate is not yet partitioned; instead it accepts: 1) pending court petition; or 2) sworn declaration of heirs/administrator. |
| Revenue Memorandum Circulars (RMCs) 62-2018, 55-2019, 122-2022 | Confirm that payment may be made “in the name of the estate” or by any heir/fiduciary even without partition documents; clarify bank-withdrawal rules; introduce checklists that treat EJS and judicial proceedings as alternative, not compulsory, proofs. |
| Estate-Tax Amnesty Laws – R.A. 11213 (2019), R.A. 11569 (2021), R.A. 11956 (2023) | Allow payment of a 6 % amnesty tax on the total net estate in lieu of regular tax, penalties, and interest for deaths up to 31 May 2022, with final deadline extended to 14 June 2025. Neither a court order nor Deed of EJS is required to file the Estate Amnesty Return. |
| Civil Code arts. 776–783 | Define hereditary succession; create the estate as a juridical entity upon death. |
| Rules of Court, Rule 73 & Rule 74 | Distinguish judicial settlement (probate/letters of administration) from extrajudicial settlement; Rule 74.1(a) bars EJS if the decedent left a will or if any heir is a minor/unrepresented. |
3. Roles and Standing to File
| Who may sign BIR Form 1801 (Estate Tax Return) without an EJS | Basis |
|---|---|
| Executor or Administrator (if already appointed by court) | §90, NIRC |
| Any heir, surviving spouse, or residuary legatee acting jointly or through a SPA | §90, NIRC; RMC 55-2019 |
| Agent bank (for withdrawals) – may remit 6 % withheld tax on the amount withdrawn, in lieu of CAR at that stage | §97, NIRC; RR 12-2018 |
Tip: The estate itself must obtain its own TIN (e.g., TIN 123-456-789-000). Even if the heirs later disagree or litigate, paying under the estate’s TIN protects them from surcharges and interest.
4. Documentary Requirements When No EJS Is Yet Executed
The BIR’s latest checklist (Annex “C”, RMC 122-2022) allows alternate proofs for every asset class:
| Asset | Minimum documents accepted before partition |
|---|---|
| Real property | ① Certified true copy (CTC) of title, tax declaration, and zonal valuation print-out; ② If no EJS: “Affidavit of Heir Withholding Partition” or “Pending Probate Petition” stamped by the court. |
| Bank deposits | ① Decedent’s passbook / bank certificate of balance; ② Bank withholding confirmation (if 6 % already withheld). |
| Shares of stock | ① Stock certificate in decedent’s name; ② Certification of last book value (for unlisted shares). |
| Motor vehicles | ① OR/CR in decedent’s name; ② SPA from all heirs if any one is signing alone. |
| Other personalty | Inventory list with fair-market values, sworn before a notary. |
| Mandatory for all | Death certificate; TIN of estate and heirs; Receipt for filing fee; Sworn Declaration of Gross Estate and Deductions (TRAIN format). |
The CAR issued at this stage will bear the annotation “Transfer in favor of the Estate of the late ___ pending settlement”. The actual re-titling to heirs requires the eventual EJS, judicial partition, or compromise agreement—but the tax is already paid.
5. Computing and Paying the Tax
Determine the gross estate at the higher of Fair Market Value (FMV) per zonal valuation or per local assessor on the date of death (or whichever is later if both schedules are issued afterward).
Apply allowable deductions (TRAIN rates):
Deduction 2025 Amount Standard deduction ₱5,000,000 Family home Up to ₱10,000,000 Funeral expenses Up to 5 % of gross estate, max ₱200,000 Medical expenses (1 yr prior) Up to ₱500,000 Claims against the estate, unpaid premiums, accruals Actual Vanishing deductions, transfers for public use, net share of surviving spouse, etc. As qualified Apply the flat 6 % rate (post-TRAIN).
Penalties if late (outside amnesty):
Item Rate Surcharge 25 % of basic tax (50 % if willful neglect/false return) Interest 20 % p.a. (simple) from original due date Installment option: File Form 1801 indicating the first partial payment; execute a written undertaking; pay balance within two years. Interest accrues only on unpaid installments.
6. Estate-Tax Amnesty Route (for deaths up to 31 May 2022)
| Feature | Regular Estate Tax | Estate Tax Amnesty |
|---|---|---|
| Rate | 6 % of net taxable estate | 6 % of net estate or FMV of undeclared assets, whichever is higher |
| Penalties & interest | Imposed if late | Waived |
| Deadline | 1 year from death | File and pay on or before 14 June 2025 (R.A. 11956) |
| Need for EJS? | No, but heirs must eventually submit partition docs for transfer | Expressly NOT required to avail, provided sworn declaration & undertaking are filed |
Warning: Amnesty is one-time and irrevocable. Filing an amnesty return bars you from later claiming deductions you forgot to declare.
7. Interaction with Settlement & Transfer of Title
| Stage | Estate-Tax Focus | Settlement Focus |
|---|---|---|
| Pre-settlement (No EJS yet) | Secure TIN, file and pay estate tax; obtain CAR in the name of the estate. | Decide whether to go to probate, execute EJS, or remain in co-ownership. |
| Settlement proper | No additional estate-tax filing, unless new assets discovered (file amendment within 30 days). | 1) Judicial: court approves project of partition; or 2) Extrajudicial: Deed of EJS + Rule 74 publication for 3 consecutive weeks. |
| Transfer & registration | Present original CAR, tax clearance, and proof of payment of DST/LTFRB/RPT as applicable. | Registry of Deeds/Motor Vehicle Registrar/corporate secretary issues new titles/CR or transfers shares. |
If the heirs sell an estate asset before partition, purchasers usually require: (a) CAR in the name of the estate; (b) SPA from all heirs authorizing sale; and (c) undertaking to deliver final partition instruments later.
8. Practical Scenarios
| Scenario | Can estate tax be paid now? | Notes |
|---|---|---|
| All heirs abroad; no time yet for EJS | ✔ Yes | Heirs may execute a consolidated SPA naming a local attorney-in-fact to file Form 1801. |
| Estate in litigation (will contest) | ✔ Yes | Administrator appointed ad litam files return; tax is a court-approved expense. |
| Property encumbered; no liquid cash | ✔ Yes | File return with request for installment schedule; administrator may sell or mortgage with court leave after payment started. |
| Decedent left a bank deposit only | ✔ Yes | Bank may release up to ₱20,000 without CAR (BIR RMC 11-2019); excess subject to 6 % withholding, credited against final estate tax. |
| Heirs discovered another parcel three years later | ✔ Yes (amended return) | Additional tax subject to penalties unless still within amnesty period. |
9. Risks of Ignoring Estate-Tax Filing
- Accrual of interest and surcharge – these compound quickly; unpaid tax becomes a lien on every estate asset.
- Delay in property transfers – Registry of Deeds will refuse re-titling without CAR; buyers may walk away.
- Criminal liability – Willful refusal or falsification may constitute violation of §255, §256 NIRC.
- Prescription does not run – The ten-year period for BIR assessment begins only upon filing of the return; if no return is filed, the right to assess is imprescriptible.
10. Best-Practice Checklist (No EJS Yet)
Within 3 months of death
- Obtain PSA-issued death certificate.
- Apply for TIN of “Estate of the late ________”.
By the 10th month
- Gather asset documents, fair-market values, and deductible expense proofs.
- Execute a simple “Heirs’ Declaration & Authority to File Estate-Tax Return” (not yet a partition).
On or before the 12-month deadline
- File BIR Form 1801 or, if qualified, Estate Amnesty Return.
- Pay in full or first installment.
- Secure CAR(s) in the name of the estate.
After tax payment
- Decide on settlement path (EJS vs. probate).
- When ready, attach original CAR to Deed of EJS or court-approved Partition for final transfer.
Keep records for 10 years – BIR may audit the estate or the heirs’ subsequent income-tax returns.
11. Frequently Asked Questions
| Question | Short Answer |
|---|---|
| Must we publish Rule 74 notice before paying estate tax? | No. Publication is required for the extrajudicial settlement instrument, not for estate-tax filing. |
| Can we split payment among heirs? | Yes. The total basic tax is indivisible, but any heir may advance payment; internal reimbursement is a civil matter. |
| What if the property is still in the name of grandparents (two generations of deaths)? | File separate estate-tax returns for each decedent in chronological order; amnesty may be available for both. |
| Does estate tax apply to overseas assets of a Filipino? | Yes, the Philippine estate tax is global for citizens and resident aliens; deduct foreign estate tax paid, if any, under §86(D). |
| Do we also need to file income-tax returns for the estate? | Only if the estate earns income (rent, interest, gains) after death and before distribution; file BIR Form 1701-A/1701 for “Estate of the late ___”. |
12. Key Takeaways
- Paying estate tax need not wait for an extrajudicial (or judicial) settlement.
- Filing early stops interest and surcharge, preserves eligibility for amnesty, and keeps assets marketable.
- The estate is a distinct taxpayer; any heir or fiduciary may file on its behalf.
- Documentary requirements are flexible: affidavits or proof of pending probate suffice until partition.
- Final transfer of title still requires a settlement document later—but settlement can proceed at the heirs’ pace once tax exposure is cleared.
Disclaimer: This article is for general information only and does not constitute legal advice. Estate-planning and tax positions depend on specific facts. Consult a Philippine tax professional or lawyer for guidance on your particular situation.