I. Introduction to Estate Taxation in the Context of Conjugal Property

In the Philippines, the death of a parent who is married under the regime of Conjugal Partnership of Gains (CPG) triggers a complex interplay between family law, succession, and taxation. Conjugal property—assets acquired by the spouses during the marriage through their joint efforts—forms the bulk of most family wealth. Upon the death of one spouse (the decedent), the conjugal partnership is automatically dissolved by operation of law. The surviving spouse retains ownership of their undivided one-half share outright, while the decedent’s one-half share becomes part of the taxable estate that must be settled and subjected to estate tax before it can be transferred to the heirs.

Estate tax is a transfer tax imposed on the privilege of transmitting property from the decedent to the heirs. It is governed primarily by the National Internal Revenue Code (NIRC) of 1997, as amended by Republic Act No. 10963 (TRAIN Law) effective for decedents dying on or after January 1, 2018. The current flat rate is six percent (6%) on the net estate. The settlement process for conjugal property is unique because it requires a clear delineation between the surviving spouse’s conjugal share (which is not part of the estate) and the decedent’s share (which is).

This article exhaustively covers every legal, procedural, and practical aspect of estate tax settlement involving conjugal property in the Philippine context.

II. Applicable Property Regime: Conjugal Partnership of Gains vs. Absolute Community of Property

The default property regime depends on the date of marriage:

Marriages before August 3, 1988: Conjugal Partnership of Gains (CPG) under the Civil Code. Only properties acquired during the marriage by onerous title are conjugal. Separate properties (brought into the marriage or acquired by gratuitous title) remain separate.
Marriages on or after August 3, 1988: Absolute Community of Property (ACP) under the Family Code. All properties acquired during the marriage, whether by onerous or gratuitous title, are community property, except those expressly excluded (e.g., inherited property, property acquired before marriage).

Although the topic specifies “conjugal property,” the principles are substantially identical under both regimes. In practice, the Bureau of Internal Revenue (BIR) treats them similarly for estate tax purposes: the decedent’s interest is one-half of the community or conjugal assets after deducting liabilities chargeable thereto.

III. Legal Effects of Death on the Conjugal Partnership

Article 126 of the Family Code provides that the conjugal partnership is terminated by the death of either spouse. Upon termination:

An inventory of all conjugal properties must be made.
Conjugal liabilities (debts incurred for the benefit of the conjugal partnership) are paid first from conjugal assets.
The net conjugal property is divided equally: one-half to the surviving spouse as their absolute property; the other half forms part of the decedent’s estate.
The decedent’s separate properties also form part of the estate.

The surviving spouse does not need to wait for estate settlement to enjoy their conjugal share. However, in practice, titles to real properties remain in the name of both spouses until the estate is settled and a new title is issued.

IV. Inclusion of Conjugal Property in the Gross Estate

The gross estate of the decedent includes:

All separate properties owned by the decedent at the time of death.
The decedent’s one-half (1/2) interest in the net conjugal or community properties.

In the Estate Tax Return (BIR Form 1801), the procedure is as follows:

Schedule of Real Properties: List all real properties (conjugal and separate) at their fair market value (zonal value or assessed value, whichever is higher) as of the date of death.
Schedule of Personal Properties: List all personal properties, including bank deposits, vehicles, stocks, etc.
For conjugal properties, the full value of each conjugal asset is reported in the gross estate.
The surviving spouse’s net share (one-half of net conjugal assets after conjugal debts) is then deducted as a specific deduction.

This method ensures that only the decedent’s half is ultimately taxed.

V. Allowable Deductions from the Gross Estate

The net estate is computed as:

Net Taxable Estate = Gross Estate – Allowable Deductions

Key deductions relevant to conjugal property settlement (TRAIN Law):

Standard Deduction – ₱5,000,000 (automatic, no substantiation required).
Family Home – Up to ₱10,000,000 (the principal residence, provided it is duly constituted as such and the surviving spouse or any heir continues to use it as residence).
Net Share of the Surviving Spouse in the Conjugal/Community Property – This is the single most important deduction in conjugal property cases. It is computed as:
- Gross conjugal assets
- Minus conjugal liabilities
- Divided by 2 = Surviving spouse’s net share (deductible).
Claims Against the Estate – Unpaid debts, funeral expenses (now limited), medical expenses (now subsumed in standard deduction).
Vanishing Deduction – For properties previously subjected to donor’s or estate tax within 5 years.
Unpaid Mortgages – Deducted from the value of the mortgaged property.
Transfers for Public Use – Properties bequeathed to the government.

The surviving spouse’s share deduction effectively removes half the conjugal property from taxation.

VI. Computation of Estate Tax

Estate Tax Due = 6% × Net Taxable Estate

Example (simplified):

Conjugal real property (house and lot): ₱20,000,000
Conjugal bank deposit: ₱2,000,000
Conjugal liabilities: ₱1,000,000
Decedent’s separate property: ₱3,000,000

Gross Estate:

Conjugal assets reported: ₱22,000,000
Separate: ₱3,000,000
Total gross: ₱25,000,000

Deductions:

Conjugal liabilities: ₱1,000,000
Net conjugal: ₱21,000,000
Surviving spouse’s share: ₱10,500,000 (deductible)
Standard deduction: ₱5,000,000
Family home: ₱10,000,000 (assuming qualified)

Net Taxable Estate: ₱25,000,000 – ₱1,000,000 – ₱10,500,000 – ₱5,000,000 – ₱10,000,000 = ₱(1,500,000) → No estate tax due.

This illustrates how the surviving spouse’s share deduction, combined with standard and family home deductions, often results in zero or minimal tax on conjugal properties.

VII. Filing and Payment Requirements

Deadline: The Estate Tax Return must be filed, and the tax paid, within one (1) year from the date of death.
Who Files: The executor/administrator, or if none, any heir or the surviving spouse.
Where Filed: Revenue District Office (RDO) where the decedent was domiciled at death, or where the principal property is located if no domicile.
Extensions:
- Commissioner may grant up to two (2) years for extrajudicial settlement.
- Up to five (5) years for judicial settlement.
Installment Payment: Allowed if the tax exceeds ₱20,000, payable in installments over the extension period.
Notice of Death (BIR Form 1800): Required if the gross estate exceeds ₱5,000,000 or if the estate includes real property or personal property with titles.

VIII. Estate Settlement Modes

A. Extrajudicial Settlement (EJS) – Most Common for Conjugal Property Cases

Requirements (Rule 74, Rules of Court):

Decedent died intestate (no will).
All heirs are of legal age and capacitated.
No outstanding debts (or all debts paid).
Heirs execute a Deed of Extrajudicial Settlement of Estate (with partition).

In the Deed:

Surviving spouse is included as both co-owner (conjugal share) and heir (in decedent’s share).
Typical adjudication:
- Surviving spouse: ½ conjugal share + 1 share as compulsory heir.
- Children: 1 share each in decedent’s estate (including his ½ conjugal).

A Publication of the settlement in a newspaper of general circulation for three (3) consecutive weeks is required.

B. Summary Judicial Settlement (for small estates)

Available when gross estate ≤ ₱500,000 (under special proceedings).

C. Judicial Settlement (Testate or Intestate)

Required when:

There is a will.
Minor heirs exist.
Disagreement among heirs.
Outstanding debts.

Involves filing a petition in the Regional Trial Court (probate court).

IX. Step-by-Step Procedure for Estate Tax Settlement of Conjugal Property

Secure Death Certificate and other vital documents.
Inventory all Properties:
- Obtain certified true copies of titles (conjugal and separate).
- Bank statements, stock certificates, etc.
- Determine zonal values from BIR or local assessor’s office.
Prepare Estate Tax Return (BIR Form 1801):
- Attach detailed schedules for conjugal properties.
- Compute surviving spouse’s net share deduction.
Pay Estate Tax (or file request for extension/installment).
Obtain Certificate Authorizing Registration (CAR) from BIR.
Execute and Publish Deed of Extrajudicial Settlement.
Register the Deed and CAR with the Register of Deeds (RD) to cancel old titles and issue new ones.
Transfer Bank Accounts, Stocks, Vehicles:
- Banks require CAR and death certificate for release of decedent’s share.
- Surviving spouse’s conjugal share in joint accounts can be withdrawn upon presentation of death certificate and affidavit.
Pay Local Transfer Taxes:
- Documentary Stamp Tax (DST) on transfer: 1.5% of fair market value.
- Local transfer tax: 0.5%–0.75% depending on city/municipality.
Secure New Tax Declarations from the Assessor’s Office.

X. Special Considerations for Conjugal Real Properties

Family Home: Automatically qualifies for the ₱10M deduction if it was the decedent’s residence.
Agricultural Lands: Subject to Comprehensive Agrarian Reform Law (CARP) implications if tenanted.
Multiple Properties: Each property requires separate CARs if located in different RDOs.
Foreign Properties: Included in gross estate if decedent is a Filipino citizen or resident alien; taxed only on Philippine situs properties if non-resident alien.

XI. Common Challenges and Solutions

Disputes Among Heirs: Resolved by judicial partition or mediation.
Missing Titles: Reconstitution proceedings before RD or court.
Unpaid Conjugal Debts: Must be settled first; heirs may assume liability.
Penalties for Late Filing: 25% surcharge + 20% interest per annum + compromise penalty.
Surviving Spouse as Sole Heir: Can execute Affidavit of Self-Adjudication for the entire estate (including decedent’s share).
Minor Children: Judicial settlement mandatory; guardian ad litem required.

XII. Documentary Requirements Checklist (BIR)

Certified true copy of Death Certificate.
Marriage Contract.
Birth Certificates of heirs.
Inventory of properties (sworn).
Certified true copies of titles/tax declarations.
Bank certificates of deposit balances at death.
Appraisal reports for personal properties.
Proof of payment of real property taxes.
Deed of Extrajudicial Settlement (for CAR issuance).
Special Power of Attorney if represented.

XIII. Recent Developments and Compliance Tips

The TRAIN Law significantly simplified estate taxation by introducing the flat 6% rate, higher deductions, and longer filing periods. As of 2026, no major amendments have altered the core rules for conjugal property settlement.

Practical Tips:

Engage a licensed appraiser early for accurate valuation.
File the return even if no tax is due to obtain CAR.
Use the surviving spouse’s share deduction aggressively—it is the most powerful tool in conjugal cases.
Consider installment payments to avoid liquidity issues.
Consult a notary and a CPA familiar with estate tax to avoid common BIR disallowances.

Estate tax settlement for conjugal property, while technical, is designed to protect the surviving spouse and facilitate orderly transfer of family assets. Proper compliance ensures that the family home and livelihood assets remain intact for the next generation.