When a loved one passes away without a will, the legal process of distributing their assets can seem daunting. In the Philippines, the law provides an expedited way to settle an estate without going to court, provided certain conditions are met. This process is known as an Extrajudicial Settlement of Estate (EJS).
What is an Extrajudicial Settlement?
An Extrajudicial Settlement is a private agreement among the heirs of a deceased person (decedent) to divide the estate among themselves. It is governed primarily by Rule 74, Section 1 of the Rules of Court.
By choosing this route, heirs avoid a lengthy and expensive court-supervised probate or intestate proceeding.
Requisites for a Valid EJS
To qualify for an extrajudicial settlement, the following conditions must be met:
- No Will: The decedent died intestate (without a last will and testament).
- No Debts: The decedent left no outstanding debts at the time of death (or all debts have been paid).
- Heirs are of Age: All heirs are of legal age, or if there are minors, they are represented by judicial or legal guardians.
- Agreement: All heirs must agree on how the properties will be partitioned.
- Public Instrument: The settlement must be written in a public instrument (notarized) and filed with the Register of Deeds.
The Step-by-Step Process
1. Preparation of the Deed
The heirs must draft a Deed of Extrajudicial Settlement of Estate. This document must include:
- A statement that the decedent left no will and no debts.
- A complete description of the properties (both real and personal).
- The specific manner of partition (who gets what).
- An undertaking that the deed will be published in a newspaper of general circulation.
[!NOTE] If there is only one heir, they execute an Affidavit of Self-Adjudication instead of a Deed of Settlement.
2. Publication
The law requires that the settlement be published in a newspaper of general circulation once a week for three consecutive weeks. This serves as notice to any potential creditors or other heirs who might have been excluded.
3. Payment of Estate Tax
Since the enactment of the TRAIN Law (Republic Act No. 10963), the estate tax rate is a flat 6% based on the net value of the estate.
- Where to file: At the Bureau of Internal Revenue (BIR) Revenue District Office (RDO) having jurisdiction over the decedent's residence at the time of death.
- Proof: Once paid, the BIR will issue a Certificate Authorizing Registration (CAR). This is the "golden ticket" required to transfer titles.
4. Filing with the Register of Deeds
Submit the notarized Deed, the Affidavit of Publication from the newspaper, and the BIR-issued CAR to the Register of Deeds where the properties are located. After paying the required registration fees, the old titles will be cancelled, and new ones will be issued in the names of the heirs.
Required Documents Checklist
To ensure a smooth process, heirs should gather the following:
Core Documents
- Death Certificate: Certified true copy from the Philippine Statistics Authority (PSA).
- Birth Certificates: Of the heirs (to prove relationship to the decedent).
- Marriage Certificate: If the decedent was married (to determine the surviving spouse's share).
Property-Related Documents
| For Real Property (Land/Condo) | For Personal Property |
|---|---|
| Original Owner’s Duplicate of Title (TCT/CCT) | Stock Certificates (for shares) |
| Certified True Copy of the Title | Bank Statements/Passbooks |
| Tax Declaration (Land and Improvements) | Certificate of Registration (for vehicles) |
| Real Property Tax Clearance (Current Year) | Proof of valuation of other assets |
Important Timelines and Limitations
- Estate Tax Filing: Under the TRAIN Law, the Estate Tax Return must be filed within one year from the date of death.
- The Two-Year Lien: Under Section 4, Rule 74, a "two-year lien" is annotated on the new titles. This protects any heir or creditor who may have been deprived of their lawful participation in the estate for a period of two years after the settlement.
Would you like me to draft a basic template for a Deed of Extrajudicial Settlement of Estate that you can use as a reference?