Extrajudicial Settlement of Estate in the Philippines: Requirements and Typical Costs

This guide explains how heirs in the Philippines can transfer a decedent’s assets without going through a full-blown court case (“probate/letters of administration”)—using an extrajudicial settlement under Rule 74 of the Rules of Court and related tax rules. It’s practical, step-by-step, and cost-aware. (General information only; for specific cases, consult a lawyer or tax/titles professional.)

1) What “extrajudicial settlement” means

An extrajudicial settlement (EJS) is a private (out-of-court) method of dividing a deceased person’s estate among heirs by executing and notarizing a public instrument, then complying with publication and tax/registration requirements. Two common instruments are:

Affidavit of Self-Adjudication (ASA): when there is only one heir.
Deed of Extrajudicial Settlement/Partition (EJS): when there are two or more heirs (often with a Deed of Waiver/Quitclaim if someone renounces).

Once taxes are cleared (via BIR eCAR), titles and other assets can be transferred administratively (Registry of Deeds, LTO, banks, stock transfer agents, etc.).

Importantly, real property distributed by EJS remains subject to a two-year lien from the date of settlement and its newspaper publication, during which omitted heirs/creditors may still enforce claims.

2) When you can (and cannot) use EJS

You may use EJS if all of the following are true:

No will was left in the Philippines (or any will will not be probated here).
The decedent left no outstanding debts, or debts have been fully paid, or the heirs have made provisions for payment.
All heirs are of legal age, or any minor/incompetent heir is represented by a legal/judicial guardian (with proper authority).
All heirs agree on the division/partition (who gets what).
The assets can be transferred administratively (e.g., land/condo in the Philippines, bank accounts, vehicles, shares).

You should not use EJS if:

There is a will to be probated;
The heirs disagree or there are unsettled/contested debts;
A necessary heir is missing, unidentified, or unrepresented;
There’s already a pending judicial estate proceeding for the same estate;
Special circumstances make court supervision safer (e.g., complex disputes, serious creditor issues).

(There is also “summary settlement of small estates” under Rule 74 Sec. 2, but its monetary threshold is very low and rarely practical today.)

3) The documents you’ll typically need

PSA Death Certificate of decedent (multiple certified copies).
PSA Birth/Marriage Certificates proving filiation/marriage (heirs).
Government IDs of heirs/representatives; TINs of decedent and each heir (BIR can issue TINs if absent).
Asset proofs:
- Real property: Original/Owner’s Duplicate Title, latest Tax Declaration, latest Real Property Tax (RPT) receipts/clearance.
- Condominium: Condominium Certificate of Title + tax docs.
- Bank accounts/time deposits: bank certifications/statements; bank’s estate requirements checklist.
- Vehicles: OR/CR (LTO Certificate of Registration), deed to decedent if applicable.
- Shares of stock: stock certificates and/or broker/transfer agent certifications.
- Business interests: SEC/DTI documents.
Liability proofs: statements showing debts paid or arrangements made.
Draft instrument: ASA (single heir) or EJS/Partition (multiple heirs), including schedule of assets and allocation.
Special Power of Attorney (SPA) if an heir appoints an attorney-in-fact (SPAs signed abroad must be apostilled).

4) The process, step by step

Step 1 — Inventory & valuations

List all assets and liabilities.
For real property, note assessed value and BIR zonal/fair market value (BIR uses the higher of applicable values for tax base).
Check RPT arrears and homeowners/condo dues, if any.

Step 2 — Draft the instrument (ASA or EJS)

The instrument states: decedent’s details, no will, no debts (or paid/provided for), heirs’ identities, legal bases of heirship, and how the estate is divided.
Attach schedules (properties, descriptions, valuations) and any waiver/quitclaim.
If there are minors/incompetents: ensure guardian authority is in order.

Step 3 — Notarization

Execute and notarize the ASA/EJS.
Keep multiple certified copies for BIR, Registry of Deeds (ROD), banks, etc.

Step 4 — Publication (mandatory)

Publish a notice of the ASA/EJS in a newspaper of general circulation, once a week for three (3) consecutive weeks.
Secure the publisher’s affidavit and clipped issues—you’ll need them for title work and to start the two-year period.

Step 5 — Estate tax compliance and eCAR with BIR

File the Estate Tax Return (BIR Form 1801) and supporting documents.
Under current rules, estate tax is a flat 6% of the net estate (gross estate minus allowable deductions). Key deductions include the standard deduction and the family home deduction (subject to statutory caps), plus the surviving spouse’s net share.
Pay any surcharge/interest if filing late.
BIR issues eCAR(s) (Certificate Authorizing Registration)—there is one eCAR for each real property title, and separate eCARs for other asset classes as required (e.g., bank deposits, vehicles, shares).

Step 6 — Transfer the assets

A) Real property (land/condo):

Settle RPT and obtain Tax Clearance from the LGU.
Pay Local Transfer Tax at the LGU Treasurer (rate depends on location).
Submit to Registry of Deeds: notarized ASA/EJS (+ publication proof), eCAR, owner’s duplicate title, tax clearance, IDs, and required forms/fees.
ROD cancels old title and issues new title(s) in heirs’ names; EJS is annotated on each title.
Update Tax Declarations at the Assessor’s Office.

B) Bank deposits/investments:

Banks generally freeze accounts upon notice of death. Release typically requires eCAR, bank forms, IDs, and sometimes withholding rules on interim withdrawals (banks follow current BIR regulations). Expect bank-specific processing fees.

C) Vehicles:

Present eCAR, ASA/EJS, IDs, OR/CR to LTO for transfer and pay LTO fees.

D) Shares of stock:

Present eCAR, ASA/EJS, IDs to the stock transfer agent/broker for cancellation/issuance. Transfer/stamp fees may apply.

5) Estate tax—how the 6% works (quick primer)

Tax base for real property is generally the higher of BIR zonal value / fair market value at the time of death (LGU assessor’s schedule may be relevant for FMV).
Deductions (illustrative highlights, subject to statutory caps/conditions):
- Standard deduction (fixed amount).
- Family home deduction (up to a cap).
- Surviving spouse’s net share in conjugal/community property.
- Certain expenses/claims if legally allowable and sufficiently proved.
Net estate × 6% = Estate tax.
If filed late: surcharge (generally 25% for late filing; higher for willful cases) plus interest (computed by the NIRC using a rate tied to the BSP legal interest rate).
After payment/compliance, BIR issues eCAR(s).

Practical note: Smaller/medium estates can legally pay zero estate tax after deductions (e.g., if the family home and standard deduction cover the gross estate), but you still need to file and obtain eCAR to transfer assets.

6) Typical timeline (indicative)

Document gathering & drafting: 1–3 weeks
Publication (three consecutive weeks): ~21 days
BIR eCAR processing: a few weeks to a couple of months (varies by RDO and file completeness)
ROD/LGU title work: 2–8 weeks (varies by registry/LGU and volume)

(These are practical ranges; they can lengthen with missing documents, valuation issues, disputes, or backlogs.)

7) Typical costs (ballpark, for budgeting)

Actual amounts vary by city/region, asset values, and complexity. Think in two buckets: (A) one-time process costs and (B) value-linked taxes/fees.

A) One-time process costs

Notarization (ASA/EJS): ~₱3,000–₱15,000 (simple) to ₱20,000–₱50,000+ (long/complex instruments).
Lawyer’s professional fees (if you retain counsel to draft/handle end-to-end): commonly fixed for simple estates (e.g., ₱30,000–₱150,000+) or percentage-based for complex/high-value matters (often ~1%–3% of gross estate, sometimes staged).
Publication (3 insertions): typically ₱9,000–₱45,000+ total depending on the newspaper and location (provincial rates usually lower; metro broadsheets higher).
PSA certificates: usually hundreds of pesos per copy; plan multiple copies.
Misc. certifications (Assessor, Treasurer, Barangay, etc.): usually hundreds to a few thousand pesos total.
Bank/transfer-agent processing fees (if any): ₱500–₱5,000+ per institution/account/security.
LTO transfer fees for vehicles: hundreds to a few thousand pesos depending on region/vehicle type.

B) Value-linked taxes/fees

Estate Tax (BIR): 6% of net estate after allowable deductions.
Local Transfer Tax (LGU): commonly up to 0.5% of value in provinces and up to 0.75% in independent/component cities/Metro Manila (rates vary by LGU).
Registry of Deeds fees (registration/annotation/IT fees): graduated schedules; for typical titles expect several thousand pesos to tens of thousands per title depending on declared value and number of annotations.
Real Property Tax (RPT) arrears/penalties (if any): varies widely by LGU.
Documentary charges for stock/vehicle transfers (if applicable): modest but vary by transfer agent/LTO.

Two quick “feel” examples (purely illustrative):

Single house, zonal/FMV ₱4,000,000, family home; no debts.
- Deductions may wipe out estate tax (net estate could be ≤0).
- You still pay publication, ROD/LGU fees, RPT arrears (if any), and professional/notarial costs.
- All-in process (excluding estate tax): commonly ₱30,000–₱100,000+ depending on city/complexity.
Two properties (₱3M + ₱5M), some cash/investments, no debts.
- After deductions, estate tax may still be modest;
- Add Local Transfer Tax, ROD fees for each title, and multiple publication/eCAR copies, etc.
- All-in (incl. estate tax if any): often ₱80,000–₱300,000+, driven largely by location/valuations and whether counsel manages the file.

Caveat: These are planning ranges, not quotes. For precise figures you’ll need current zonal values, assessor FMVs, LGU transfer-tax rates, ROD fee schedules, and a clean liabilities picture.

8) Practical tips & common pitfalls

Always publish. Skipping the 3-week publication invalidates the protection of Rule 74 and exposes the transfer to challenge.
List everything. Omitting assets (intentionally or not) leads to additional rounds of eCAR/registration later—and potential disputes.
Minors/incompetents: Ensure valid guardianship authority before signing.
Don’t “touch” bank money prematurely. Banks freeze on notice; coordinate with the bank and BIR for compliant release.
Heir waivers: Put waivers in clear, notarized form; if someone assigns their share to a co-heir, memorialize with a Deed of Assignment and consider tax consequences.
Foreign heirs: Land ownership by foreigners is restricted, but hereditary succession is an exception; however, paperwork for foreign heirs often takes longer (apostilles, notarizations abroad, tax IDs).
Two-year lien: Even after transfer, distributed property is answerable for claims within two years from EJS and publication; title buyers may ask to see proof of publication.
Keep a “closing set.” Maintain a clean bundle: ASA/EJS, publication proofs, eCARs, ROD receipts, new titles, updated tax declarations, bank/stock transfer proofs.

9) Quick FAQ

Do we need a lawyer? Not legally required for notarization itself, but highly advisable—especially with multiple properties, foreign heirs, minors, or bank/stock assets.

Is publication needed for an ASA (single heir)? Yes—the 3-week publication applies to both ASA and EJS.

Do we owe capital gains or donor’s tax? Transmission by succession is subject to estate tax (not capital gains or donor’s tax). Separate taxes may apply only if the heirs later sell or donate property.

Can we EJS if there are debts? Only after paying or providing for debts. Leaving legitimate creditors unpaid risks later annulment/claims against the distributed property.

What if an heir lives abroad? Use an Apostilled SPA to authorize someone in the Philippines to sign/appear; expect extra time for consular/Apostille processing.

10) Clean checklist (printable)

Verify no will (or decide not to probate).
Confirm debts are paid/provided for.
Identify all heirs; arrange guardian/SPA if needed.
Gather PSA, IDs, TINs, titles, tax declarations, bank/stock/vehicle papers.
Inventory and obtain valuations (zonal/FMV; cash/investments).
Draft and notarize ASA/EJS (+ waivers/assignments).
Run 3-week newspaper publication and secure proof.
File BIR Form 1801, pay estate tax (if any), obtain eCAR(s).
Transfer each asset: LGU Transfer Tax, ROD (new titles), Assessor (new TDs), LTO, banks, brokers/transfer agents.
File away final set: EJS/ASA, publication proof, eCAR(s), new titles, new TDs, bank/stock/LTO receipts.

If you want, tell me the assets involved (titles/banks/vehicles/shares), locations, and rough values and I’ll map out a customized cost/timeline and a document checklist tailored to your estate.