1) Why banks “freeze” a deceased depositor’s funds

When a bank learns that an account holder has died, it typically restricts withdrawals and transfers. This is not (only) bureaucracy; it is risk control and legal compliance:

Succession law: Money in the account becomes part of the decedent’s estate at death. Heirs may become owners by operation of law, but banks need proof of who is entitled to receive and sign for the funds.
Bank secrecy and privacy: Banks are cautious about disclosing balances and releasing funds to anyone not clearly authorized.
Tax compliance: Philippine tax rules generally require banks to ensure estate tax requirements are complied with before allowing withdrawals in many situations.
Protection against conflicting claims: Banks can face liability if they pay the wrong person (e.g., an omitted heir, a creditor, an impersonator, or someone relying on a later court order).

Because of these risks, banks commonly require an “Heir’s Bond” and other estate-settlement documents before releasing funds.

2) The core legal framework (Philippines)

A. Succession basics (Civil Code)

Heirs succeed to the estate at the moment of death (subject to the estate’s obligations).
Even if heirs “own” the property by law, possession and practical control (like withdrawing bank deposits) usually requires documentary proof acceptable to the bank and, where applicable, to the BIR.

B. Settlement of estate: judicial vs extrajudicial (Rules of Court)

There are two broad routes:

Judicial settlement (court proceeding)

Used when there is a will (probate is required), or
There are disputes, debts, complex issues, or
Heirs include minors/incompetents without proper representation, or
The bank insists on court authority (rare for routine cases, but possible).

Extrajudicial settlement (no court case)

Allowed when the decedent left no will, and
The heirs are all of age (or minors are duly represented), and
The estate can be settled among heirs by agreement (commonly done even when there may be debts, but that increases risk).

Rule 74, Section 1 is the key rule for extrajudicial settlement. It also introduces the bond requirement—the legal ancestor of what banks often call an “Heir’s Bond.”

C. Estate tax and bank release (National Internal Revenue Code / BIR rules)

As a practical matter, banks usually require proof that estate tax filings and payments are in order before releasing deposits. Expect requirements such as:

Filed estate tax return,
Proof of payment (if due),
BIR clearance / eCAR or other BIR-issued authority relevant to the release of estate assets.

Even when the estate tax due is minimal, documentation is often still required.

D. Unclaimed balances / escheat risk (Unclaimed Balances Act)

If deposits remain untouched for long periods and meet dormancy thresholds, they may be reported as unclaimed balances and can eventually be subject to escheat proceedings. This does not automatically erase heirs’ rights, but it can make recovery more procedural and time-consuming.

3) What is an “Heir’s Bond” in bank practice?

A. Two meanings: the Rule 74 bond vs the bank’s “heirs bond”

In Philippine practice, “Heir’s Bond” can refer to either (or both) of these:

Rule 74 bond (legal bond) Under Rule 74, Section 1, when heirs settle an estate extrajudicially, they are generally required to post a bond “in an amount equivalent to the value of the personal property” (conceptually to protect creditors and other interested persons).
Bank-required Heir’s Bond (contractual/surety bond) Banks often require a surety bond (from a bonding/surety company) or an indemnity undertaking signed by heirs. This is a risk-management tool: if someone later proves a better right (e.g., an omitted heir), the bank can claim against the bond/undertaking.

In many cases, banks blend both concepts: they ask for extrajudicial settlement documents plus a surety bond labeled “Heir’s Bond.”

B. Purpose of the bond

An Heir’s Bond is designed to:

Indemnify the bank if it releases funds to the wrong person(s),
Protect against later claims by:
- Omitted heirs,
- Unknown creditors,
- Parties asserting a later court appointment (administrator/executor),
- Claims that the settlement document was defective, forged, or invalid.

C. When banks typically require an Heir’s Bond

Common triggers:

The account is solely in the decedent’s name.
The bank is being asked to release funds via extrajudicial settlement rather than a court order.
The decedent had multiple heirs, or the bank cannot easily verify heirship.
The amount is substantial, or the bank deems the risk higher.

Some banks may waive or reduce bond requirements for small balances, but that is policy-based and varies.

D. Typical bond amount and duration

There is no single universal standard. In practice:

Bond amount is often equal to the amount to be withdrawn (sometimes plus a margin), or aligned with the value of personal property being settled.
The “risk window” often mirrors the two-year exposure period commonly associated with Rule 74 remedies (banks frequently think in those terms), though surety terms depend on the bond contract.

E. Who signs / obtains the bond

Usually:

All heirs sign the bank’s indemnity forms and participate in the bond process.
If one heir is acting for others, banks often require a Special Power of Attorney (SPA) from the other heirs (and may require consular/apostilled formalities if executed abroad).

F. Where to get an Heir’s Bond

Typically from:

A surety/bonding company (often affiliated with or recognized by the bank). Steps usually include:
Application,
Submission of estate and heir documents,
Underwriting (and sometimes collateral),
Payment of premium.

G. Cost (practical note)

Premiums vary widely based on amount, underwriting, and collateral. Expect a premium that is a percentage of the bond amount, with possible documentation and processing fees.

4) Documents banks commonly require (Philippine practice)

While exact checklists vary by bank, these are common:

A. Proof of death

Death Certificate (PSA-certified is often preferred; some banks accept local civil registry copy initially but later require PSA copy).

B. Proof of heirship / relationship

Depending on the family situation:

Marriage certificate (for spouse),
Birth certificates (for children),
Other documents establishing relationship (for parents/siblings/other heirs).

C. Settlement document (extrajudicial route)

One of:

Affidavit of Self-Adjudication (when there is only one heir), or
Deed of Extrajudicial Settlement (with Partition) (multiple heirs).

Common features:

Notarized public instrument,
Complete identification of heirs,
Statement of no will (and typically no debts),
Description of estate assets covered (banks often want the deposit identified by bank/branch/account).

D. Publication requirement (extrajudicial)

Rule 74 requires publication of the extrajudicial settlement once a week for three consecutive weeks in a newspaper of general circulation. Banks vary on whether they strictly require proofs of publication, but many do—especially for larger amounts.

Typical proof:

Publisher’s affidavit,
Copies of the newspaper issues or clippings.

E. Bond / indemnity documents

Heir’s Bond (surety bond) and/or
Bank’s Deed of Undertaking / Indemnity Agreement, signed by heirs.

F. Tax documents (often critical)

Banks commonly ask for BIR documents showing estate tax compliance, such as:

Filed estate tax return,
Proof of payment (if due),
BIR-issued clearance/eCAR or other release authority required by current BIR practice for deposits.

G. Bank internal forms

Claim/withdrawal forms,
Specimen signature cards,
KYC/identity updates,
Authority for one heir to transact (if applicable).

5) Step-by-step: How heirs can withdraw a deceased person’s bank funds (typical workflow)

Step 1: Identify the account and secure immediate records

Gather passbook/ATM card/account number statements (if available).
Avoid “guesswork” withdrawals using ATM/online access after death. Even if technically possible before the bank is notified, it can create:
- Disputes among heirs,
- Bank investigation issues,
- Problems in estate accounting and tax compliance.

Step 2: Notify the bank and ask for the bank’s estate-claims checklist

Banks differ, so obtain the checklist early. Provide:

Death certificate,
IDs of heirs,
Relationship documents.

Step 3: Choose the settlement route

Route A: Extrajudicial settlement (most common for routine estates)

Use this if:

No will, no contest,
Heirs can agree.

Prepare:

Affidavit of Self-Adjudication (single heir) or
Deed of Extrajudicial Settlement (multiple heirs)

Then comply with:

Publication requirement,
Bond requirement (as required by law/bank policy),
Estate tax compliance.

Route B: Judicial settlement (when required or unavoidable)

Use this if:

There is a will (probate),
There are disputes, unclear heirs, or other complications,
Minors/unrepresented heirs are involved,
Bank insists on court authority.

Typical court outputs banks recognize:

Letters Testamentary / Letters of Administration,
Court orders authorizing withdrawal or disposition,
Executor/administrator authority to transact.

Step 4: Secure the Heir’s Bond (if required)

Coordinate with:

The bank (some have preferred sureties),
A surety company.

Submit:

Settlement document draft/final copy,
Death certificate,
IDs and proof of relationship,
Bank deposit details and amount (as needed).

Step 5: Estate tax compliance (often the pacing item)

Expect to:

Compile an inventory of estate assets (not only the bank deposit if required by the return),
File the estate tax return,
Pay tax due (if any),
Obtain the BIR document the bank requires to release funds.

Step 6: Submit complete package to the bank

Typical package:

Death certificate,
Heir IDs and proof of relationship,
Extrajudicial settlement/self-adjudication (notarized),
Proof of publication,
Heir’s Bond / surety bond + indemnity agreement,
BIR clearance/eCAR or relevant authority,
Bank claim forms.

Step 7: Release mechanics (how banks usually pay)

Banks often release via:

Manager’s check payable to “Estate of [Name]” or
Credit to an estate account opened for that purpose, or
Checks payable to heirs per deed of partition (less common; depends on bank policy).

Distribution among heirs should follow:

The extrajudicial settlement/partition agreement, and
Rules on legitimes and compulsory heirs (if relevant and not waived/settled).

6) Common scenarios and how the requirements shift

Scenario 1: One heir only (Affidavit of Self-Adjudication)

If the decedent truly left only one compulsory/legal heir:

Prepare Affidavit of Self-Adjudication,
Publication (often still required),
Bond (often required),
Estate tax compliance,
Bank release.

Risk point: “Only heir” claims are frequently challenged later if an heir was overlooked.

Scenario 2: Multiple heirs, all cooperative (Deed of Extrajudicial Settlement)

Most common. Banks typically require:

Deed signed by all heirs (or via SPAs),
Proof of publication,
Heir’s Bond,
Estate tax documents.

Scenario 3: One heir abroad / signatures abroad

You usually need:

SPA executed abroad (often consular notarized or apostilled, depending on where executed and current authentication rules),
IDs and proof of identity,
Bank may require wet signatures or additional verification.

Scenario 4: Minor heirs

Extrajudicial settlement can still be possible if minors are duly represented (e.g., by legal guardian/parent) and requirements are met, but banks often apply heightened scrutiny. In some cases, court authority or guardianship proceedings may be required, especially where minors’ shares are being received, waived, or compromised.

Scenario 5: Account is “AND/OR” or joint account

Joint accounts create recurring confusion.

Bank operationally: surviving co-depositor may be able to transact depending on the account’s signing rules.
Estate/tax reality: the decedent’s interest in the joint account may still be treated as part of the estate for tax and succession purposes unless clearly shown otherwise.

Banks may:

Allow partial withdrawal by survivor,
Require estate documents for the decedent’s share,
Require estate tax compliance for release/closure.

Scenario 6: Time deposit certificates / long-term instruments

Time deposits may have:

Pre-termination rules,
Assignment/transfer forms,
Bank may require additional documentation to “rebook” or release proceeds to the estate/heirs.

Scenario 7: Depositor had outstanding loans with the bank

The bank may assert:

Right of set-off (subject to contract and applicable rules),
Requirement to settle obligations before full release.

7) Publication, bond, and the “two-year risk window” (why banks care)

A. Publication (Rule 74)

Publication is intended to give notice to:

Creditors,
Other heirs,
Interested parties.

It reduces (not eliminates) the risk that someone later claims they were deprived without notice.

B. Bond (Rule 74)

The bond is meant to protect:

Creditors (unpaid debts),
Omitted heirs or claimants.

C. Two-year remedies concept (practical explanation)

Rule 74 contains provisions that, in practice, are treated as creating a two-year exposure period after extrajudicial settlement during which certain claims and remedies are emphasized. Banks often mirror that risk logic by insisting on a bond/undertaking.

Important nuance:

The bond and publication do not magically immunize heirs or banks from all future disputes; they are risk controls, not absolute shields.

8) Bank secrecy and getting balance information

A recurring practical problem: heirs do not know the balance but need the balance for estate tax and bond amount.

Banks may require one of the following before releasing detailed account information:

Appointment of an administrator/executor (judicial route),
A sufficiently documented extrajudicial settlement plus proof of heirship,
Specific bank forms authorizing disclosure to identified heirs,
In some instances, a court order/subpoena if the bank declines disclosure without judicial authority.

Practically, many banks will at least confirm existence of the account and provide a balance statement once they are satisfied that the requester is a legitimate heir with adequate documentation.

9) Mistakes that delay release (and how to avoid them)

A. Incomplete heir list

Omitted heirs are the single biggest risk driver. Banks are sensitive to:

Children from prior relationships,
Illegitimate children (who still have succession rights),
Surviving spouse issues,
Adopted children,
Substitution/representation issues in cases where a child predeceased the parent.

B. Wrong settlement route (will exists)

If there is a will, the proper route is probate. Extrajudicial settlement is generally not the correct mechanism for testate estates.

C. Deed does not clearly identify the bank deposit

Banks often need:

Bank name,
Branch,
Account number (or sufficient identifiers),
Type of account,
Statement that the deposit is part of the estate being settled.

D. Publication defects

Common defects:

Wrong newspaper (not general circulation for the relevant area),
Wrong frequency or incomplete weeks,
Missing publisher’s affidavit.

E. Tax clearance mismatch

BIR documents must align with:

Correct decedent name,
Correct TIN (if applicable),
Correct assets/estate details,
Correct dates.

F. Signatures and notarization issues

Banks often reject documents when:

IDs are expired or inconsistent,
Notarial details are incomplete,
Names do not match civil registry records (middle names, suffixes, spelling).

10) Special topics that often matter

A. Safe deposit boxes

Accessing a safe deposit box after death can be even more restricted than withdrawing deposits. Banks often require:

Court authority or strong estate documentation,
Inventory procedures,
Presence of bank officer and heirs/representatives.

B. Foreign currency deposits

Foreign currency deposits are subject to additional rules under foreign currency deposit laws. Banks can be more cautious with disclosure and release. Expect stricter documentation requirements and possibly different internal processes.

C. PDIC insurance and bank closure

If a bank is closed and PDIC steps in, heirs may need to file a deposit insurance claim or estate claim with PDIC using estate settlement documents (often similar to bank requirements, sometimes more formal).

D. Unclaimed balances/escheat

If the account has been dormant for many years, there may be additional steps if the funds have been reported/subject to escheat proceedings. Recovery is still possible but can require coordination with the appropriate government processes.

11) Practical checklist (extrajudicial route)

Personal and civil registry documents

PSA Death Certificate
PSA Marriage Certificate (if spouse is an heir)
PSA Birth Certificates of children/heirs
Valid government IDs of all heirs
TIN information (as required for tax filings)

Settlement documents

Affidavit of Self-Adjudication (single heir) or
Deed of Extrajudicial Settlement/Partition (multiple heirs)
Notarization compliant with notarial rules
Proof of publication (3 consecutive weeks) + publisher’s affidavit

Bond / indemnity

Heir’s Bond (surety bond) or bond required by bank
Bank’s indemnity/undertaking forms
SPAs if some heirs are represented

Tax compliance (as applicable)

Estate tax return filing documents
Proof of payment (if due)
BIR clearance/eCAR or other BIR authority required for deposit release under current practice

Bank processing

Bank claim forms
Specimen signature cards / verification
Manager’s check/estate account arrangement

12) Key takeaways

An Heir’s Bond is primarily a risk-and-liability tool used alongside extrajudicial settlement to persuade a bank that it can safely release the deceased depositor’s funds.
In the Philippines, the backbone legal concepts come from succession law, Rule 74 extrajudicial settlement rules, and estate tax compliance requirements.
The fastest path is usually complete documentation: proof of death + proof of heirship + proper extrajudicial instrument + publication + bond + tax clearance the bank accepts.
The most common causes of delay are missing heirs, document defects, and tax clearance issues.

This article is for general information and does not constitute legal advice.