In the Philippines, the passing of a loved one brings not only emotional grief but also a complex set of administrative and legal responsibilities. Among the most common concerns for heirs is the process of claiming funds left in the deceased person’s bank account.
Under Philippine law, the "estate" of the deceased—which includes bank deposits—is transmitted to the heirs at the moment of death. However, accessing these funds requires compliance with the Civil Code, the Tax Code (as amended by the TRAIN Law), and specific banking regulations.
1. Determining the Method of Settlement
The first step in claiming a bank account is determining how the deceased’s estate will be settled. This depends on whether the person left a will and whether they had outstanding debts.
Extrajudicial Settlement (EJS)
If the deceased left no will and no debts, the heirs may opt for an Extrajudicial Settlement. This is the fastest and most common method.
- Deed of Extrajudicial Settlement: All heirs must sign a public instrument (notarized) stipulating how the bank deposits are to be divided.
- Affidavit of Self-Adjudication: If there is only one sole heir, they execute this affidavit instead of a deed of settlement.
- Publication Requirement: The settlement must be published in a newspaper of general circulation once a week for three consecutive weeks.
Judicial Settlement
If there is a will (Testate) or if the heirs cannot agree on the distribution (Intestate with dispute), the estate must undergo a court process. The bank will only release funds upon the presentation of a court order and the appointment of an Executor or Administrator.
2. The Impact of the TRAIN Law (R.A. 10963)
Prior to the Tax Reform for Acceleration and Inclusion (TRAIN) Law, banks were strictly prohibited from allowing any withdrawals from a deceased person’s account until the Bureau of Internal Revenue (BIR) issued a certification that estate taxes had been paid.
Under the current Law (effective 2018):
- 6% Final Withholding Tax: Heirs are now permitted to withdraw funds from the deceased’s account, provided the bank withholds a 6% final withholding tax.
- Timeline: This withdrawal must generally be made within one year from the date of death.
- The Benefit: This allows families to access funds immediately for funeral expenses or immediate needs without waiting for the entire estate tax processing to conclude.
3. Essential Documentation for Banks
While requirements vary slightly between institutions (e.g., BDO, BPI, Metrobank, or Landbank), the standard "Death Claim" kit usually includes:
- Certified True Copy of the Death Certificate: Issued by the Philippine Statistics Authority (PSA).
- Proof of Relationship: Birth certificates (for children) or Marriage Contract (for the surviving spouse) to establish heirship.
- Valid IDs: Government-issued identification for all heirs and the deceased.
- Notarized Deed of Extrajudicial Settlement: Including the Affidavit of Publication and the publisher's certificate.
- Surety Bond: Most banks require a bond from an insurance company to protect the bank against potential claims from other heirs or creditors who may emerge within two years after the settlement.
- BIR Form 1904: Proof of registration of the Estate with the BIR.
4. Handling Joint Accounts
The treatment of joint accounts depends on the conjunction used when the account was opened:
"AND" Accounts
Deposits are presumed to be owned jointly. Upon the death of one holder, the account is usually frozen. The signatures of both the surviving holder and the legal heirs of the deceased (or the court-appointed administrator) are required to move the funds.
"OR" Accounts
Under the "Survivorship Agreement" often signed during account opening, the surviving depositor can theoretically withdraw the funds. However, banks are still mandated to freeze the account upon notice of death to ensure the 6% estate tax is withheld on the deceased's share (usually presumed to be 50% unless proven otherwise).
5. Small Value Claims
For accounts with very low balances, some banks may offer a "Simplified Claim" process. This often involves an Indemnity Agreement where the heirs promise to hold the bank harmless from any future claims, effectively waiving the more expensive requirement of a Surety Bond or publication if the amount is negligible (e.g., below ₱10,000 to ₱50,000, depending on bank policy).
Summary of the Process Flow
| Step | Action | Requirement |
|---|---|---|
| 1 | Notification | Inform the bank of the depositor's passing to freeze the account. |
| 2 | Documentation | Gather PSA documents and execute the Deed of Extrajudicial Settlement. |
| 3 | Publication | Publish the Deed in a newspaper for 3 weeks. |
| 4 | Tax Compliance | Coordinate with the bank regarding the 6% withholding tax under the TRAIN Law. |
| 5 | Submission | Present the complete "Death Claim" package and the Surety Bond to the bank. |
| 6 | Release | The bank issues a manager's check or transfers funds to the heirs' accounts. |
Note: Because bank deposits are protected by the Bank Secrecy Law (R.A. 1405), banks will not disclose the balance of the account to anyone—even heirs—until they are satisfied with the proof of death and the legal standing of the person inquiring. It is often helpful to present the Death Certificate and proof of kinship just to verify the existence of the account.