Below is a self‑contained, practice‑oriented guide that pulls together all the essential Philippine rules, rates, and procedures for computing the estate tax when the decedent is a widow (i.e., her spouse pre‑deceased her). It reflects the law in force from 1 January 2018 (TRAIN Law, R.A. 10963) up to 20 July 2025.
1. Legal Framework
| Authority | Key Points |
|---|---|
| National Internal Revenue Code (NIRC) of 1997, as amended – §§ 84‑97 | Defines estate tax, items of gross estate, deductions, filing and payment rules. |
| TRAIN Law (R.A. 10963, effective 1 Jan 2018) | Flattened rate to 6 % of net estate; introduced ₱ 5 M standard deduction and up to ₱ 10 M family‑home deduction; removed the separate medical & funeral caps. |
| BIR Revenue Regulations (RR) 12‑2018 and subsequent issuances | Implement TRAIN changes; prescribe BIR Form 1801, eCAR requirements, installment rules, penalties, etc. |
| Civil Code & Family Code | Determine property regime (conjugal partnership, absolute community, or separation of property) and succession rules. |
Terminology note – Estate tax is sometimes loosely called inheritance tax. In Philippine law the correct term is estate tax; inheritance tax exists only at the local‑government level (i.e., transfer tax).
2. Step‑by‑Step Computation
Step 1. Identify the Gross Estate
Include all property, wherever situated, that belonged to the widow at the moment of death, valued at fair market value (FMV) on that date:
- Real property in the Philippines – Use the higher of BIR zonal value or local assessor’s FMV.
- Personal property – bank deposits (net of final withholding tax), investments, vehicles, jewelry, business interests, etc.
- Intangible property abroad – Include unless a treaty or reciprocity rule applies.
- Proceeds of life‑insurance policies taken out by the widow on her own life and receivable by her estate or executors (not the designated individual beneficiary).
- Transfers in contemplation of death, revocable transfers, property passing under general power of appointment, etc.
Conjugal or community property? Because the decedent is already a widow, the prior conjugal/community partnership with her late husband has previously been dissolved. Only assets she acquired or retained in her exclusive ownership after that dissolution form part of her present gross estate.
Step 2. Deduct Allowable Deductions to arrive at the Net Estate
| Deduction | Statutory Basis | How to claim (widow decedent) |
|---|---|---|
| Standard deduction – ₱ 5 000 000 | NIRC § 86(A)(5) | No substantiation required. |
| Family‑home deduction – up to ₱ 10 000 000 | NIRC § 86(A)(4) | Applies if the residential house & lot (or condo) constituted the widow’s principal residence. The first ₱ 10 M of its FMV is deductible; any excess remains taxable. |
| Claims against the estate | NIRC § 86(A)(1) | Valid, enforceable debts of the decedent existing at death and properly notarized/contracted. |
| Unpaid mortgages & indebtednesses | NIRC § 86(A)(1)(b) | Deduct only the decedent’s share of a mortgage; attach bank/LGU certifications. |
| Claims against insolvent persons | NIRC § 86(A)(2) | Debts owed to the decedent that are uncollectible; needs proof of debtor insolvency. |
| Losses during settlement | NIRC § 86(A)(3) | Casualty/theft losses incurred within 1 year after death and not compensated by insurance. |
| Transfers for public use | NIRC § 86(A)(6) | Donations/bequests to the Government or qualified charities, with proof of acceptance. |
| Property previously taxed (vanishing deduction) | NIRC § 86(A)(7) | Applies if the widow inherited property within 5 years before her own death and that prior transfer was already hit by estate or donor’s tax. Deduction is 100 % if within 1 year, phasing down to 20 % by the 4th‑5th year. |
| Retirement benefits (R.A. 4917) | NIRC § 86(A)(9) | Amounts received by heirs under qualified retirement plans. |
| Share of surviving spouse | NIRC § 86(A)(8) | Not applicable because no spouse survives. |
Under TRAIN the separate P 200 k cap on funeral expenses and the P 500 k medical deduction have been absorbed into the ₱ 5 M standard deduction.
Step 3. Compute the Estate Tax
$$ \text{Estate Tax} = 6% \times (\text{Gross Estate} - \text{Total Deductions}) $$
There is no tax‑free bracket; every peso of net estate is taxed at a flat 6 %.
Step 4. Apportion the Tax (Who Actually Pays?)
- The estate itself is the primary taxpayer, represented by the executor, administrator, or heir responsible for filing.
- In practice, heirs usually agree to contribute pro rata in proportion to the value they receive. This should be documented in the deed of extra‑judicial settlement or the project of partition approved by the court.
3. Procedural Requirements
| Deadline / Rule | Details (TRAIN / RR 12‑2018) |
|---|---|
| Estate Tax Return (BIR Form 1801) | File within 1 year from the date of death (may request extension for meritorious reasons for up to 6 months for filing and up to 2 years for payment). |
| Mandatory attachments | Certified death certificate, TINs of heirs, Statement of Assets & Liabilities, certified fair‑market‑value schedules, notarized debts, proof of deductions, prior eCARs relating to vanishing deduction, etc. |
| Payment | Cash or manager’s check via AAB / eFPS, or through installments if > ₱ 2 M net estate and the estate has insufficient cash: up to 2 years without interest (Sec. 91, NIRC) or up to 5 years if under judicial settlement. Collateral may be required. |
| Electronic Certificate Authorizing Registration (eCAR) | Issued by BIR after full or installment payment and is indispensable for transferring titles at Registry of Deeds / LTO / corporate stock transfer agent. |
| Penalties | 25 % surcharge for late filing/payment; 12 % annual interest on unpaid basic tax; compromise penalties per RR 19‑2015. |
| Audit window | Estate tax may be assessed within 3 years from filing; fraud extends to 10 years. |
4. Illustrative Computation
Facts (simplified)
- Date of death: 30 June 2025
- Gross estate: • Family home (FMV) — ₱ 8 000 000 • Other real property — ₱ 15 000 000 • Bank deposits — ₱ 2 000 000 • Shareholdings — ₱ 5 000 000
- Valid debts (hospital bill + personal loan) — ₱ 1 500 000
- No property previously taxed; no charity donations.
| Amount (₱) | |
|---|---|
| Gross Estate | 30 000 000 |
| Less: | |
| a. Standard deduction | 5 000 000 |
| b. Family‑home deduction (limited to FMV) | 8 000 000 |
| c. Claims against estate | 1 500 000 |
| Total Deductions | 14 500 000 |
| Net Estate | 15 500 000 |
| Estate Tax (6 %) | ₱ 930 000 |
If there are three heirs sharing equally, each may shoulder ₱ 310 000, but the actual scheme can be varied by agreement.
5. Special Topics & Frequently‑Asked Questions
5.1 Small Estates (≤ ₱ 10 M)
- Under A.M. No. 03‑02‑05‑SC, heirs may file a Summary Settlement of Estates of Small Value in court; however, BIR taxes still apply.
- BIR may allow one‑time transaction processing at Revenue District Office (RDO) without needing a project of partition.
5.2 Unregistered or Informal Property
Failure to register title during the widow’s lifetime does not avoid estate tax. Heirs must prove ownership (e.g., tax declarations, deeds) and include FMV.
5.3 Foreign‑Situs Property and Reciprocity
For intangible personal property situated abroad (e.g., U.S. stocks), if the foreign jurisdiction does not impose estate, inheritance or gift tax on non‑residents, or grants a reciprocal exemption to Filipinos, that property is excluded from the gross estate (NIRC § 104).
5.4 Estate vs. Donor’s Tax Planning
Lifetime donation may save tax if property appreciates sharply, but post‑TRAIN both donor’s and estate tax are 6 %. Compare: donor’s tax is computed on each donation, while estate tax uses the aggregated net estate.
5.5 Local Transfer Taxes
Cities/municipalities impose a 0.5 % of FMV transfer tax on real property inheritance (Local Government Code). Payment and tax‑clearance are prerequisites to title transfer but separate from estate tax.
6. Practical Compliance Checklist
Gather documents – Titles, tax declarations, bank certificates, stock certificates, loan contracts.
Secure FMV certifications – BIR zonal value ruling and assessor’s certification.
Draft sworn Statement of Assets & Liabilities and compute tentative tax.
Prepare and notarize:
- Deed of Extrajudicial Settlement (if no will and heirs all of legal age) or
- Project of Partition / Judicial settlement (if minors, contested estate, or court action).
File BIR Form 1904 for estate TIN (if no executor with separate TIN).
File BIR Form 1801 with RDO of decedent’s domicile; attach documentary stamp tax (DST) on extrajudicial settlement.
Pay or secure installment approval; obtain eCAR(s).
Transfer titles at appropriate registries; pay local transfer tax.
7. Common Pitfalls
- Under‑valuation of real property – BIR will substitute its zonal value.
- Claiming deduction without substantiation – debts must be notarized and existing before death.
- Late filing – surcharges and interest quickly outweigh the savings from delaying.
- Ignoring prior‑duty vanishing deduction – heirs sometimes overlook estates received within 5 years that qualify.
- Misidentifying the family home – must be the actual principal residence of widow, not an unoccupied ancestral house.
8. Conclusion
Computing and paying the Philippine estate tax for a deceased widow has become simpler under the 6 % flat rate and generous standard deductions, yet compliance remains document‑heavy. Heirs should:
- Value assets accurately,
- Document every deduction, and
- File & pay within one year to avoid penalties.
When in doubt, engage a tax lawyer or accredited tax agent and coordinate early with the relevant BIR RDO.
Disclaimer : This article is for informational purposes only and is not a substitute for individualized legal or tax advice. Laws and BIR issuances may change; always verify the current rules or consult a professional before acting.