1) Why bank deposits become an issue in extrajudicial settlement
In Philippine estate practice, “estate” includes not only land and vehicles but also cash and bank deposits, time deposits, checks, online bank balances, investment-linked deposit products, and similar credits belonging to the decedent at death. Problems arise when:
- Heirs discover deposits after signing an extrajudicial settlement (EJS) that listed only real property; or
- Heirs intentionally exclude deposits (often to “avoid hassle” or taxes), then later need to access the funds; or
- One heir already withdrew funds informally (ATM, online banking, “in trust” accounts, joint accounts) and other heirs later demand accounting.
Because banks generally require proof of authority and settlement documentation, non-disclosure delays release and increases the risk of family disputes, tax exposure, and potential civil/criminal liability.
The practical goal is: prepare an EJS that fully discloses bank deposits and creates a clear, bank-acceptable mechanism for release and distribution, while remaining compliant with estate tax rules and documentary requirements.
2) Governing legal framework (high level)
2.1 Extrajudicial settlement as a shortcut, not a substitute for compliance
Extrajudicial settlement is permitted when:
- the decedent died intestate (no will, or no effective will to govern the property being settled);
- the heirs are all of age, or minors are represented by a judicial or legal representative; and
- the decedent left no outstanding debts, or if there are debts, they are settled/assumed in a manner consistent with creditor protection requirements.
Even when an EJS is available, it does not “legalize” non-disclosure. The heirs’ deed is an instrument that can be scrutinized by banks, the BIR, and other parties.
2.2 The tax overlay is unavoidable
Bank release is commonly tied to:
- proof of filing/payment of estate tax (or proof of exemption, if applicable); and
- relevant BIR clearances/authorizations banks usually request.
So the EJS should be drafted with the assumption that tax documentation will be required for the bank to act.
2.3 Bank secrecy and information access
The Philippines has strong bank confidentiality rules. As a rule:
- heirs do not automatically gain full access to a decedent’s accounts merely by being heirs; and
- banks will disclose/release only upon compliance with their internal requirements and applicable law.
In practice, banks frequently ask for the EJS (or court order), death certificate, IDs, proof of publication, and BIR estate tax documents before allowing withdrawal/transfer.
3) What counts as “unreported” deposits in estate settlement
“Unreported bank deposits” typically refers to deposits not included in the list of estate assets in:
- the EJS, and/or
- estate tax return (or the schedules).
Examples:
- savings/current accounts not known at signing;
- time deposits and rollover TDs discovered later;
- payroll accounts, e-wallet balances, remittances credited after death but earned before death;
- dormant accounts;
- checks payable to the decedent;
- proceeds of refunds, dividends, or benefits credited after death but attributable to the decedent;
- joint accounts where the decedent is co-depositor.
“Unreported” may be innocent (new discovery) or deliberate (concealment). The drafting strategy should cover both, but the legal risk analysis differs.
4) Risks of excluding bank deposits
4.1 Estate tax, penalties, and assessment exposure
If deposits existed at death but were not declared, there is risk of:
- deficiency estate tax assessment,
- interest and surcharges,
- penalties for incorrect/incomplete filings.
Even when heirs intend to “fix it later,” bank processing may force them into formal correction anyway.
4.2 Civil liability among heirs
One heir who withdraws or controls deposits without accounting may face:
- actions for accounting, reimbursement, partition, or damages;
- claims of breach of trust or fraud, depending on facts.
4.3 Issues with creditors
If the decedent had unpaid obligations, excluding cash deposits can be viewed as an attempt to defeat creditors, which is precisely why publication and creditor protection concepts exist in estate settlement.
4.4 Bank refusal or freezing
Banks commonly refuse to process if:
- the EJS asset list does not match the accounts being claimed,
- the deed is too generic (“all deposits wherever situated”) without identifiers,
- publication or BIR requirements are incomplete,
- there are conflicting claims among heirs.
5) The compliance-centered approach: “EJS with full disclosure” (core concept)
An EJS that properly discloses bank deposits aims to:
- Identify the accounts (as much as practicable) and classify them as part of the estate;
- Confirm heirship and the intestate relationship basis;
- Provide allocation (pro-indiviso or specific distribution) of deposits;
- Authorize a representative (optional but practical) to deal with banks and BIR;
- Address unknown/after-discovered deposits with a structured clause;
- Provide accountability safeguards (undertakings, receipts, indemnities); and
- Meet formalities needed for bank acceptance (notarization, publication, etc.).
6) Preparation roadmap (step-by-step)
Step 1: Confirm eligibility for extrajudicial settlement
Before drafting, verify:
- intestacy (no will affecting the assets being settled);
- complete list of heirs (including compulsory heirs where relevant);
- no unsettled debts or a clear plan for them;
- capacity of heirs; if minors exist, consider judicial steps or proper representation.
If any of these are doubtful, an EJS may be vulnerable, and a judicial settlement or special proceeding may be more appropriate.
Step 2: Build the asset inventory (with bank deposits)
Inventory is the foundation. For deposits, aim to obtain:
- bank name/branch,
- account name style (e.g., “Juan Dela Cruz,” “Juan Dela Cruz and Maria Dela Cruz”),
- account number (full or partial masking if needed in the public copy),
- type (savings/current/time deposit),
- balance as of date of death (preferred) or nearest available statement,
- any holds/pledges, outstanding checks, or linked facilities.
Where account numbers cannot be confirmed due to confidentiality, you can still draft in tiers:
- “identified accounts” (specific), and
- “after-discovered deposits” (general but governed).
Step 3: Clarify special deposit categories
These are frequently contentious:
(a) Joint accounts (“and/or”)
Banks often treat joint deposits differently depending on the contract and their policies. For estate purposes, the decedent’s interest may still be considered part of the estate, and disputes among heirs are common. Your EJS should acknowledge the joint nature and state the heirs’ agreed approach (e.g., recognizing only the decedent’s share as estate property, subject to documentation).
(b) “In trust for” (ITF) / “For the account of” arrangements
An ITF label does not automatically remove the funds from the estate; the real ownership may still be questioned. Drafting should not assume ownership without evidence.
(c) Accounts funded by exclusive property / conjugal or community property
If the decedent was married, determine the property regime and whether deposits are part of:
- community property/conjugal partnership, or
- exclusive property.
The EJS should reflect whether the surviving spouse is receiving his/her share as spouse (not as heir) and the remainder as estate.
(d) Payroll and benefit credits
Some post-death credits may not be estate assets (depending on the nature of benefit and beneficiary designation). Separate those that are payable by designation from those that are simply owed to the decedent.
Step 4: Decide the distribution mechanics
Common options:
Pro-indiviso distribution of “cash and deposits” among all heirs in stated percentages.
- Simple, but banks may still require a process for release.
Designation of an estate representative/heir-agent to withdraw/collect and then distribute.
- Practical; include accounting and receipts obligations.
Assignment of specific accounts to specific heirs with balancing payments if needed.
- Useful if heirs want to keep particular bank relationships.
A good EJS will combine (1) or (3) with (2) as an administrative mechanism.
Step 5: Draft the EJS with bank-ready clauses
Key drafting elements appear in Section 7 below.
Step 6: Comply with formalities
Typical expectations:
- notarized EJS;
- publication requirement (commonly in a newspaper of general circulation, as required for EJS);
- payment of applicable documentary stamp taxes/transfer taxes where relevant for other assets;
- estate tax compliance and securing whatever BIR document banks require to release deposits.
Step 7: Present to banks and implement distribution
Prepare a bank submission packet:
- original or certified true copy of EJS;
- death certificate;
- IDs of heirs;
- proof of publication;
- tax documents (estate tax return, proof of payment, clearance/authorization);
- special bank forms and indemnities (banks often require their own).
7) Drafting an Extrajudicial Settlement With Disclosure of Bank Deposits (what to include)
7.1 Parties and heirship recital
Include:
- full names, civil status, citizenship, addresses;
- relationship to decedent;
- statement of intestate death (date/place);
- list of all heirs and affirmation there are no other heirs.
If an heir is abroad, consider consular notarization or apostille requirements for signatures, and align with the bank’s acceptance standards.
7.2 Estate composition clause with detailed deposit schedule
Use a schedule/annex for deposits:
Schedule “B” – Bank Deposits and Cash Assets
- Bank; Branch; Account Type; Account Name; Account No.; Balance (as of death); Remarks.
Practical tip: because publication makes the deed public-facing, some practitioners use:
- a public deed with a reference to “Schedule B (confidential annex),” and
- a bank-facing certified annex listing account numbers.
Whether this works depends on the bank and the notarial practice. Some banks insist the account identifiers appear in the notarized instrument itself (even if partially masked). Draft accordingly.
7.3 After-discovered property clause (critical for “unreported deposits”)
Include a robust clause that:
- acknowledges the possibility of after-discovered bank deposits and credits belonging to the decedent at death;
- declares that such after-discovered deposits are covered by the settlement in the same proportions; and
- authorizes execution of a Deed of Confirmation / Supplemental Extrajudicial Settlement to specifically identify newly discovered accounts when required by a bank or government agency.
This clause reduces the need to renegotiate, but you should still expect banks to require a supplemental deed to identify the specific account.
7.4 Authority to deal with banks (representative clause)
Heirs may authorize one or more persons to:
- inquire, process, sign bank forms;
- receive proceeds;
- deposit into an “estate settlement account” if opened; and
- distribute to heirs per the deed.
Add:
- requirement for written liquidation/accounting within a defined period after receipt;
- requirement for each heir to sign acknowledgment/receipt.
7.5 Allocation/distribution clause (percentages and regime)
State clearly:
- shares of each heir;
- if married decedent: delineate spouse share as property-regime share vs inheritance share, if applicable;
- treatment of joint accounts, if any.
7.6 Undertakings, warranties, indemnities
Include undertakings that:
- heirs warrant the truth of heirship and absence of other heirs;
- heirs will defend and hold each other (and sometimes the bank) free from claims arising from misrepresentation;
- heirs agree to pay any taxes/penalties attributable to their shares.
Be careful: banks often have their own indemnity forms; still, including an inter-heir indemnity is useful.
7.7 Creditor protection and debt statement
The EJS typically states the decedent left no debts, or that debts have been paid. If there are known debts:
- specify how they are satisfied, or
- reserve a fund from deposits before distribution.
A blanket “no debts” statement when debts exist is a common vulnerability.
7.8 Publication and registry references
If real property is also settled, the deed often includes:
- publication recital,
- registry annotations,
- tax declaration updates.
For a “deposits-only” EJS, publication is still typically treated as part of EJS compliance; banks may ask for proof.
8) Handling deposits discovered after an EJS was already signed (corrective pathway)
If the heirs already executed an EJS that did not list the deposits, the safest corrective steps generally are:
Execute a Supplemental Extrajudicial Settlement (or Deed of Confirmation/Addition of Omitted Properties)
- specifically identifying the bank deposits and adopting the same distribution; and
Correct/Amend estate tax filings (if deposits existed at death and were omitted)
- align the tax declaration with the corrected asset list; and
Provide the bank with the supplemental deed plus tax documents.
Even if the original EJS had a general “all properties wherever situated” phrase, many banks still want an explicit supplemental identification because their compliance teams require account-level matching.
9) Bank practice considerations (what banks tend to look for)
While each bank differs, common friction points are:
Mismatch between account name and deed party names (spelling, middle initials, married names).
Solution: include aliases and name consistency recitals; attach IDs.
Heir not present or signed abroad.
Solution: proper notarization/apostille/consularization; special power of attorney where needed.
Unclear share allocation.
Solution: specify percentages and mechanism.
Joint accounts.
Solution: an explicit clause acknowledging joint nature and agreed treatment, plus bank forms.
Account numbers not stated.
Solution: include them (or partially masked if acceptable) in a notarized annex.
Tax documents incomplete.
Solution: treat tax compliance as part of the settlement plan, not an afterthought.
10) Typical factual scenarios and how to draft for each
Scenario A: Deposits are known and undisputed
Draft a full Schedule B with balances and distribution. Appoint an agent-heir for processing and accounting.
Scenario B: Deposits exist but exact details are unknown
Use:
- a broad asset description of “all bank deposits and credits in the name of the decedent,” and
- an after-discovered clause, plus
- commitment to execute supplemental deeds once banks confirm account details.
Expect to still do supplemental documents for each bank.
Scenario C: One heir already withdrew funds before settlement
Add:
- an accounting clause requiring disclosure of amounts withdrawn, dates, and remaining balances;
- a hotchpot/advance clause treating withdrawn amounts as part of that heir’s share (subject to agreed adjustments);
- a release upon settlement only after reconciliation.
If there is dispute, an EJS may not be advisable; judicial remedies may be necessary.
Scenario D: Joint account with surviving co-depositor
If the co-depositor is also an heir (e.g., spouse), separate:
- the co-depositor’s own interest, and
- the decedent’s estate interest.
If the co-depositor is not an heir, the deed should avoid conclusory ownership statements and may require separate documentation or judicial resolution.
11) Common drafting mistakes (and how to avoid them)
Omitting deposits entirely because “banks will release anyway.”
Banks often do not.
Overbroad, vague asset clause without any schedule and without an after-discovered mechanism.
Banks and the BIR tend to require specificity.
Incorrect heir list (missing an heir, wrong civil status, ignoring recognized compulsory heirs).
This can invalidate or expose the settlement.
Ignoring marital property regime and treating everything as solely the decedent’s.
This causes disputes and may derail processing.
Declaring “no debts” inaccurately.
Creates exposure to creditor claims and intra-family liability.
No authority clause and no accounting safeguards.
Practical implementation becomes messy; disputes arise.
No plan for later-discovered deposits.
Forces repeated renegotiation and creates delays.
12) Document checklist for a deposits-focused extrajudicial settlement file
A comprehensive working file typically includes:
- Death Certificate (PSA-issued copy often preferred in practice);
- Proof of heirship (birth certificates, marriage certificate, etc., as applicable);
- Valid IDs of all heirs and specimen signatures;
- Bank certificates/statements showing balances as of death (when obtainable);
- Notarized EJS with deposit schedule/annex;
- Proof of publication and affidavit of publication;
- Estate tax return filing package and proof of payment/clearance/authorization required for release;
- SPA/consularized documents for heirs abroad or agents;
- Receipts/acknowledgments of distribution and liquidation report.
13) Practical template outline (structure you can follow)
Below is an outline (not a fill-in form) of sections that make an EJS “bank-deposit ready”:
Title: “Deed of Extrajudicial Settlement of Estate (With Disclosure of Bank Deposits)”
Parties: heirs’ complete details
Recitals: death, intestacy, heirs, no other heirs, marital regime facts
Declaration of Estate Assets
- Schedule A: real/personal property (if any)
- Schedule B: bank deposits and cash assets (detailed)
After-Discovered Assets / Omitted Properties Clause
Distribution and Adjudication (percentages; spouse share if applicable)
Appointment of Representative / Authority to Collect and Process
Accounting, Liquidation, and Receipts
Debts and Creditor Protection Statement
Taxes and Expenses Allocation
Warranties and Indemnities
Publication Undertaking and Compliance
Signatures and Notarial Acknowledgment
Annexes (Schedules, IDs list, authority designations, etc.)
14) When an EJS with disclosure is not the right tool
Even with perfect drafting, extrajudicial settlement may be inappropriate when:
- heirship is contested or uncertain;
- there are minors without proper representation and safeguards;
- debts are substantial or disputed;
- there is evidence of concealment, coercion, or fraud;
- a bank deposit ownership issue requires adjudication (e.g., third-party claim, complex trust/ITF dispute, adverse claim).
In these situations, judicial settlement or specific proceedings may be necessary to produce a court order banks will honor.
15) Core takeaways
- Bank deposits are estate assets and should be included in the EJS and aligned with tax filings.
- The most defensible approach is full disclosure with a deposit schedule, plus after-discovered asset and supplemental deed mechanisms.
- Include clear authority-to-collect provisions and accountability safeguards to avoid intra-heir conflict.
- Expect banks to require a tight match between accounts claimed, the EJS, and estate tax documentation.
- If deposits were previously omitted, correct via a supplemental EJS and tax alignment rather than relying on vague “all properties” language.