Extrajudicial Settlement of Estate in the Philippines

When a loved one passes away, one of the inevitable realities families face is dealing with the estate left behind. In the Philippines, when a person dies without a will—or intestate—the estate must still be properly settled to ensure that all properties, money, and other assets are legally transferred to the rightful heirs.

Fortunately, the law provides a way for families to handle this process without going to court. This is known as extrajudicial settlement of estate—a legal option designed to simplify what could otherwise be a long and costly court proceeding.

What Is an Extrajudicial Settlement of Estate?

An Extrajudicial Settlement of Estate (EJS) is a written agreement made among the legal heirs of a deceased person to divide the estate among themselves, without the need for judicial intervention.

This process is usually faster, less expensive, and generally more amicable—provided all heirs are in agreement.

There are two common scenarios where an extrajudicial settlement may apply. First, if the deceased left only one heir, that heir may execute an Affidavit of Self-Adjudication, effectively assigning the entire estate to themselves. Second, if there are multiple heirs, they may jointly execute a notarized Extrajudicial Settlement of Estate detailing how the estate will be divided.

In either case, this document must be filed with the Register of Deeds that has jurisdiction over the decedent’s last residence.

When Can an Estate Be Settled Extrajudicially?

Not all estates can be settled out of court. There are specific conditions that must be met:

• The deceased must have died without a will;

• The estate must have no outstanding debts at the time of settlement;

• All heirs must be of legal age, or minors must be duly represented by a legal guardian;

• The EJS or Affidavit of Self-Adjudication must be notarized and executed as a public document;

• The settlement must be published in a newspaper of general circulation for three consecutive weeks;

• If the estate includes personal property, a bond equivalent to its value must be filed with the Register of Deeds.

The Process Involved

Settling an estate extrajudicially typically starts with a thorough inventory of the decedent’s assets—real estate, bank accounts, investments, personal belongings, and so on. This helps the heirs determine what exactly will be divided and ensures nothing is left out.

From there, the EJS document is drafted and signed by all legal heirs. Supporting documents such as the decedent’s death certificate, tax identification numbers of both the deceased and the heirs, land titles, bank certificates, and where applicable, a CPA-certified statement of assets, are gathered to complete the process.

Once the EJS has been notarized and executed, a notice of the settlement must be published once a week for three consecutive weeks in a widely circulated newspaper. This publication serves as public notice to any potential creditors or other interested parties.

At this point, the heirs must file the Estate Tax Return (BIR Form 1801) with the Bureau of Internal Revenue (BIR). Depending on the size and composition of the estate, the BIR may require additional documents, especially when deductions are being claimed.

Finally, the notarized settlement and other required documents are submitted to the Register of Deeds, along with the corresponding bond, for the proper transfer and registration of titles or interests.

Taxes and Deductions

Thanks to the Tax Reform for Acceleration and Inclusion (TRAIN) Law, the estate tax has been simplified. A flat rate of six percent (6%) is applied to the net estate—that is, the value of the estate after allowable deductions.

Some of the key deductions allowed include:

• A ₱5 million standard deduction;

• Debts or claims against the estate;

• Unpaid mortgages and other obligations;

• The value of the family home, up to ₱10 million;

• Property previously taxed, and transfers for public use;

• Amounts received under RA 4917 (related to retirement benefits).

These deductions help reduce the taxable estate and lower the amount the heirs must pay in estate taxes.

Estate Tax Amnesty: A Lifeline for Heirs

If you're dealing with an estate that has long been unsettled, there's good news. The government has extended the Estate Tax Amnesty Program until June 14, 2025, through Republic Act No. 11956.

This extension allows heirs to settle unpaid estate taxes without incurring penalties or interest, and even permits installment payments over two years. It covers estates of individuals who passed away on or before May 31, 2022, and who may or may not have been previously assessed for estate tax.

Many families have taken advantage of this amnesty program to finally settle estates that have remained unresolved for years—some for decades. It’s a practical opportunity that should not be missed.

In Summary

Settling a loved one’s estate doesn’t always have to mean drawn-out court proceedings. If the conditions are right, extrajudicial settlement offers a peaceful, cost-effective way for families to move forward while preserving relationships—and resources.

However, while the process may seem straightforward, it still involves careful legal compliance, paperwork, and coordination with government agencies like the BIR and Register of Deeds. A single mistake or omission can result in delays or complications.

That’s why it’s always advisable to work with a legal professional who can guide you through the process—from documentation to tax settlement to registration.

If you need help drafting an Extrajudicial Settlement of Estate or navigating the estate tax amnesty, Libongco & Pante Law Office is here to assist. Let us help make this transition easier for you and your family.