When there is no will and the heirs agree, an estate can be settled out of court. It is faster and far cheaper than a judicial settlement.
When extrajudicial settlement is possible
Under Rule 74 of the Rules of Court, heirs may settle an estate between themselves if the person who died left no will and no outstanding debts, and all heirs are of age or properly represented. If any of these is missing, the estate goes to court.
The deed and its publication
The heirs sign a deed of extrajudicial settlement dividing the property. A notice of the settlement must be published in a newspaper of general circulation once a week for three consecutive weeks, so creditors and other heirs can come forward.
Estate tax
Estate tax is six percent of the net estate. The return is filed with the BIR within one year of death. Once the tax is paid, the BIR issues an electronic certificate authorising registration, which the Registry of Deeds needs before it transfers any title.
Transferring the titles
With the certificate, the published deed and the transfer tax receipt, the heirs can have new titles issued in their names. If property sits in several provinces, each Registry of Deeds is handled separately.
If there is a will
A will must be probated, which means proved in court, before it takes effect. Even a handwritten will that is entirely written, dated and signed by the person who made it needs probate. Until then, the property cannot be divided according to the will.
One heir can settle alone
If there is only one heir, that heir can adjudicate the whole estate to themselves through an affidavit of self-adjudication, with the same publication and estate tax steps.
When heirs disagree
If heirs cannot agree, any of them can ask the court to partition the estate. Before that, it is worth trying mediation: most disagreements are about who keeps which property, and they can often be settled by assigning values and balancing the shares in cash.
What to gather first
The death certificate, the titles and tax declarations of each property, bank certificates showing balances at the date of death, and the birth and marriage certificates that prove who the heirs are.
Heirs living abroad can take part through a special power of attorney, so the settlement does not have to wait for everyone to fly home.
This guide is general information, not legal advice. Talk to us if any heir disagrees or if there may be debts.