Understanding the Extrajudicial Settlement of Estate

An Extrajudicial Settlement of Estate is a legal process involving surviving heirs of a deceased person to distribute the deceased person's property. The most common method used by the surviving heirs of the deceased is signing a document called the "Deed of Extrajudicial Settlement of Estate." This is applicable when there are two (2) or more surviving heirs of the deceased, and an alternative to the probate of a will which is commonly used in the Philippines.

The Extrajudicial Settlement of Estate is an out-of-court procedure, meaning it does not involve the intervention of the court. However, it is necessary that all heirs must agree on the distribution of assets and sign the deed of extrajudicial settlement in front of a notary public. If the heirs cannot reach an agreement, the matter may have to be resolved by filing a petition for judicial settlement of the estate in court.

Requirements for an Extrajudicial Settlement of Estate

To initiate an Extrajudicial Settlement of Estate, several requirements must be met:

1. The deceased left no will and no debts.

2. All legal heirs must be of legal age (or the minors have legal representatives) and must agree to the division of the assets.

3. The Extrajudicial Settlement of Estate is notarized before a Notary Public.

4. The publication of  the Extrajudicial Settlement of Estate in a newspaper of general circulation once a week for three (3) consecutive weeks.

5. A bond secured from a reputable bonding company acceptable to the Register of Deeds.

Steps in the Extrajudicial Settlement Process

To complete an Extrajudicial Settlement of Estate, the following steps must be followed:

1. Prepare the necessary documents:

   - A certified true copy of the deceased's death certificate

   - Notarized Deed of Extrajudicial Settlement of Estate, signed by all legal heirs

   - Proof of publication of the notice

   - Tax Identification Numbers (TIN) of the deceased and the heirs

   - Other relevant documents, such as land titles and tax declarations, Sworn Declaration of all properties of the estate.

2. File the Deed of Extrajudicial Settlement of Estate and other required documents with the Bureau of Internal Revenue (BIR) in the Philippines.

3. The BIR will assess the estate tax, which the heirs need to timely pay. Penalties and interest may apply for late payment.

4. Secure the Certificate Authorizing Registration (CAR) from the BIR after paying the estate tax.

5. Register the properties with the appropriate government agency (e.g., Assessor's Office for tax declaration, Register of Deeds for land titles) and have the property titles transferred to the heirs' names.

6. Pay the corresponding transfer taxes and documentary stamp taxes to the local government and the BIR, respectively.

Considerations for Those Living Abroad

If it happens that one or more of the surviving heirs are living outside the Philippines,  executing a "Special Power of Attorney" (SPA) may be considered. An SPA is a legal document that authorizes someone to act on your behalf. 

Alternatively, a duplicate copy of the Deed of Extrajudicial Settlement of Estate may be executed by such surviving heirs outside the Philippines.

Just like in the Philippines, the SPA and/or Deed of Extrajudicial Settlement of Estate must be notarized. In addition, the need for apostille or legalization of these documents executed by heirs residing abroad ensures the validity and recognition of foreign documents in the Philippines. "Apostille" or "authentication" is a certification under the Hague Convention of 1961, to which the Philippines is a party, that  serves as a way to authenticate the origin of a public document issued in one country for legal purposes in another country that is also a party to the convention. For those countries that are not members of the Apostille Hague Convention, the document must undergo a legalization (colloquially known as "consularized" or  formerly "red ribbon"). Both  processes ensure that your document executed abroad is valid for use in the Philippines.

Apostille Pinoy Services:

Your Solution for Document Authentication

Apostille Pinoy is a trusted service provider specializing in apostille and authentication services for Philippine documents. With years of experience and expertise of our team, Apostille Pinoy can assist heirs residing abroad in ensuring that their Special Power of Attorney (SPA), Deed of Extrajudicial Settlement of Estate and other necessary documents are properly apostilled and recognized by Philippine authorities.

Ensure a smooth and hassle-free Extrajudicial Settlement of Estate process by having your documents processed by Apostille Pinoy.

Contact us at hello@apostillepinoy.com to get started. Our team of experts will guide you through the process and ensure that your documents meet all legal requirements for use in the Philippines.