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Estate?
Extrajudicial means outside of court; hence, an extrajudicial settlement of
estate means heirs do not need go to court to partition the properties left by a
deceased decedent.
It is settling an estate by drafting a contract where the properties are divided
among the heirs as they see fit. Enumerated in the contract are the properties left
by the deceased, which is collectively recognized as the estate.
What are the requirements of an extrajudicial settlement of estate?
An extrajudicial settlement of estate is only possible if the decedent had left no
will. In the event that there is one, extrajudicial settlement is only applicable to
the properties not addressed in the will. The decedents estate must also not
have any existing debts. Should there, these must first be satisfactorily paid, with
the remainder being what is subject to division among heirs.
Speaking of heirs
When heirs are not able to reach an agreement on the division of the properties,
they are relegated to having to filing a standard action for partition instead.
All heirs must also be of legal age. Should one be a minor, he or she must be
duly represented by judicial or legal representative.
Solitary heirs may adjudicate the entire estate to him or herself by means of an
affidavit. Called an Affidavit of Self Adjudication, this is filed in the Register of
Deeds of the locale where the decedent resided.
A group of heirs, on the other hand, must reach an agreement and subsequently
divide the estate among themselves by way of a Deed of Extrajudicial
Settlement of Estate and Adjudication of Estate. This must be signed by all
heirs, notarized before a Notary Public, and contain the following information:
The heirs then secure a bond from a reputable bonding company recognized by
the Register of Deeds, and file it simultaneously with the registration of the
notarized Deed of Extrajudicial Settlement and Adjudication of Estate.
Upon successful completion of notarized extrajudicial settlement of estate, legal
owners can readily put their real estate properties up for sale with minimal
difficulties, whether it be featuring it on a real estate listings website, having it
attached to a particular broker, or transferring it to its eventual buyer.
http://investinginphilippines.com/what-is-an-extrajudicial-settlement-ofestate/
Buying and selling of property is a business transaction long in existence, as even those with little
to no real estate experience have a general understanding of the process. In a nutshell, it is
indeed fairly simple: an owner sells and an interested buyer purchases, with some legal
formalities in between.
There are instances where the process is a little more cumbersome, like when a property owner
passes away without having been able to name heirs. While it does not fully keep the property in
limbo, the failure to transfer ownership prevents it from being sold later on, or worse, opens it up
for other parties to make a claim on the property.
A simple fix for this is an extrajudicial settlement, and in this edition of Lamudi Q&A, we discuss
how the process works.
Q: How does extrajudicial settlement of estate work?
A: An extrajudicial settlement is the settling of an estate via the drafting of a contract, which
indicates how a deceased owners properties will be divided among the heirs as they see fit. The
properties left by the deceased listed in the contract is collectively recognized as the estate.
The settlement is considered extrajudicial, or out of court, as the heirs do not go to trial to
divide the properties left by the deceased property owner.
Q: What is necessary in going about the settlement procedure?
A: It should be noted that the very first requirement for an extrajudicial settlement is the absolute
absence of a will, as this is what the settlement process was made to address. In the event that
there is a will, an extrajudicial settlement can still be used to address properties not included in it.
Apart from this, the other requirements for an extrajudicial settlement are the following:
1. The decedents estate must have no existing debts. If there are, these must first be
satisfactorily paid. The estate can be used for payment, with the remainder being what is subject
to division among the heirs.
2. A judicial or legal representative for heirs who are minors.
3. An Affidavit of Self Adjudication. These are for sole heirs who wish to adjudicate the entire
estate to him- or herself, filing the affidavit at the Register of Deeds of the locale where the
decedent resided.
4. A Deed of Extrajudicial Settlement of Estate and Adjudication of Estate. This, on the other
hand, is for a group of heirs. This must be signed by all individuals involved, notarized before a
Notary Public, and include the following information:
a. Text indicating the decedent left no will and no debt;
b. Each heirs relationship to the decedent;
c. That they are the decedents only surviving heirs;
d. An inventory with individual descriptions of the decedents properties, both real and personal,
that the heirs have agreed to divide among themselves; and
e. The exact manner that the properties are to be divided.
5. The heirs then secure a bond from a reputable bonding company recognized by the Register of
Deeds, and file it simultaneously with the registration of the notarized Deed of Extrajudicial
Settlement and Adjudication of Estate.
Upon successful completion, legal owners can then put their real estate properties up for sale
with minimal difficulties. They can market the property in any real estate listings website, have it
handled by their chosen broker, or transfer it to its eventual buyer with ease.
http://www.lamudi.com.ph/journal/qa-how-does-extrajudicial-settlement-ofestate-work/
the BIR, in meritorious cases, not exceeding thirty (30) days. It must be noted that
the estate itself is assigned its own Tax Identification Number (TIN). The Estate Tax
Return is filed with Revenue District Office (RDO) having jurisdiction over the place of
residence of the decedent at the time of his death. If the decedent has no legal
residence in the Philippines, then the return can be filed with:
1. The Office of the Revenue District Officer, Revenue District Office No. 39, South
Quezon City; or
2. The Philippine Embassy or Consulate in the country where decedent is residing at
the time of his death.
Furthermore, the estate tax shall be paid at the time the return is filed. However,
upon request and if the Commissioner of the BIR finds that payment on the due date
of the Estate Tax or of any part thereof would impose undue hardship upon the estate
or any of the heirs, he may extend the time for payment of such tax or any part
thereof not to exceed five (5) years, in case the estate is settled through the courts or
two (2) years in case the estate is settled extra-judicially. If an extension is granted,
the BIR Commissioner may require a bond in such amount, not exceeding double the
amount
of
tax,
as
it
deems
necessary.
The estate tax is based on the value of the net estate as follows:
1.
If
not
over
P200,000,
it
is
exempt
2. If over P200,000 but not over P500,000, then tax is 5% of the excess over
P200,000
3. If over P500,000 but not over P2,000,000, then tax is P15,000 PLUS 8% of the
excess
over
P500,000
4. If over P2,000,000 but not over P5,000,000, then tax is P135,000 PLUS 11% of the
excess
over
P2,000,000
5. If over P5,000,000 but not over P10,000,000, then tax is P465,000 PLUS 15% of the
excess
over
P5,000,000
6. If over P10,000,000, then tax is P1,215,000 PLUS 20% of the excess over
P10,000,000
The basis shall be the net estate. That means that there are allowable deductions on
the estate. These deductions include funeral expenses, share of the surviving spouse,
medical expenses incurred by the decedent within 1 year prior to his death, family
home deduction of not more than P1,000,000.00, standard deduction of
P1,000,000.00, among others. It is best to consult with an accountant on this matter
to determine the accurate estate tax.
For extrajudicial settlement of estate, the following documents must be submitted
with the BIR:
1.
Notice
of
Death
2.
Certified
true
copy
of
the
Death
Certificate
3.
Deed
of
Extra-Judicial
Settlement
of
the
Estate
4.
Certified
true
copy
of
the
land
titles
involved
5. Certified true copy of the latest Tax Declaration of real properties at the time of
death
6. Photo copy of Certificate of Registration of vehicles and other proofs showing their
correct
value
7.
Photo
copy
of
certificate
of
stocks
http://ndvlaw.com/extrajudicial-settlement-of-estate-in-the-philippines/
WHAT IS AN ESTATE?
1
1. The beneficiary who will receive the proceeds under a life insurance policy
or pre-need plan is an Estate.
2. The owner of the life insurance policy or pre-need plan or mutual fund
placement has become an Estate and needs to transact business with the
company.
HOW IS AN ESTATE SETTLED? An Estate may be settled judicially or
extrajudicially:
I. EXTRAJUDICIAL SETTLEMENT.
TO BE VALID:
3. The heir/s are all of age, or the minor heirs are represented by their
judicial guardians or legal representatives;
6. The parties to the extrajudicial settlement shall file a bond with the
Register of Deeds in an amount equivalent to the value of the
personal property involved.
This bond should be filed simultaneously with the
extrajudicial settlement instrument(document).
Heirs for purposes of the discussion on extrajudicial settlement, may refer to the following: 1) if the
deceased was single without children surviving parents; 2) if the deceased was single with children
legitimate and illegitimate children only; 3) if the deceased was single with illegitimate children and
surviving parents surviving parents and illegitimate children only; 4) if the deceased was married with
children - legal spouse and illegitimate and legitimate children only; and 5) if the deceased was
married with illegitimate children legitimate spouse, surviving parents and illegitimate children.
Claimants are encouraged to seek the advice of their own legal counsel.
3. Publication. Notice of the filing of the petition for settlement of estate and the
proceedings thereof are required to be published in a newspaper of general
circulation once a week for three consecutive weeks.