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Difference between Judicial Settlement and Extrajudicial Settlement of Estate in the Philippines

When a person dies and leaves assets in his name, there is a need to settle or distribute his assets and transfer these to his heirs. The totality of these properties, whether real or personal, is called the estate of the deceased or decedent. Examples of personal properties are a mutual fund placement or a life insurance policy if revocable, painting, jewelry, car, shares of stock, monies in the bank, and the like. Examples of Real properties, on the other hand, are condominiums, parcels of land, buildings, and the like.

There are two different methods to distribute an ESTATE.Through the judicial settlement of estate and the extrajudicial settlement of estate.

When handling estate settlements, there are situations where it is necessary to require the court’s intervention, for example, when the heirs are either in dispute, the estate has debts or the deceased left a will. Such circumstances require that the estate be settled judicially or through court action.

On the other hand, settlements that are resolved outside of court, meaning there is no need for court intervention, the estate may be settled extrajudicially.

JUDICIAL VS EXTRAJUDICIAL – What is the Difference?

EXTRAJUDICIAL

In an extrajudicial settlement of estate, there are three (3) requisites to be followed as stated underSection 1 Rule 74 of the Rules of Courtof the Philippines:

(1) The deceased or decedent was unable to leave a will and testament;

(2) The deceased or decedent was able to pay the remaining debts and tax expenses of the estate;

(3) The deceased or decedent’s heirs are all of legal age; for minors – a duly authorized legal representative shall represent them on their behalf.

This is a mere paper agreement among the heirs whereby the heirs voluntarily subdivide the assets among themselves in accordance with law.

In instances where the heir is identified as a “sole heir”, an affidavit of self-adjudication is necessary in order for the transfer to be valid.

JUDICIAL

If any of the above is present, for example, there is a will, or there is debt, then extrajudicial settlement is not possible. The heirs have no recourse but to settle the estate judicially.

If there is a last will and testament, then there must be a probate of the will. Probate requires a court action. or judicial proceedings.

Aside from the presence of will, if the parties do not see eye to eye on the distribution of the assets, any of the heirs may force the issue of distribution or settlement of the estate before the court.

In the process of settling an estate, an extrajudicial settlement is much more convenient – again, depending on your own circumstance if ever this does apply – since extrajudicial settlement is a mere paper agreement among the heirs distributing the estate among themselves. However, judicial settlements may be unavoidable – so legal representation is necessary in order for the settlement issues to be resolved.

Need further information and assistance in processing Extrajudicial Settlement? Talk to our team at  FILEDOCSPHIL  to know more about the requirements and process. Call us today at  (+63) 917 149 2337 or send an email to  info@filedocsphil.com or simply message us through the live chat for more information.

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