When a person passes away, he or she is also known as the decedent, he or she leaves behind his or her properties among the heirs or remaining family members. These properties can either be real or personal in nature. There are different kinds of settlement that may be done, either judicial settlement or extra judicial settlement of estate.
In the Philippines, executing one’s last will is not common. Most of the Filipinos die without a will. An Extrajudicial Settlement is the option to manage and distribute the properties left by the deceased person. In this process, a Deed of Extrajudicial Settlement of the Estate must be signed for the properties to be legally transferred to the heirs.
In this blog we shall discuss the usual method of settlement – extrajudicial settlement of estate.
Section 1 of Rule 74 of the Rules of Court provides for the extrajudicial settlement by agreement between heirs. The law provides that extrajudicial settlement is done:
- If the decedent left no will and no debts and
- The heirs are all of age, or the minors are represented by their judicial or legal representatives duly authorized for the purpose,
- The parties may without securing letters of administration, divide the estate among themselves as they see fit by means of a public instrument filed in the office of the register of deeds, and should they disagree, they may do so in an ordinary action of partition.
- If there is only one heir, he may adjudicate to himself the entire estate by means of an affidavit filed in the office of the register of deeds.
The public instrument mentioned by the provision that shall be filed in the Office of the Register of Deeds is the Deed of Extrajudicial Settlement of Estate. The law also provides that a bond must also be filed, amount of which shall be equivalent to the value of the personal property subject to the settlement. The same provision states that:
“The parties to an extrajudicial settlement, whether by public instrument or by stipulation in a pending action for partition, or the sole heir who adjudicates the entire estate to himself by means of an affidavit shall file, simultaneously with and as a condition precedent to the filing of the public instrument, or stipulation in the action for partition, or of the affidavit in the office of the register of deeds, a bond with the said register of deeds, in an amount equivalent to the value of the personal property involved as certified to under oath by the parties concerned and conditioned upon the payment of any just claim that may be filed under section 4 of this rule.”
What should be included in the Deed of Extrajudicial Settlement of Estate?
An extrajudicial settlement of estate document would indicate the following:
- Decedent
- Heirs
- there is no will or debt left behind
- last residence of the decedent
- the list properties that will be passed on to and divided by heirs
- other matters such as: if there is a waiver between the heirs or sale of the said property to another person.
Another requirement stated by the law is for publication in a newspaper of general circulation of the extrajudicial settlement. The law mentioned below:
“The fact of the extrajudicial settlement or administration shall be published in a newspaper of general circulation in the manner provided in the next succeeding section; but no extrajudicial settlement shall be binding upon any person who has not participated therein or had no notice thereof.”
Note that the law also states that if within two years after the death of the decedent, no creditor has filed any petition for letters of administration, there is a presumption that no debts have been left behind by the decedent. With this, the annotation in the title may now be removed. This is through a petition for the removal of annotation with the registry of deeds.
Note that by executing the extrajudicial settlement of estate, the heirs will also need to settle the estate taxes, if there is any, and process the Bureau of Internal Revenue BIR CAR.
What if You are living Abroad?
Consider obtaining a “Special Power of Attorney or SPA” if you plan to handle the distribution or transfer of assets in the Philippines on your behalf without traveling. An SPA is a necessary legal document for your representative or agent to be able to act on your behalf.
Additionally, consider having your SPA authenticated through Apostille. This process ensures that your document, executed outside of the Philippines, is legitimate for use there as well.
Need further information and assistance in 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 for more information.