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Death, Real Estate, and Estate Tax

Last Updated on by Atty. Cherry Vi Saldua Castillo | Filed under: - 52 Comments

In times of death, we still need to pay estate tax...
In times of death, we still need to pay estate tax…

The topic of death is usually avoided, except when we remember our dearly departed on All Saints’ and All Souls’ Day. But with death, estate taxes must be settled, and this will be the main focus of my discussion in this blogpost.


On ordinary days, most try to avoid talking about death, maybe out of fear. It only becomes acceptable to talk about it when we’re jolted by the death of a close friend or relative. We must accept, though, that we will all die – it is just a matter of time, and even during times of death, we still need to pay taxes…

In times of death, we still need to pay taxes

When someone passes away, loved ones left behind are usually overwhelmed with emotions and are unable to do anything. I know this from experience.

But, there are certain things that need to be done, like making arrangements for the embalming, the wake, the casket, the interment or cremation, the burial plot (incidentally, there are a lot of foreclosed memorial lots for sale inside our database) and the gravestone, among others.

And of course, someone has to take care of the estate tax.

Note: For the rest of this article, we will use the terms “decedent” or “deceased person” to refer to the person who died.

What is Estate Tax?

Estate tax is imposed on the transfer of the net estate, which is the difference between the gross estate (as defined under Section 85 of the Tax Code) and allowable deductions (under Section 86) of the decedent. Estate tax rates are graduated and depend on the net estate amount.

Net Estate = Gross Estate – Deductions

Real property may not be transferred from the decedent to his or her heirs without the filing of the estate tax return and payment of the estate tax. Non-payment of estate tax is common and this brings about many problems when the properties need to be transferred to the names of buyers.


What to do when someone has died

Estate tax-wise, these are the things that need to be done:

  1. File a Notice of Death with the Bureau of Internal Revenue within two months after the date of death. This is applicable when the gross value of the estate exceeds P20,000.00. This should be filed by the executor or administrator of the estate, or any of the legal heirs. It shall be filed with the RDO where the decedent was domiciled at the time of his death. There is no specific format.
  2. Get a Tax Identification Number (TIN) for the Estate of the deceased person by using BIR Form No. 1901.  Use this TIN when filing the Estate Tax Return (BIR Form No. 1801).
  3. Prepare the list of assets and liabilities of the decedent. Get the fair market values of the properties at the time of death.
  4. Prepare the supporting documents for the assets and liabilities, as well as the deductions you are going to take. You will need these for the estate tax computation and as attachments to the Estate Tax Return.
    1. Certified true copy of the Death Certificate
    2. Notice of Death duly received by the BIR, if gross estate exceeds P20,000 for deaths occurring on or after Jan. 1, 1998; or if the gross estate exceeds P3,000 for deaths occurring prior to January 1, 1998
    3. Any of the following:
      • Deed of Extra-Judicial Settlement of the Estate, if the estate is settled extra judicially (sample forms may be found here and here).
      • Court Orders/Decision, if the estate is settled judicially;
      • Affidavit of Self-Adjudication (sample here) and Sworn Declaration of all properties of the Estate
      • A certified true copy of the schedule of partition of the estate and the order of the court approving the same, if applicable.
    4. Certified true copy(ies) of the Transfer/Original/Condominium Certificate of Title(s) of real property(ies) (front and back pages), if applicable
    5. Certified true copy of the latest Tax Declaration of real properties at the time of death, if applicable
    6. “Certificate of No Improvement” issued by the Assessor’s Office declared properties have no declared improvement or Sworn Declaration/Affidavit of No Improvement by at least one (1) of the transferees
    7. Certificate of Deposit/Investment/Indebtedness owned by the decedent and the surviving spouse, if applicable
    8. Photocopy of Certificate of Registration of vehicles and other proofs showing the correct value of the same, if applicable
    9. Photo copy of certificate of stocks, if applicable
    10. Proof of valuation of shares of stocks at the time of death, if applicable
      • For listed stocks – newspaper clippings or certification from the Stock Exchange
      • For unlisted stocks – latest audited Financial Statement of issuing corporation with computation of book value per share
    11. Proof of valuation of other types of personal property, if applicable
    12. Proof of claimed tax credit, if applicable
    13. CPA Statement on the itemized assets of the decedent, itemized deductions from gross estate and the amount due if the gross value of the estate exceeds two million pesos, if applicable
    14. Certification of Barangay Captain for claimed Family Home
    15. Duly notarized Promissory Note for “Claims against the Estate” arising from Contract of Loan
    16. Accounting of the proceeds of loan contracted within three (3) years prior to death of the decedent
    17. Proof of the claimed “Property Previously Taxed”
    18. Proof of claimed “Transfer for Public Use”
    19. Copy of Tax Debit Memo used as payment, if applicable
  5. Compute the net estate and estate tax.
  6. File the Estate Tax Return and pay the estate taxes.
  7. Follow the procedure for transferring real properties to the name of the heirs (this will be discussed in a separate post).
  8. Follow the procedure for cancellation of the TIN of the decedent as discussed in Section 12 of Revenue Regulations No. 7-2012. Use BIR Form No. 1905 for the cancellation of TIN.

Gross Estate

Gross estate is the value at the time of death of all property, real or personal, tangible or intangible, wherever situated.  In the case of a nonresident decedent who at the time of his death was not a citizen of the Philippines, only that part of the entire gross estate which is situated in the Philippines shall be included in his taxable estate.

The value of the properties shall be based on their fair market value (FMV) as of the time of death.

If the property is a real property, the FMV shall be the higher between the BIR zonal valuation and FMV per tax declaration (I paraphrased this).

Please also note that also included in the computation of the gross estate are interest or share in a property, transfers in contemplation of death, and revocable transfers.

The proceeds of life insurance are included in the gross estate unless the beneficiary is designated as irrevocable).


Deductions from gross estate

  1. Expenses, Losses, Indebtedness, and Taxes (ELIT)

a. Funeral expenses – Lowest among:

    • Actual funeral expenses;
    • 5% of the gross estate; and
    • P200,000.00.

b. Judicial expenses of the testamentary and intestate proceedings

c. Claims against the estate

    • At the time the indebtedness was incurred, the instrument was duly notarized; and
    • If the loan was contracted within three (3) years before the death of the decedent, the administrator or executor shall submit a statement showing the disposition of the proceeds of the loan

d. Claims of the deceased against insolvent persons

e. Unpaid mortgages, etc.

  1. Property Previously Taxed (Vanishing deduction)
  2. Transfers for Public Use
    • The amount of all bequests, legacies, devises or transfers to or for the use of the Government of the Republic of the Philippines, or any political subdivision thereof, for exclusively public purposes.
  1. Family Home
    • Fair Market Value of the Family Home or P1 million, whichever is lower.
    • As a condition for the exemption or deduction, said family home must have been the decedent’s family home as certified by the barangay captain of the locality.
  1. Standard Deduction – P1 million (no substantiation needed)
  1. Medical Expenses
    • Medical expenses incurred by the decedent within one (1) year prior to his death which shall be duly substantiated with receipts
    • Maximum: P500,000.00
  1. Amount received by heirs under RA 4917 (retirement benefits of employees of private firms)
  2. Share in the Conjugal Property

The net share of the surviving spouse in the conjugal partnership property as diminished by the obligations properly chargeable to such property

What are the Estate Tax rates?

The estate tax rates depend on the date of death. For those who died on January 1, 1998 and onwards, the following are the estate tax rates based on the net estate:

OverBut not overThe tax shall bePlusOf the excess over
0200,000Exempt
200,000500,00005%200,000
500,0002,000,00015,0008%500,000
2,000,0005,000,000135,00011%2,000,000
5,000,00010,000,000465,00015%5,000,000
10,000,000And Over1,215,00020%10,000,000

Estate Tax Philippines Table 1: For decedents who died on January 1, 1998 and onwards

 

If the decedent died between July 28, 1992 to December 31, 1997, the following are the applicable estate tax rates based on the net estate amount:

Over

But not Over

The Tax
Shall be

Plus

Of the Excess Over

P 200,00.00

0%

P200,000.00

500,000.00

5%

P 200,000.00

500,000.00

2,000,000.00

P 15,000.00

8%

500,000.00

2,000,000.00

5,000,000.00

135,000.00

12%

2,000,000.00

5,000,000.00

10,000,000.00

495,000.00

21%

5,000,000.00

10,000,000.00

1,545,000.00

35%

10,000,000.00

Estate Tax Philippines Table 2: For decedents who died between July 28, 1992 to December 31, 1997

 

If the decedent died between January 1, 1973 and July 27, 1992, the following are the applicable estate tax rates based on the net estate amount:

Over

But not Over

The Tax
Shall be

Plus

Of the Excess Over

P 10,00.00

Exempt

P 10,000.00

50,000.00

3%

P 10,000.00

50,000.00

75,000.00

P 1,200.00

4%

50,000.00

750,000.00

100,000.00

2,200.00

5%

75,000.00

100,000.00

150,000.00

3,450.00

10%

100,000.00

150,000.00

200,000.00

8,450.00

15%

150,000.00

200,000.00

300,000.00

15,950.00

20%

200,000.00

300,000.00

400,000.00

35,950.00

25%

300,000.00

400,000.00

500,000.00

60,950.00

30%

400,000.00

500,000.00

625,000.00

90,950.00

35%

500,000.00

625,000.00

750,000.00

134,700.00

40%

625,000.00

750,000.00

875,000.00

184,700.00

45%

750,000.00

875,000.00

1,000,000.00

240,950.00

50%

875,000.00

1,000,000.00

2,000,000.00

303,450.00

53%

1,000,000.00

2,000,000.00

3,000,000.00

833,450.00

56%

2,000,000.00

3,000,000.00

1,393,450.00

60%

3,000,000.00

Estate Tax Philippines Table 3: For decedents who died between January 1, 1973 and July 27, 1992

 

If the decedent died between September 15, 1950 to December 31, 1972, the following are the applicable estate tax rates based on the net estate amount:

From

To

ESTATE

INHERITANCE

5,000.00

0

5,000.00

Exempt

Exempt

7,000.00

5,000.00

12,000.00

1.0%

2&

18,000.00

12,000.00

30,000.00

2.0%

4%

20,000.00

30,000.00

50,000.00

2.5%

6%

30,000.00

50,000.00

70,000.00

3.0%

8%

Estate Tax Philippines Table 4: For decedents who died between September 15, 1950 to December 31, 1972

 


Sample computations

Please refer to BIR Revenue Regulations No. 2-2003 for sample computations.

When is an Estate Tax return required to be filed?

  • When the gross value of the estate exceeds P200,000 (though exempt from tax); or
  • Regardless of the gross value of the estate, where the said estate consists of registered or registrable property such as real property, motor vehicle, shares of stock, or other similar property for which a clearance from the BIR is required as a condition precedent for the transfer or ownership thereof in the name of the transferee

When to file and pay

  • Within six (6) months from the decedent’s death;
  • Unless an extension of time is requested in cases where the payment of the tax will result in undue hardship on the heirs
    • Not to exceed 5 years  in case the estate is settled through the courts;
    • Not to exceed 2 years in case the estate is settled extrajudicially.

Penalties for late payment

The penalties shall include 25% surcharge and 20% interest per year (Under Secs. 248 and 249, respectively). If fraud is involved, the surcharge shall be 50%. You may also pay compromise penalties in lieu of imprisonment, which can be viewed at the BIR’s website through the following link: Schedule of compromise penalties.


BIR Form to be used

  • —BIR Form No. 1801 (Estate Tax Return)

Where to file

  • The Authorized Agent Bank (AAB), Revenue District Officer (RDO) or duly authorized Treasurer of the city or municipality where the decedent was domiciled at the time of his death; or
  • If there be no legal residence in the Philippines, with the Office of the Commissioner.

How to Get A BIR Certificate Authorizing Registration (CAR)

The Registry of Deeds will not allow you to transfer the title of real properties of a deceased person if there is no BIR CAR. Please make sure that you have the documents as enumerated in the Checklist of Documentary Requirements (CDR) for Estate Tax, which can be found in Annex A-6 and A-6.1 of Revenue Memorandum Order (RMO) No. 15-03 (see pages 7 to 9).

To help you determine the computation for the estate tax due, you may refer to the ONETT (One-Time Transaction) Computation Sheet, in Annex B-3 (pages 16 and 17) also of RMO No. 15-03. Please also check the sample computations in BIR RR No. 2-2003 and BIR Form No. 1801.

Further reading

For better understanding of estate taxes, I urge you to read the following:

  1. Overview on Estate Tax
  2. Sections 84 to 97 of the 1997 Philippine Tax Code
  3. Revenue Regulations 2-03 (Estate Tax and Donor’s Tax Regulations)
  4. Estate Tax Return (BIR Form No. 1801, front and back pages)

~~~

Thank you for reading and I hope this helps you. Should you have questions, please read the estate tax-related documents I mentioned in my post, just follow the links provided.

Related post: Donor’s Tax as an estate planning tool

~~~

Atty. Cherry Vi M. Saldua-Castillo – CPA, REB, REA

PRC Real Estate Broker License No. 3187
PRC Real Estate Appraiser License No. 6918
PRC CPA License No. 102054
Roll of Attorneys No. 55239
2013 Internal Education Head, REBAP-LMP
2015 REBAP National Legal Counsel

Text by Jay Castillo and Cherry Castillo. Copyright © 2015 All rights reserved.

Full disclosure: Nothing to disclose.




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Atty. Cherry Vi Saldua Castillo

Atty. Cherry Vi Saldua Castillo is a Lawyer (Roll of Attorneys No. 55239), CPA (PRC CPA License No. 0102054), Real Estate Broker (PRC REB License No. 3187), and Real Estate Appraiser (PRC REA License No. 6918). She's the 2013 Internal Education Head of REBAP-LMP and 2015 REBAP National Legal Counsel.

This Post Has 52 Comments

  1. My mother died in 2008. Before she married my dad, she owned a small area of house and lot about 194sq meters in Quezon City. My father wanted to sell this property and found a buyer. As I know we have to have extrajudicial to sell this property. So the heirs are my father and 3 of us siblings. My brother passed away this July 2015. His wife and children went to the U.S. In 2004. And in the last 5 years seemed they have no contacts with them whatsoever and seemed he was disowned by his family. When he was in the hospital he signed the deed of sale but his name has a typo in spelling. Now with the Extrajudicial settlement with a deed of sale, can we just exclude his name from the contract? Or will it be more complicated now, that my brother died, to close this contract? None of the estate taxes of this property was paid yet.

  2. Could we settle the BIR computed estate taxes of my deceased father who died in 2006 by property? We could not pay the total amount in a one time payment. Thank you

  3. Hi Cherry, My sister, with her family, has been residing in the property of our parents before and after our father died in 2003. Our mother died in 1995. In either case, no estate tax has been filed due to lack of knowledge about it. It’s only now that we learned about estate tax when we thought of selling the property. We are 6 surviving siblings and 3 deceased. In completing the Extrajudicial Settlement of Estate, are we required to include the surviving family of our deceased siblings? If so, can we designate which surviving family member of the said deceased sibling and will they be required to sign? Please send me your response thru my email: jesways@aol.com Thank you, Jessie Diaz

  4. hello.. I need help regarding our properties.. My mom died may 2012 and we didn’t know that we have to file for estate tax until we decided to sell our house. Our properties here in Cebu City and Cebu Province are all conjugal properties.My father is still alive, so do we still need to file for estate tax? or can we make deed of donation and the dates are given prior my mom passed away? or what other ways can we do to save money cuz estate tax is way expensive.. and we still have lots of debts prior my mom passed away last may 2012. can you help me. thank you! 🙂

  5. hi maam , can you teach me how to amend estate tax? I just discover that my mother (deceased) have shares of stocks. thank you

  6. Test

  7. what if 11 years had pass and a estate tax is not been filed..what happens to the property? and can i still file a estate tax

  8. thank you fo you info..it really help

  9. Can a real property be donated if the said property was mortgaged?

  10. can real property be transferred directly from decedent to buyer upon paying estate tax. or it has first to be transferred to heirs and then execute deed of sale from heirs to buyer?

  11. Hi Atty Castillo,

    I hope you still read this thread. My Lolo died last Sept 2014 and we have not filed yet because we’re clueless, I was fortunate to have read your article just now and it hasn’t been 6 months so we have time to file without penalty. Anyway, how do we proceed? File first then arrange later for the division of property? Because my grandparents have always said and decided to leave their home in Manila to my mom and my uncle but there are 3 other siblings. Also, the youngest died last 2010, does that mean the wife is considered an heir as well? It’s a conjugal property and my Lola is still alive. I don’t know how to go about the extra-judicial settlement with regards to the property. DO we need to submit a waiver or affidavit that indicates the rights of the 2 children from the other siblings? How do we do that?

    I hope I make sense. Thank you and hoping for your enlightening response.

  12. for presentation purposes, does it necessary to deduct standard deduction of 1M even the estate is less than a million?

  13. Hello,
    Does interest compound?

  14. hi, i want to be clarified on the the funeral expenses deduction….what if not all receipts for expenses spent on this were kept and accounted for or the admin really did not bother to keep receipts of the expenses, but would like to claim the funeral deduction, does this mean, the administrator can take the 5 percent of the gross estate figure as the allowed deduction for such, provided it shall not exceed the 200K cap? please advise……

  15. Hi Atty:
    Among the ESTATE PLANNING TOOLS : 1) transfer to corporation 2) Donation 3) Sale : which one have you considered favorable to the property owner. Lets say the best option for this case. And My 2nd question: if the property is transferred to the corporation, and then shareholder will transfer it to their children (also a shareholder) in what way can it be transferred… is it by sale? donation? . What valuation will be used Bookvalue or FMV. Thankyou

  16. Hi Atty Cherry, do you accept consultation for real estate tax and transfer of deeds? I am planning to have our ancestral house renovated however, in order for me to get a bank or pag-ibig loan, the title should be under my name. This property is still named under my deceased grand parents and my mom and her siblings were not able to divide the property. I would like to pursue this property but not sure of my steps yet until i get this real estate tax. I really need your help. pls let me know if you accept consultation and how to reach you.

    Thanks

  17. Thank you so much Atty. Cherry for this very useful information. This is even more user-friendly with the terms and language used compared the the actual BIR website. My mom died too sudden last March and i have been walking through everything one day at a time… This is very helpful to me and it is much appreciated.

    If I may ask, it is only now reading your article that I learned about filing a NOTICE OF DEATH within two months…

    “File a Notice of Death with the Bureau of Internal Revenue within two months after the date of death. This is applicable when the gross value of the estate exceeds P20,000.00. This should be filed by the executor or administrator of the estate, or any of the legal heirs. It shall be filed with the RDO where the decedent was domiciled at the time of his death. There is no specific format.”

    My question is will it there be any penalties if I will be filing a notice of death after two months?

    I hope you can help me with this. Thanks!

  18. Hi Atty. Castillo,

    I am looking to buy a Tax Dec property where the owner named on the Tax Declaration is now deceased and the heirs jointly agreed to sell the land. Do I still need proof that the Estate Tax is paid? Do you have information on what the requirements are to apply for an OCT in my name? If you can direct me to a website with all the information, I would greatly appreciate it.

    Thank you and all the best to you and Jay!

    Lolita

  19. just want to have a good sample of a notice of death to be given to the BIR

  20. Hello Ms. Castillo. Very informative and comprehensive. I was wondering if you accept Consultation Services for Estate Tax advice? Where can I get in touch? Thank You.

  21. Hi there ! There are some things that i would like to find an answer with regards our situation. I’m hoping that you’ll be able to help me on this. It’s somehow a bit complex though. Our grandmother died around 1986-1987, she left the ancestral house and a 10 hectare-farm lot without transferring it to her heirs (my dad and his 4 other siblings, one of which is my aunt who’s a nun). I’m not sure if a notice of death has been filed. At that time, 2 of my dad’s siblings were based in U.S., and the transferring of the inheritance were not processed. Then in year 2010, my aunt who is a nun, signed a document stated that all her part in the inheritance from her mom, who is our grandmother, will be given to me and my brother. But that document were just kept by my parents without it being notarized or some sort. In year 2012, my aunt died. Then in 2013, my aunt and uncle in U.S. showed interest in selling the ancestral house and the 10 hectares lot. We had a talk about it last january, and suggested that instead of my brother and I, having a part of the inheritance, my dad willl just get 40% of each of the properties. Now i would just like to know how should we compute for the estate tax and the penalties for not filing it for almost 30 years. So that we’ll know the estimated amount that we have to pay. Thanks in advance.

  22. i want to meet you in person. Please reply through my email or cp 0917 528 9727. Thank you

  23. good day please let us know the best possible way to settle this.
    FMV of land based on tax dec. 78,000, selling price 80,000, it was sold last year of Feb. not knowing that we need to pay BIR taxes, when we go to BIR they computed our CGT and DST based on the BIR zonal value of 1500/sqm. incl. charges the total amt of taxes is more than 110,000 pesos. do you think it’s fair that we have to pay taxes more than the amt. of land ssold? please help and advice what to do. thank u and Godbless

  24. asking for a sample computation of estate tax of both single and married decedent

  25. thank you for a very nice and informative topic

  26. Hi Ms. Cherry,

    I have 3 other siblings and our father died when I was 5.. during that time my mom paid off our mortgage and the title was transferred to her name. However, she passed away in 2002 and we only learned about estate taxes etc recently.

    What is the best step to take so that the title can be transferred to my siblings and I? I’m a bit worried because we may have to pay penalties since it has been more than 10 years.

  27. Dear Atty. Cherry,

    I found this site very informative and useful. I have learned about real property taxes and estate taxes.
    I have a few questions thou and I need your advice. My father sold a part his property but it wasn’t transferred yet to the buyer.
    My sister is the one paying for its tax every year. Is it possible for us to buy back the proprty even if the buyer refused to sell it back. Do we need to seek legal aid to help us settle this issue. Does my sister has a right to contest what my father did as she’s the one paying taxes fof the property?
    Looking forward for your much appreciated advice.
    Anabelle

  28. May I seek advise po. We bought a property kasi name to the 3 of us (My aunt, Me & my wife) then while processing it, My aunt died ng wala pa yung title, but we were able to pay taxes/fees sa BIR. When we go to the city hall, we ask on how to make it na huwag na lumabas ang name ng aunt namin, they told us to do an extra-judicial with Sale signed by the siblings (as her heirs) plus other requirements, so we did it. pero pagbalik po doon, iba na naman ang sinasabi nila. Disregard po nila ang extra judicial na pina notaryo namin, dahil dapat daw naka name muna sa aming tatlo and TITLE bago nag extra-judicial (but that was what they told us). Bakit iba-iba po ang statement nila, dami na naming nasasayang na pera dahil iba-iba ang instructions nila.

  29. If the decedent died in 1987, are the applicable compromise penalties also those prevailing at the time of death? Or will it be the most recent?

  30. Goodmorning Sirs/ Ma’am,
    I just have 2 simple but important questions that I really need answers for and they are the following:

    1. When processing the initial inheritance/estate/real estate taxes, upon application for this with the B. I. R., is the newspaper publication of the inheritance for a sole heir a requirement before payment of the taxes can be made or required at all at the. B. I. R.?

    2. How long does it usually or approximately take for the B. I. R. to process the computation and approval for payment of such taxes and the certificate or reciept released thereafter for example, the estate inherited by a “sole heir”, if all requirements are complete for simply altogether the following estate:

    A. Lots
    B. A house and the Lot where it stands
    C. Certificates of stocks for a company such as San Miguel Corporation.

    As I understand the. Register of Deeds and a surety bonding company to be the next institutions where the other processes and requirements would be finalized and the new titles and certificates bearing the heir’s name be released.

    Hoping for your prompt reply. God Bless.

    .

  31. Question lang ma’am

    My mom died last december 2008. hindi ko pa napapa transfer yung land title sa name ko hanggang ngayon due to financial reasons narin. magkano kaya magiging penalty nito? its a house and lot na maliit lang naman Lot is around 80sqm. house is probably 35sqm single. I do not know kung magkano compute ng penalty nito..

    1. Hi Atty Cherry,
      Thank for your very informative article. Would you be able to help with my query please – my father died here in Australia in 2008. He had dual citizenship (Australia allows this). We have a family home in the Philippines with my brother living in it at the time of my father’s death. For purposes of calculating the estate tax deduction, can my mother claim it as the family home please? Will my mother be penalized for not filing for the estate tax return since 2008 please? How will the penalty be calculated please and what could happen if she is unable to pay please? She is only on a pension and for financial reasons she wants to sell the family home. I would really appreciate hearing from you soon.
      Regards,
      Joy & Denis Carey

  32. Hello Atty. Cherry,
    Is payment of estate tax allowed even without partition of the estate first among the heirs? Moreover, is filing of Affidavit of Self-Adjudication and Sworn Declaration of all properties of the Estate allowed and applicable even if there are 4 heirs and not just one? Thank you.

    1. Hi Ma’am,

      I believe this is allowed. In the meantime, the heirs will be co-owners of the property. I think that the Affidavit of Self-Adjudication applies when there is only one heir. I have not yet seen an actual Sworn declaration of all properties of the estate but I think this may be executed by the administrator or executor. Kindly confirm with your lawyer.

      Best regards,
      Cherry

  33. Dear Atty. Cherry,

    Its complicated and don’t know where claims of Bank Deposits fall under. Time is also of the essence – we just found out after 10 years there is money in the Bank. Is there a way I can inquire by calling you? I am from the province and don’t have a land line. But I can call you by Cell Globe#.
    Thank you and GOD BLESS you.

    1. Dear clearmind,

      I hope everything works out. Let me know how it goes.

      Best regards,
      Cherry

      1. Dear Atty Cherry,

        We had a bit of a headway on my mother’s (84yrs old) claim with the Bank. We provided them with all the requirements. But we hit a snag when the Legal Dept of the Bank questioned that the documents we presented did not a have a ” Junior ” appended ( am not sure if its the right term) in my uncle’s name. The Bank said it will be to our advantage if we can locate the certificate and passbook of my uncle who died 10 years ago, single and no child and whom we have not seen for the last 30yrs for the plain reason my uncle prefers to live alone. His ” Partner ” just notified us when he died. Tough luck!

        I lost the Cell# of Sir Jay and I think its not posted in his profile anymore.

        Any suggestion is much appreciated. Thanks (PS. we can’t afford a lawyer to represent us with the Bank)

  34. Hi Cherry,
    My uncle, his wife, and 3 kids (all over 21 years old) are in the U.S. He bought a vacation house here (Cebu, Phils.) sometime in 2004. My uncle died in June this year (2012) and my aunt intends to sell the house as soon as possible.
    Q1. Since a Notice of Death wasn’t filed yet w/ the BIR, how much is the penalty if filed by Jan, 2013?
    Q2. Can my aunt (the surviving spouse) sell the property without the need for extra-judicial settlement involving her 3 children?
    Q3. Can this property qualify as “family dwelling” to avail of the deductions/exemptions in case of extra-judicial settlement?
    Thanks and Happy Holidays!

    1. Dear Sir greg,

      Sorry i missed this comment. 1. The penalty for the notice of death should be minimal, if any. 2. The surviving spouse and all her children can sell the property if all of them sign the documents and the estate tax has been paid. 3. Since they are all based in the US, don’t think the house can be considered as their family dwelling, also I understand it is only their vacation house. Hope this helps.

      Best regards,
      Cherry

  35. Hi Atty Cherry,

    Just want to ask on how to treat the deductions which was incurred abroad. What I’m thinking is that it is still deductible as long as you have the necessary documents to prove it. We need to convert it in Php at the time of death right?

    Thanks and More Blessings!!!

    1. Hello Mr. Erwin,

      Yes, but convert at the time it was incurred (which is of course prior to death).

      Best regards,
      Cherry

  36. Cherry, thank you for this very informative article. Extending this topic a bit, you might want to write additional articles that deals with estates that have remained unpaid for so long:

    article #1. what if the property belongs to a grandfather who has passed away years back with no estate taxes paid so far and the property hasn’t been divided yet.

    article #2. what if proof of said property in #1 is the paid tax declarations (no torrens title yet), how is the estate tax handled?.

    Perhaps you can expound on that?

    Also, since we are talking about estate taxes, one specific action property owners can take to alleviate the pain of having their heirs pay estate taxes is to get a basic life insurance just for the purpose of covering estate taxes. If you have property worth P10M, assuming no deductions, the estate tax would be P1.215M. A suitable life insurance policy will give cash to the heirs that can then be used to pay off that estate tax. For more info on how this works, just give me a call at 0917-572-0001.

    1. Dear Sir,

      Thank you for your suggestions. My husband also told me to include penalties and examples so I will probably make a separate post since this post is too long already.

      Re: life insurance, I totally agree. In fact, I co-wrote an article on insurance with former BIR Commissioner Mr. Joel Tan-Torres who was a partner in SGV at that time – we were both part of the Family Wealth Planning Group. Here is the link to our article entitled, “To be sure, insure” published on Oct. 22, 2004 by the Philippine Daily Inquirer: http://www.accessmylibrary.com/coms2/summary_0286-14088959_ITM

      Best regards,

      Cherry

  37. useful

  38. thank you for a very clear discussion regarding estate tax procedures. I hope that you will include in your next discussion regarding, deaths prior to 1998 or those covered by inheritance tax. including the interpretation of the tax table for estate in a particular years.

    More Power

    1. Dear Sir Edgardo,

      You’re welcome Sir. The data can be found in the link I provided. Kindly give me some time too to update my post.

      Best regards,

      Cherry

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