What is an extrajudicial settlement?
When a person dies, the heirs may divide the estate among themselves without going to court, through a public document called an extrajudicial settlement. This is allowed under Rule 74 of the Rules of Court.
When is it allowed?
- The deceased left no will.
- The deceased left no debts. (In practice, heirs often state that all debts have been paid.)
- The heirs are all of legal age, or minors are represented by their guardians or legal representatives.
- The heirs agree on how to divide the estate.
If there is only one heir, the heir may use an affidavit of self-adjudication instead. If the heirs cannot agree, the estate is settled in court.
The usual steps
- Gather the documents: death certificate, titles, tax declarations, and proof of each heir's relationship.
- Prepare and sign the extrajudicial settlement before a notary public.
- Publish the settlement in a newspaper of general circulation once a week for three consecutive weeks.
- File and pay the estate tax with the BIR and obtain the Certificate Authorizing Registration (CAR).
- Transfer the titles at the Register of Deeds, and the tax declarations at the Assessor's Office.
Estate tax
Under the TRAIN Law, the estate tax is 6% of the net estate. The estate tax return is due, and the tax payable, within one year from the date of death. In meritorious cases, the BIR may allow a longer time to pay, and payment by installment is possible under the TRAIN Law. Late payment adds surcharges and interest.
Good to know
- For two years after the settlement, an heir or creditor who was left out may still make a claim against the estate. This is noted on the titles.
- A bond may be required if personal property, such as cash or vehicles, is included.
- Settling early avoids added penalties and makes it easier to sell or use the property later.
This guide is general legal information as of October 2026. It is not legal advice. Laws and rules change, and the facts of each case matter. Consult a lawyer about your specific situation.