What is an extrajudicial settlement?

An extrajudicial settlement is a method of distributing the estate of a deceased person without going through the court process of probate or intestate proceedings. In the Philippines, this process allows the heirs to agree on the division of the estate among themselves, in accordance with the law, and execute a document called an Extrajudicial Settlement of Estate (EJS).

Can a foreigner inherit land through an Extrajudicial Settlement?

Yes. Actually, an Extrajudicial Settlement is the only way that land can be transferred to a foreigner . However, he will inherit along with the other compulsory heirs in the proportions stated in Philippine Intestate Law.

When is an extrajudicial settlement applicable?

An extrajudicial settlement can be used when the deceased left no will and all the heirs agree on the division of the estate and are willing to sign documents to that effect.

What are the requirements for an extrajudicial settlement?

To execute an extrajudicial settlement, all heirs must be in agreement on the division of the estate and must sign the a written and notarized EJS which must be filed at the BIR. Estate taxes must be settled and then the transfer must then be recorded at the Registry of Deeds and City Hall.

Why is a bond requirement in an extrajudicial settlement?

In an extrajudicial settlement, the heirs are required to post a bond equivalent to the value of the personal property involved, as determined by the parties or appraisers. This bond serves as a guarantee to protect the interests of any unknown heirs, creditors, or other interested parties who may come forward within two years after the settlement.

Can an extrajudicial settlement be contested?

Yes, an extrajudicial settlement can be contested. If there are parties who believe they have a rightful claim to the estate or that the EJS is not in accordance with the law, they may file a petition in court within two years from the date of the last publication of the ESE.

What if there are minors or incapacitated heirs?

If there are minor or incapacitated heirs, an extrajudicial settlement may still be executed. However, a legal guardian must be appointed to represent the interests of the minor or incapacitated heir during the settlement process.

What are the Estate Taxes for an Extrajudicial Settlement?

The Estate Taxes are 6% of the net value of the estate but Donor’s tax may also be added depending on the situation.

What are the other Transfer Taxes for an Extrajudicial Settlement?

Aside from Estate Taxes, there are other transfer taxes at the Registry of Deeds and City Hall prior to the release of the Title and the new Tax Declaration.

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