You may be wondering – what if you are an heir of a decedent who had multiple properties in different cities or countries – what would you do, or where would you file the extrajudicial settlement of an estate (EJS) assuming that there is no last will and testament?
EJS is a summary of what the properties were left behind and the partition of the same among heirs. To execute the EJS, if falling under certain conditions, estate tax must be paid to successfully transfer the assets that the decedent left among the heirs.
Let us give a scenario, Mr. X died in the USA while securing medical treatment. He was a dual citizen and had properties in the Philippines, as well in the United States, at the time of his passing. What happens then?
In the payment of estate tax, what is controlling is the residence of the taxpayer. Thus, if the dual citizen at the time of death was residing in the Philippines, but also had properties in the US, he shall be subject to estate tax in the Philippines and shall need to pay said tax before the Bureau of Internal Revenue (BIR) Revenue District Office (RDO) where he considered as his permanent residence.
When and Where to File and Pay Estate Tax
Note that one year from the death of the decedent, the Estate Tax Return must then have been filed. Reasonable extensions shall only be granted in meritorious cases not exceeding thirty days for filing the Estate Tax Return as granted by the Commissioner. Keep in mind that depending on the law at the time of the death of the decedent, the due date on filing and payment of the Estate Tax Return may be subject to change.
There is a difference as to where to file the Estate Tax Return when the decedent has legal residence in the Philippines, or when he does not. If the decedent has legal residence in the country, the filing of the return shall be done through the RDO where the decedent has a permanent residence at the time of death. However, if the decedent does not have any legal residence in the Philippines, the place of filing of the return shall be at RDO No. 39, South Quezon City. The same is true if the decedent is no resident. The family should file and/or settle the estate tax before RDO 39.
The estate tax imposed (6%) will be paid by the executor or administrator before the distributive share of the estate will be delivered to the heirs. The beneficiary (i.e. heirs) will be subsidiarily liable to the extent of his distributive share of the estate, and for the payment of such portion of the estate tax, as his distributive share bears to the gross value of the estate.
Deed of Extrajudicial Settlement of Estate
Executing a Deed of Extrajudicial Settlement is the process of obtaining an extrajudicial estate settlement. This legal document details the following:
- Compliance with the requirements set forth by law for an extrajudicial settlement.
- The details of the properties (title number, value, location, lot size, technical description, etc.) that will be settled extrajudicially.
- Nature of the asset (if joint property).
- The heirs’ names.
- How the heirs will be allocated the property.
- Posting a bond if personal property is at stake.
- Undertaking that the Deed will be published in a newspaper of general circulation once a week for 3 consecutive weeks.
Keep in mind that it is necessary to settle the estate tax first before filing the Deed of Extra judicial settlement to the Registry of Deeds.
Transferring properties under the name of the heirs
Under Tax laws, before you can register your property involved in your name, there are measures by the BIR that estate taxes are paid first prior to the transfer of the property. Under the Tax Code (Sec. 95), the following should be observed:
Registers of Deeds shall not register in the Registry of Property any document transferring real property or real rights therein or any chattel mortgage, by way of gifts inter vivos or mortis causa, legacy or inheritance,unless a certification from the Commissioner that the tax fixed in this Title and actually due thereon had been paid is shown, and they shall immediately notify the Commissioner, Regional Director, Revenue District Officer, or Revenue Collection Officer or Treasurer of the city or municipality where their offices are located, of the nonpayment of the tax discovered by them.
Upon payment of the estate tax, you will receive a BIR CAR. This document can now be presented, together with the EJS, before the respective Registry of Deeds, where the property is located or has jurisdiction over the place.
Need further information and assistance regarding the application forfiling of extrajudicial settlement of estate with multiple properties in different cities? 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.
