How to survive the estate tax process

It took our family almost two years to complete the estate tax process here in the Philippines after my dad passed away. He died in August 2015 and we only moved forward with the whole thing a few months after his death, which meant that we weren’t able to have everything completed within the six-month period in which you’re expected to accomplish all related steps. It seems pretty heartless to expect the bereaved to immediately plunge into paperwork without having had enough time to grieve, if you ask me. What we didn’t know was that we could have requested an extension, which you absolutely must do if you want to avoid paying a penalty.

Here’s what I learned from our own experience. Given that my dad didn’t leave behind a will, we had to have an extrajudicial deed of settlement done by a lawyer. This guide is not necessarily in order, and I may have missed out on some details. I would also appreciate hearing from people who have experienced and completed the estate tax process where their parent was able to leave behind a will.

  • Acquire the death certificate of the deceased. NSO may not have this yet, so this needs to be obtained from city hall.
  • Make sure that you have IDs of the deceased, which reflect his or her address. You will need this to get a letter from the barangay, which will certify that the deceased is a resident of that barangay.
  • Obtain a certificate of property holdings. This should indicate all properties that the deceased may own or which may still indicate that he or she is still the owner. We found out that one property my parents sold in the late nineties still reflected their name because the buyer didn’t update the information on the tax declaration. So that needed to be taken care of by the buyer first before we were able to move forward. This certificate should also be presented to the BIR when the time comes.
  • NSO-related tasks: Get birth certificates of all the deceased’s children, the deceased’s spouse, and the deceased himself or herself. Also, get marriage certificates of the deceased and his or her spouse and of any married children.
  • Gather a list of all the assets of the deceased, from properties to bank accounts to vehicles to jewelry. You can have the latter assessed to determine their value and allow you to get the total amount of assets, so you can then compute the approximate estate tax you will be paying.
  • Do your siblings live abroad and you’re handling all the paperwork yourself? Then they will need to execute a Special Power of Attorney, which will allow you to take care of the entire process in their behalf.
  • Have a lawyer prepare the extrajudicial deed of settlement. You can also ask for assistance with publishing the death notice and the EJS.
  • You have to download the eBIRForms software, which you will use to fill out Form 1801. You’ll print this out and present it to your RDO. Make sure to get a a TIN for the estate and that all the heirs also have TINs with the correct addresses. The RDO will check all your documents and the computations and then give you the go-ahead to pay the estate tax.
  • Once you have paid the estate tax to Landbank or whatever the bank designated by your Revenue District Office 1 is, you should then proceed back to your RDO with all your documents: the receipt from the bank, the affidavit of publication, the newspaper where the death notice was announced, the certificate of property holdings, the EJS, birth certificates, marriage certificates, the death certificate–basically everything you have. Remember to have photocopies of every document just to be safe. Once they have assessed that everything is in order, you will then be asked to come back for the Certificate Authorizing Registration (CAR), which you may receive in about a month, if there aren’t any hitches. Some possible hitches may include wrongly assessed values, in which case a recomputation is needed.
  • Once you have the CAR, it’s time for you to head over to city hall to begin the process of transferring the properties. First, you need to obtain the tax certificate for each property. Then, you will need a cedula or community tax certificate. You can then have the transfer tax computed and then pay for it.
  • Make sure that the tax declarations of all the properties are updated and that it reflects the name of the deceased.
  • Once you have paid the transfer tax, you can then head to the Register of Deeds. Bring the transfer tax receipt, the titles, the EJS, the newspaper, the affidavit of publication, almost everything you have gathered. They will then compute the amount you need to pay for titling.
  • Expect the new titles to be released in a couple of weeks or so.

This guide will be updated once I remember more of the details, but these are more of less the things you need to keep in mind when paying the estate tax and having the properties transferred. You will save yourself a lot of trouble if all the properties’ titles and tax declarations reflect the correct names and are updated. Overall, it’s a tedious undertaking, and many people tend to just neglect it altogether because it’s too much work and the estate tax is generally too high for anyone to be able to pay off easily. But you need to do it to make sure that the properties are properly transferred to the heirs.

  1. This link may not contain updated addresses and contact details, being a government website, after all.