Published 1 June 2020, The Daily Tribune
People usually think that when one dies, all of his/her problems go away. But the reality is, death brings forth another set of problems, not necessarily to the deceased, but to the loved ones he/she left behind. Problems on how to settle the estate and/or distribute the properties of the decedent usually arise among the heirs. We now provide you a simplified overview on ways to settle the estate or divide and distribute the properties of the decedent.
There are two ways to settle the estate of the decedent. It can be done through a judicial action or extrajudicially.
Extrajudicial Settlement of Estate can be done if (a) the decedent did not leave a last will and testament; (b) there are no debts (or the debts have been fully paid); and (c) ALL of the heirs agree on the manner of the division and distribution of the estate of the decedent. Should such be the case, the heirs may execute a public instrument, i.e., notarized extrajudicial settlement of estate or affidavit of self-adjudication (if there is only one heir), divide the estate among themselves as they see fit. After the publication of the public instrument and the payment of the appropriate taxes and fees, the properties of the decedent can now be transferred to the heirs.
In case of personal properties, the Certificate Authorizing Registration (CAR) issued by the Bureau of Internal Revenue (BIR) has to be presented to the appropriate institutions to effect the transfer of the properties, i.e., banks (bank deposits) or corporate secretary (shares of stocks) to the name of the heir/s. In the case of real properties, the public instrument, together with the CAR, should be submitted and registered with the appropriate registries of deeds where the properties are located to authorize them to issue a new title under the name of the heir/s.
Judicial Settlement of Estate comes into play when the decedent left a last will and testament or when the decedent does not leave a will but the heirs are unable to agree on how to divide and distribute the properties among themselves.
If the decedent left a last will and testament, any interested person may file a Petition for Probate of Will with the appropriate court. The purpose of the probate is to determine whether the last will and testament executed by the decedent has complied with the legal formalities and requirements under the law. Once the court determines that the last will and testament is valid and legal, it will appoint an executor to implement or execute the wishes of the decedent as contained in the last will. The executor will be the one in charge to administer the estate, pay the debts of the estate and pay the appropriate taxes, fees and charges. After all the debts, taxes and other obligations of the estate have been paid, the court may already order the distribution of the residue or remaining properties of the estate to the heir/s. Finally, the court order of distribution, together with the CAR, will be submitted to the appropriate agencies or institutions to effect the transfer of real properties or personal properties, as the case may be, to the heir/s.
If the decedent did not leave a last will and testament and the heirs are unable to agree to partition the estate among themselves, an interested person may file a Petition for Intestate Settlement of Estate of the deceased with the appropriate court. The court will appoint an administrator of the estate who will be the one in charge to administer the estate, pay the debts and obligations of the estate, as well as any taxes, fees and charges due from the estate. If the heirs are still unable to agree to partition the estate among themselves, the administrator may submit to court a Project of Partition detailing how the properties of the decedent will be divided and distributed among the heirs. Once approved by the court, the Project of Partition shall be binding among the heirs and will be the basis of division and distribution of the estate. The court order approving the Project of Partition, together with the CAR, will be submitted to the appropriate agencies or institutions to effect the transfer of real properties or personal properties, as the case may be, to the heir/s.
While the procedure laid down above appears to be simple and straightforward, going through Judicial Settlement of Estate is actually complex and generally takes several years before it can be completed. The appointment of an executor or administrator is tedious and is a constant source of delay considering that each of the heirs or other interested persons want to be appointed as one. The role of an executor or administrator is crucial since he/she is the one who looks for, collates and submits an inventory and appraisal of the properties of the decedent. The Rules of Court also require compliance with the notice, posting and publication requirements. It is therefore important that you are assisted by a competent lawyer in navigating through these things or that an Estate Plan is already in place in the event of one’s demise.
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