Who Will Inherit Property After a Person's Death?

It is unfortunate once a family member passes away. But the bereaved family will have to start over again with their daily lives. What’s more excruciating is if a deceased person left assets and real estate properties in his or her name, leaving the family fighting about who’s the rightful heir.

This may sound like a TV drama, but the thing is, it always happens in reality. Worse, some family members hurt one another by ending up in legal court. 

If you happen to have a valuable house and lot Philippines, it would be ideal to understand inheritance laws, how it is being done, and who are your beneficiaries.

Understanding the Extrajudicial Settlement of Estate

Extrajudicial settlement of estate refers to a process wherein the heirs of a deceased person agreed on how to distribute the assets without involving the court. It is a simplified and non-contentious method of estate settlement.

An extrajudicial settlement may be done when certain conditions are met:

• No will. If the deceased person or owner did not leave a valid will, the heirs could opt for an extrajudicial settlement. This is typically applicable when the estate is not complex, and there are no disputes among the heirs.

• Uncontested estate. All the heirs must be in agreement regarding the distribution of assets. If there are conflicts or disagreements, it is advisable to seek a judicial settlement to ensure a fair and lawful resolution.

• Legal requirements. The extrajudicial settlement must comply with legal requirements, such as payment of estate taxes, submission of necessary documents, and publication of a notice to creditors.

• Absence of pending claims or debts. Ensure that all existing debts and claims against the estate have been settled or accounted for before proceeding with an extrajudicial settlement.

Keep in mind that the heirs can only proceed with an extrajudicial settlement if they meet these qualifications. Thus, seek professional advice to ensure the process is correctly carried out and in accordance with applicable laws.

Things to Remember When Registering With the Registry of Deeds

You must remember that filing estate tax returns and paying estate taxes must be done within one year of the person's death. You must:

• obtain tax clearance and Certificate Authorizing Registration for registrable properties from the appropriate BIR Revenue District Office.

• adhere to property valuation, deductions, and tax rates based on the real estate laws in effect at the time of death.

• The current estate tax rate is 6 percent.

• Estates enjoy a standard deduction of P5 million from the gross estate.

• Deduct up to P10 million for the family home based on Fair Market Value.

The Importance and Benefits of Estate Tax Amnesty

Fortunately, the Bureau of Internal Revenue (BIR) is currently accepting applications for estate tax amnesty until June 14, 2023. This amnesty covers individuals who passed away on or before December 31, 2017, regardless of assessments, unpaid estate taxes, or accrued amounts by December 31, 2017. 

However, the personal property valuation and deductions must comply with the laws and rules applicable at the time of death. So, take advantage of this opportunity to regularize your estate tax obligations.

Estate tax amnesty offers several advantages, which may include:

Penalty and Interest Waiver

Estate tax amnesty programs often provide relief by waiving or reducing penalties and interest charges that have accumulated on unpaid or underpaid estate taxes. This can significantly reduce the overall amount owed.

Clean Slate

By availing of estate tax amnesty, individuals can achieve a clean slate regarding their estate tax obligations. It allows taxpayers to settle their unpaid estate taxes and bring their estate into compliance without facing legal consequences or further penalties.

Simplified Process

Amnesty programs generally aim to simplify the process of settling estate tax liabilities. They may introduce streamlined procedures, documentation requirements, and standardized processes to facilitate the regularization of estate taxes.

Avoid Future Issues

Regularizing estate taxes through amnesty helps prevent potential legal issues and disputes in the future. It gives you less-stress and peace of mind knowing that the estate's tax obligations have been properly addressed and resolved.

Improved Inheritance Distribution

Most importantly, beneficiaries can receive their inheritances more efficiently and without any potential legal complications.

Important Notes to Consider

• Real properties in the estate are subject to local transfer taxes paid to the local treasurer's office where the land is located.

• The deed of extrajudicial settlement can be executed alongside other contracts, such as donation, waiver of rights, or sale.

• If there's only one heir, they can execute an Affidavit of Self-Adjudication, granting them sole ownership of the entire estate.

• Multiple heirs can use a special power of attorney to authorize representatives, usually lawyers, to settle the estate and handle transactions with relevant entities.

How to Transfer Land Title If One of the Owners is Deceased?

Each case may have specific requirements and considerations. That is why consulting with legal professionals familiar with Philippine laws and regulations is highly advisable for accurate and personalized assistance.

Determine Legal Heirs

Identify all the legal heirs, including the surviving spouse, legitimate child or legitimate children, and illegitimate children, as defined by Philippine law about the inherited property.

Settle Estate Taxes

Calculate and pay the required estate taxes by filing the estate tax return with the Revenue District Office (RDO). Obtain a Certificate Authorizing Registration from the BIR to proceed with the transfer.

Gather Required Documents

Prepare the necessary documents, such as the death certificate, valid tax identification numbers, tax declaration, and any other supporting papers required by the Land Registration Authority (LRA) or local government offices.

Execute an Extrajudicial Settlement

If there is no will, consider an extrajudicial settlement of the estate. Prepare a notarized deed that divides the estate equally among the rightful heirs, and secure a sworn declaration from credible witnesses.

Transfer Land Title

Submit the complete documentation, including the notarized deed, death certificate, tax clearance, and payment of estate tax fees, to the LRA for the transfer of ownership. Seek assistance from a real estate lawyer to ensure a smooth and legally compliant transfer process.

Going through the land title transfer process is essential for securing your ownership rights and enjoying the benefits of your investment. Whether you're purchasing an affordable house and lot property from Lumina Homes or any other developer, it's an excellent idea to know your privileges and rights when it comes to real estate property ownership.

For a hassle-free investment, opt for affordable house and lot for sale packages in Lumina Homes.