Facts You Need to Know About Land Inheritance Law in the Philippines

While telenovelas today make it appear easy to become rich once your grandfather or grandmother suddenly gives you an inheritance, in reality, there's too much paperwork and thorough process you need to follow so you can rightfully claim any inheritance, regardless whether you're the legitimate child, the surviving spouse, and even the illegitimate children. But don't worry. As inheritance commonly includes a house and lot in the Philippines, our researchers at Lumina Homes have compiled 9 facts you need to know about the Philippine Inheritance law.

If there is a notarized will, it will be executed in accordance with the testator's behalf. If there is no will, then existing inheritance laws shall apply.

What is the Philippine Law of Inheritance?

The Civil Code of Philippine law, otherwise known as Republic Act 386, discusses the different types of acquiring ownership in the Philippines. For a property to be considered yours, you can buy it from the original owner, through a donation, or you could inherit through succession, either intestate succession or not. In layman's terms, gaining property can be done three ways, you have bought one, it was given to you via a donation, or it is a property of a family member, and upon his or her death, his entire estate or even just the free portion of it was entrusted to you. However, as I mentioned earlier, it will not just easily become your personal property. It will depend on the existence of wills in the event of the testator's death.

But if left without a will, the compulsory heirs will accordingly inherit and acquire the estate of the deceased family member at the time of death.

What is a will?

A will is a legal document stating the ownership of the entire estate or part of a person's real property and how one's estate divided equally among all the heirs, in the event of his or her death. Creating a will is highly personal. The person executing it alone can determine which children or descendants, may they be legitimate and illegitimate children, or even legitimate or illegitimate parents will be your legal heirs.

However, only those who are eighteen and above, and mentally sound, can create a will. Creating a will is important so you can properly allocate who gains control over their property to a certain extent permitted by law. Creating a will also prevent any disputes that may occur due to unclear allocation of the properties that will be left behind.

Two types of Will

1. Notarial will

A notarial will must be put in writing in the language (or dialect) known to and spoken by the testator and three credible witnesses who will sign it with all of them in the presence of the notary public.  They all must be a resident of the Philippines, not blind or deaf, not convicted of perjury or of any conviction, of legal age, and more importantly, not a successor.

2. Holographic wills

These can be handwritten by the testator, but proof that it is the testator who wrote it must be produced. It must also be proven that the testator still has the mental capacity to write and decide on the will to disburse his or her personal properties to his or her descendants and beneficiary. This is strictly handwritten and can be done even without a lawyer present.

The Order of Hereditary or Intestate Succession

In the event that the deceased left no will, the property will be distributed equally to his or her immediate family. Meaning, half of the estate is automatically given to the surviving spouse as part of the conjugal share. The other half of the estate is further divided equally into two, which is a fourth will be divided to all legitimate children, still including the spouse, and the remaining part may be distributed freely disposed to whoever the testator wishes to receive them.

If the testator is a legitimate child, then the order of succession will be:

• Legitimate child/legitimate children or descendants;
• Legitimate parents or descendants;
• Illegitimate child/Illegitimate children or descendants;
• Surviving spouse;
• Brothers and sisters, nephews and nieces;
• Other collateral relatives within the fifth degree; and,
• The State

However, the testamentary succession, if the deceased is an illegitimate child, will be:

• Legitimate child/legitimate children or descendants;
• Illegitimate child/Illegitimate children or descendants;
• Illegitimate parents (other ascendants are excluded);
• Surviving spouse;
• Brothers and sisters, nephews and nieces; and,
• The State

What is Inheritance tax?

This is where the reality of inheriting begins to set in. Because you have inherited a property or properties, you are now subject to inheritance taxes. Simply put, inheritance tax is the total amount to be deducted from you, after computing and deducting all expenses, losses, debts, and taxes related to the property including the surviving spouse’s net share.

This is an important aspect to finalize receiving your inheritance, as you cannot replace the ownership of a property without paying for this. To get a detailed explanation of real estate tax.

What is the Process of Taking Ownership of the Inherited House and Lot in the Philippines

Taking over an inherited property may seem an awesome blessing, we totally agree. However, the process of transferring ownership from your beloved family member may be tricky. Hence to prepare you for this eventuality, here's an overview of the process you will encounter:

You need to get the will of the testator or of the deceased.

This will be used to kickstart the process of changing ownership of property, and the will serves as the go signal.

You will need to prepare an Extrajudicial settlement of Estate.

This means, you need to prepare a document called the Extrajudicial Settlement of Estate and Adjudication of Estate, which you will need to submit to the Registry of Deeds. This typically mentions that the owner is now dead ( confirmed through a death certificate, left with no will, and no debt). The deed mentions how the legal heirs are related to the testator, a detailed description of the property, and a notarized signature of the heirs. This would then be published in newspapers of general circulation for three consecutive weeks.

You need to settle your estate taxes.

One of the things preventing heirs from enjoying their inheritance is their failure to settle an unexpected payment. But did you know that the government offers an amnesty program so Filipinos can better enjoy their inheritance, and still be law-abiding?

Once done, you now need to have an Application for Registration (BIR Form 1904).

The process of filing the transfer of ownership is now a step nearer to completion. However, bear in mind that all parties should have a valid TIN number, that the form and the details written on it corresponds to the information mentioned in the death certificate. You may also need to prepare documents such as the following: TIN of Estate, Proof of Payment (if applicable), Photocopy of the death certificate subject to the submission/presentation of the original, or a copy or original Affidavit of Deed of Extrajudicial Settlement of Estate (if the estate has been resolved extra-judicially, Self Adjudication), Court Order, and sworn declaration of estate's entire properties.

You will also need to accomplish BIR Form 1801 - Estate Tax Return

When you complete this form, you will now have the computation of taxes for the inherited property. Then, depending on your submitted documents, the taxes will be computed and must be paid to accredited partner banks of the bureau.

You will now receive the Certificate Authorizing Registration (CAR)

This will only be released once all documents and payments are done. With this document, you are fully paid and fully recognized by the government to be the new owner of the inherited property. This will be released along with the following documents:

• Deed of Extrajudicial Settlement of Estate
• Deed of Sale (if the real estate property has been sold to a third party)
• BIR CAR/tax clearance certificate
• Affidavit of Publication of Settlement
• Owner’s Duplicate Copy of Title
• Realty Tax Clearance
• Tax Declaration (Certified Copy)
• Transfer Tax Receipt/Clearance

Lumina Homes: The Best Investment to Inherit

With all the properties you may acquire in the future, you now have a clear perspective of how it could be a challenge to your future kids and descendants to inherit them. That's why it's important to give them not just any affordable house and lot, but an affordable house and lot for sale from the country's best real estate sites which you're sure to have all the proper documents. If you want to choose from our list of development projects found all over the country, contact us today!