Estate settlement: A primer

First of two parts

“A son can bear with equanimity the loss of his father, but the loss of his inheritance may drive him to despair,” said Italian philosopher and writer Niccolo Macchiavelli.

Based on a survey conducted by Charles Stanley & Co. Limited, a UK-based investment management company, one in seven young adults expect to inherit almost £130,000 or about P8.2 million before they reach the age of 35. Moreover, 22 percent of its 1,000 respondents intended to use their inheritance as down payment for a first home.

In reality, however, persons usually inherit between the ages of 55 and 64, and at a median average amount of £11,000 or roughly close to P700,000. Likewise, official statistics would show that only 7 percent actually pay for their first houses with inherited money.

“People are living longer than ever, so relying on an inheritance to get on the housing ladder is a risky strategy as you may get less, and much later than planned,” John Porteous of Charles Stanley & Co. Ltd. said in a press release.

Furthermore, internal squabbles may severely impact the distribution of inheritance among the heirs of the decedent or the owner of the estate. Thus, in a study conducted by American bank TD’s Wealth Management & Financial Planning Department, family conflicts were cited as the biggest threat to estate planning.

In an interview with CNBC.com, Ray Radigan, head of private trust at TD Wealth, said, “We see more blended families, multiple ex-spouses, kids from prior marriages and situations where one spouse is much younger than the other.”

“These fact patterns can pose problems.”

Procedural rules on estate settlement may help address these concerns. In the Philippines, these rules govern, among others, the venue and process, the summary settlement of estate, and encumbrances over the decedent’s property.

Regardless of his citizenship, if the decedent is an inhabitant of the Philippines at the time of his death, his will, if any, shall be proved, or letters of administration granted, and his estate settled, at the Regional Trial Court (RTC) in the province where he resides at the time of his death.

If he was an inhabitant of another country, then the appropriate action shall be instituted in the RTC of any province in which he had estate.

Meanwhile, when the marriage is dissolved by the death of either spouse, the community property shall be inventoried, administered, and liquidated, and the debts thereof paid, in the testate or intestate proceedings of the deceased spouse. If both spouses passed away, the conjugal partnership shall be liquidated in the testate or intestate proceedings of either.

In the exercise of probate jurisdiction, RTCs may issue warrants and processes necessary to compel the attendance of witnesses or to carry into effect their orders and judgments, and all other powers granted to them by law.

If a person failed to comply with this judgment, order, or warrant, the proper RTC may issue a warrant for the apprehension and imprisonment of such person until his compliance therewith.

If the decedent left no will and no debts and the heirs are either all of age or are represented by duly authorized persons, they may divide his estate among themselves by executing a public instrument filed with the register of deeds, without securing letters of administration. Should they disagree on the settlement, they may file an action of partition.

Meanwhile, if there was one heir, he may adjudicate to himself the entire estate by means of an affidavit filed with the register of deeds.

The parties to the extrajudicial settlement, whether by public instrument or by stipulation in a pending action for partition, or the sole heir who adjudicates the entire estate to himself by means of an affidavit shall simultaneously post bond with the register of deeds in an amount equivalent to the value of the personal property involved as certified under oath by the parties concerned and conditioned upon the payment of any just claim that may be filed under the rule on summary settlement of estate in the Rules of Court.

It shall be presumed that the decedent left no debts if no creditor filed a petition for letters administration within two years after his death.