Dear Attorney,

I am writing to seek legal advice regarding the estate of a family member who recently passed away without leaving a will. We are concerned about how their assets will be distributed among the surviving heirs, especially since there are both legitimate and illegitimate children involved. Could you provide insights into how the law governs intestate succession in this situation, and how the estate will be divided? Additionally, is there a need for a judicial process, or can this be settled privately among family members?

Sincerely,
Concerned Family Member

Insights

In the Philippines, when a person dies without a will, their estate is distributed in accordance with the rules on intestate succession, as provided under the Civil Code of the Philippines. Intestate succession governs the distribution of the decedent's property among the legal heirs, including legitimate children, illegitimate children, the surviving spouse, and other family members, depending on who survives the decedent.

Order of Succession

The Civil Code outlines a specific order of succession when there is no will. The first priority for inheritance is usually given to the legitimate children and descendants. The estate is divided equally among them. However, if the decedent has both legitimate and illegitimate children, the law provides for a different division:

Legitimate children are entitled to receive twice the share of an illegitimate child.
Illegitimate children inherit half of what a legitimate child is entitled to. Despite their lower share, they cannot be excluded from the estate unless the decedent explicitly disowned them in a valid will (which is not the case in intestate succession).

If the decedent is survived by a spouse, the spouse is entitled to a share equal to that of a legitimate child. In some cases, if the decedent has no legitimate or illegitimate children, the spouse can inherit the entire estate or a significant portion, depending on the presence of other relatives.

Judicial and Extrajudicial Settlement

In terms of settling the estate, there are two possible routes: judicial settlement or extrajudicial settlement.

Judicial Settlement: If disputes arise among the heirs or if the estate includes complex assets, such as real estate or businesses, it may require a judicial settlement. In this case, the probate court will handle the distribution of the estate. Each heir can present their claim, and the court will ensure the proper application of the intestate succession laws. This process is more formal and may take time, especially if disagreements or issues of legitimacy arise.
Extrajudicial Settlement: If all heirs are in agreement and there is no disagreement on the distribution, the estate may be settled through an extrajudicial settlement. This involves drafting a formal agreement among the heirs, detailing how the estate will be divided. It is important to note that an extrajudicial settlement can only be pursued if the decedent left no debts. Additionally, the agreement must be filed with the Register of Deeds and published in a newspaper of general circulation to notify any potential creditors or claimants.

Estate Tax Considerations

It’s also important to consider the estate taxes that must be paid before the distribution of assets. The estate cannot be settled or transferred to the heirs unless the Bureau of Internal Revenue (BIR) issues a clearance certifying that all taxes have been settled. The current estate tax rate in the Philippines is 6% of the net value of the estate.

Practical Considerations

To avoid disputes, it is highly recommended to consult with a lawyer who can guide the family through the settlement process. While extrajudicial settlement is often faster and less costly, it may not always be the best option, especially when there are numerous heirs or potential complications, such as disputes over legitimacy or the existence of debts.

In your case, it would be wise to first gather all the heirs and determine whether they are amenable to an extrajudicial settlement. If there are disagreements or if any heir insists on a judicial process, then filing a petition for judicial settlement may be the necessary course of action.