Pa-mine Sa Pamana: Transferring Estate Inheritance to Heirs

Grieving for the death of a loved one is emotionally consuming. Dealing with the estate or “pamana” while in grief adds another layer of difficulty. It’s a position no one wants to be in, but we just have to deal with it.

Some prefer to hand all the processes to lawyers to take their minds off of it. However, it is helpful to understand the basics of inheriting an estate so you’re not completely out of the loop.

Here’s an overview of how the pamana process works with further details below:

Pamana Process

1. Secure a death certificate

The heir will need to present the death certificate. Make multiple copies of it because banks, government offices, and businesses tied to the estate will also ask for a copy.

2.Gather all estate documents

The usual estate documents include:

• Bank account statements

• Title certificates for properties and investments

• Proof of debts to other parties.

These documents also give you a picture of how much the estate is actually worth. In many cases, the deceased won’t have all these documents secured in one place.

This is why it’s important to have a discussion about family estates while the owner (e.g. your parents) are still alive. That conversation may feel odd or morbid for some but it will spare everyone a lot of time, energy, and money if all affairs are laid down properly.

3. Register the estate to the BIR to get a TIN

All movement of assets must be registered at the Bureau of Internal Revenue including the transfer of a property. Each transaction has its corresponding taxes.

So for you to start processing the pamana, you have to register the whole estate as a taxable entity to the BIR–much like a business or yourself.

The BIR will evaluate the estate’s total worth through the estate documents. Afterwhich, you’ll be asked to** fill up the Application for Registration BIR Form No. 1904 to get a tax identification number (TIN) for the estate.**

Don’t worry, this process actually helps you too! The recently passed TRAIN law allows heirs with the estate’s TIN to access the deceased’s bank accounts, subject to 6% withholding tax. This can be helpful in paying for hospital or funeral costs.

4. Settle all payables (debt)

Once you have a TIN, you can now start paying for the estate’s payables.

Say, your parents have outstanding debts that they weren’t able to pay in full before their death: these must be settled first from the estate’s assets (eg. paid from cash in bank accounts).

Remember that when you inherit an estate, you also inherit its debts. Sometimes, once a property is transferred to the heir, heirs will opt to sell the estate to recover from losses for the debt.

5. Sign an agreement with all co-heirs

We’ve seen TV show plots based on the premise of family members fighting over a large estate. There’s plenty of truth to all the drama which makes this part of the process the most difficult, especially if there are multiple heirs.

If a will was left, things will be a bit easier since there are specific instructions, by law, on how an estate should be divided among heirs.

After all outstanding liabilities are settled, the estate must first be distributed to compulsory heirs. The compulsory heirs are the spouse, legitimate children and their legitimate descendants, as well as proven illegitimate children and their descendants, whether legitimate or illegitimate. (Now you can see why there’s drama here).

The “free portion” or what is left after, is the only part that can be distributed according to the will.

If there is no will to follow, it then gets tricky because all the heirs have to agree on dividing the estate–essentially, a who-gets-what discussion. Once you agree, your lawyer can help finalize it in an extrajudicial agreement, which in turn will be required by BIR and third parties as proof of new ownership.

6. Pay the estate tax

You’re nearly there!

Note that payables and estate tax are not the same things.

Estate tax is basically what you pay to process the official transfer of the estate to the heirs. For estates with a net worth (after liabilities have been paid) of more than ₱200,000, the applicable estate tax is 6%.

You’ll need to fill out BIR Form No. 1801, pay the estate tax and secure a Certificate Authorizing Registration–the document that proves that the estate can now be transferred.

Hurry though, because you only have 1 year after a death to pay this, otherwise, you’ll incur penalties of as much as 25% of the estate tax due.

7. Transfer ownership to new owners

You’re now at the finish line!

Now that you have a Certificate Authorizing Registration, you can already transact the transfer of the estate, either via selling the estate or transferring it to your name.

You can even submit a request ONLINE to get your Certificate of Title.

Just visit https://eserbisyo.lra.gov.ph/, create an account and follow the procedure to send a request. Payments of fees are done through Bank Transfer/Deposit. Once the request is confirmed, your CTC of Title will be delivered to your preferred shipping address.

For properties like lots, condo units, or houses, transfer of ownership can be registered at related government offices (eg. Registry of Deeds for Real Properties).

Once the title of the property is in your name, you can then start dealing with banks, financing companies, or other parties. After all, the estate is an investment and one of the best ways to honor your inheritance is taking care and growing it.

https://www.firststandard.ph/2021/04/pa-mine-sa-pamana-transferring-estate-inheritance-to-heirs/