What Happens to Property and Debts After Death in the PH

Short answer: At the moment of death, the deceased’s property, rights and obligations that are not extinguished by death pass to the heirs (Civil Code, Arts. 774, 776 and 777). The heirs do not, however, take the property free and clear. The estate’s debts and estate tax are paid first from the estate, and heirs answer for the deceased’s debts only up to the value of what they inherit, never from their own assets (Art. 1311). Until the estate is settled and divided, the heirs own the whole estate in common (Art. 1078). Settlement happens out of court if there is no will, no unpaid debt and the heirs agree, or in court through probate or administration otherwise.

This page is the map. Each step links to a detailed guide in the Succession and Inheritance hub.

What passes to the heirs, and what ends at death?

Item	What happens
Land, houses, vehicles, bank deposits, shares and other property	Pass to the heirs as part of the estate, subject to debts and tax
Money owed to the deceased	Pass to the estate; the administrator or heirs may collect
Debts of the deceased	Paid from the estate; heirs are not personally liable beyond what they receive (Art. 1311)
Ordinary contracts, such as a lease	Generally continue, binding the heirs, unless the rights are personal by nature, stipulation or law (Art. 1311)
Agency and powers of attorney	End with the principal’s death (Art. 1919)
Partnership	Dissolved by a partner’s death (Art. 1830)
Usufruct held by the deceased	Ends (Art. 603)
Marriage and the spouses’ property regime	The marriage is dissolved and the community or conjugal property must be liquidated, usually within the estate settlement (Family Code, Arts. 103 and 130)
Life insurance with a named beneficiary	Generally paid to the beneficiary and not part of the estate
SSS or GSIS death benefits	Paid to the beneficiaries under those laws, not distributed as inheritance

Do the heirs have to pay the deceased’s debts?

Not from their own money. Creditors are paid from the estate before the heirs receive anything. If the estate is not enough, the unpaid balance is generally lost to the creditor; children and spouses do not inherit debt beyond the value of what they receive. In a court settlement, creditors must file their claims within the period set in the court’s notice, generally not less than six nor more than twelve months from first publication, or the claims are barred, except as a counterclaim (Rules of Court, Rule 86, Secs. 2 and 5). A secured creditor, such as a bank holding a mortgage, may abandon the security and file a claim against the estate, or foreclose the mortgage (Rule 86, Sec. 7). See what happens to a deceased person’s debts.

In an extrajudicial settlement, the property distributed remains answerable for two years to any creditor or omitted heir who was unduly deprived (Rule 74, Sec. 4).

Who inherits?

If there is a valid will, it governs within the limits of the legitime reserved for compulsory heirs. If there is none, the law decides: descendants first, with the surviving spouse and illegitimate children concurring, then ascendants, and so on. See will vs no will, who inherits without a will and compulsory heirs and legitime.

How is the estate settled?

Route	When it applies	Guide
Extrajudicial settlement or affidavit of self-adjudication	No will, no unpaid debts, and all heirs of age or represented and in agreement (Rule 74, Sec. 1)	Extrajudicial settlement
Probate	There is a will; it must be allowed by a court before it passes any property (Art. 838)	Probate of a will
Judicial settlement or administration	Debts must be settled, the heirs disagree, an heir is a minor without a representative, or the estate is complex	Judicial settlement

Estate tax and bank accounts

Estate tax is 6% of the net estate, and the return is filed within one year from the decedent’s death (National Internal Revenue Code, Secs. 84 and 90(B), as amended by Republic Act No. 10963). The BIR issues an electronic certificate authorizing registration (eCAR) once the tax is settled, and the Registry of Deeds needs it before transferring titles. Banks may allow heirs to withdraw a deceased depositor’s account before settlement, subject to a 6% final withholding tax on the amount withdrawn (Sec. 97). See estate tax and how to get an eCAR.

What happens to the property before it is divided?

The heirs co-own the estate in undivided shares (Art. 1078). One heir cannot sell a specific lot as their own, but may sell their undivided share. Rent and other income belong to all heirs, and the heir managing the property must account for it. See selling before settlement, rent from inherited property and co-ownership disputes.

What happens to cases the deceased was involved in?

Civil cases that survive death, such as actions to recover property or money, continue with the heirs or the estate’s representative substituted for the deceased (Rules of Court, Rule 3, Sec. 16).
Criminal liability is extinguished by death (Revised Penal Code, Art. 89). Civil liability based solely on the crime is extinguished if death occurs before final judgment, but a claim that also rests on another source, such as a contract or quasi-delict, may be pursued against the estate (People v. Bayotas, G.R. No. 102007, September 2, 1994).

Your options and what to do next

The right route depends on three facts: whether there is a will, whether the deceased left unpaid debts, and whether the heirs agree. Pick the row that fits your family.

Your situation	Route	Where	Key time limit
No will, no debts, heirs of age (or minors represented) and in agreement	Extrajudicial settlement or self-adjudication (Rule 74, Sec. 1)	Notary public, then BIR and Registry of Deeds	Distributed property answers to omitted heirs and creditors for two years (Rule 74, Sec. 4)
There is a will	Probate (Art. 838)	Court petition for allowance of the will; see the probate guide	No fixed period to file was verified; delay risks lost documents and witnesses
Unpaid debts, or heirs disagree	Judicial settlement or administration	Court petition; see the judicial settlement guide	Creditors must file within the period in the court’s notice, 6 to 12 months from first publication (Rule 86, Sec. 2)
You are a creditor of the deceased	File a claim in the estate case, or foreclose if secured (Rule 86, Sec. 7)	Estate proceedings in court	Unfiled claims are barred (Rule 86, Sec. 5)
Any estate	Estate tax return	BIR	Within one year from death (NIRC, Sec. 90(B))

If co-heirs disagree. Before going to court, heirs who are individuals living in the same city or municipality generally must first try conciliation before the barangay lupon; for disputes over land, the barangay where the property is located is the venue (Local Government Code, Secs. 408, 409(c) and 412). If no settlement is reached, the remedies are a judicial settlement or a partition case. If you cannot afford a lawyer, ask the Public Attorney’s Office whether you qualify for free assistance.

If a collector calls the children. Ask for the claim in writing, and reply that the debt is chargeable only against the estate (Art. 1311). Do not pay from your own funds unless you co-signed or guaranteed the loan.

Documents to gather:

Several certified copies of the death certificate from the PSA.
Any will, plus titles, tax declarations, bank and investment records, loan documents and insurance policies.
Proof of each heir’s relationship: birth and marriage certificates.
A list of known debts and creditors, and receipts for funeral and medical expenses. See who pays these expenses.

First action: within the first weeks, list the assets and the debts side by side. That list tells you whether an extrajudicial settlement is even available or whether you need the court, and it lets you file the estate tax return on time. Once the tax is settled, see transferring a title from a deceased parent.

Frequently asked questions

Can a bank or lender collect a dead parent’s credit card debt from the children?

Only from the estate. Children are not personally liable unless they co-signed, guaranteed the debt or received estate property that should have paid it.

Can the heirs use the property before the estate is settled?

Yes, as co-owners, but no heir may exclude the others or keep all the income. Major acts such as selling or mortgaging a whole property need everyone’s consent.

Is there a deadline to settle an estate?

There is no deadline to partition among heirs, but the estate tax return has a deadline, and delay adds penalties and makes titles harder to transfer later. See title still in a grandparent’s name.

Primary legal sources

This guide provides general Philippine legal information and is not legal or tax advice for a particular estate. Tax rules and BIR procedures change; confirm current requirements before filing.

Sources rechecked as of: October 4, 2026

What Happens to Property and Debts When Someone Dies in the Philippines?