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Let's Talk Tax

Withdrawing from the bank account of a deceased person

Lina P. Figueroa

Let’s Talk Tax

Matters relating to death are usually not a good topic to discuss. However, what is worse is not knowing what to do when one is faced with death-related situations, such as when the family of the deceased needs to pay the hospital bills or funeral expenses, or when funds are needed to transport or repatriate the deceased.

Unpleasant as the topic may be, I am sharing with you the clarifications issued by the Bureau of Internal Revenue (BIR) on the requirements for withdrawing from the bank account of a deceased depositor.

Most of us are already aware that the Tax Reform for Acceleration and Inclusion (TRAIN) Law has opened a window where the estate tax return will not be a prerequisite to withdraw funds from the bank account of a deceased. The old law required estate taxes to be first settled and a BIR clearance secured prior to the release of the funds. There were many instances in the past when families of the deceased were in deep debt or begging for help to pay for their expenses, while the bank account of the deceased remained frozen pending the settlement of the estate tax.

Now, the TRAIN Law only requires that the 6% estate tax is paid on the amount withdrawn. Families of the deceased need not wait for the estate tax to be processed before getting funds from the bank account. Based on the BIR clarifications, though, the heirs cannot just go to the bank and demand the release of the funds. The BIR clarifications issued under Revenue Memorandum Circular (RMC) No. 62-2018 are as follows:

RMC No. 62-2018 mandates the bank to require the executor, administrator, or any of the legal heirs applying for the withdrawal to present a copy of the Tax Identification Number (TIN) of the estate of the decedent and BIR Form No. 1904 of the estate duly stamped received by the concerned Revenue District Office (RDO) of the BIR in accordance with the existing guidelines on the issuance of TIN. The copy of the TIN, at this point, could simply refer to the appropriate BIR form for applying for registration, which the BIR would stamp as received and where the BIR would write the assigned TIN. BIR Form 1904 is the application for registration for one-time taxpayer and person registering under EO 98 (securing a TIN to be able to transact with any government office). For estate tax purposes, the Death Certificate should be attached.

Where shall the TIN of the estate be secured? The registration of the estate is applied in the RDO having jurisdiction over the residence of the deceased at the time of death. If the deceased is a nonresident, the TIN shall be secured from the RDO where the executor or administrator is registered. If the executor or administrator is not a registered taxpayer, the registration of the estate shall be made with the RDO having jurisdiction over the place of residence of the executor or administrator.

The TIN is normally issued within an hour at the time of application, if the documents are in order and there is an available approver or signatory.

Withdrawing from the bank account without first settling the estate tax and the BIR clearance shall be allowed only within one year from the date of the depositor’s death. This prescription period complements the one-year deadline for filing the estate tax return. Beyond the one-year period, the heirs would have no other way of withdrawing the bank deposits, except to file the estate tax return and secure the BIR clearance. The prescriptive period for the withdrawal will discourage complacency on the part of the heirs in settling the estate tax.

If the account is in the name of two or more depositors, the 6% withholding tax shall only be imposed on the share of the deceased in the joint bank account.

One of the surviving joint depositors will also be required to sign a sworn statement in the withdrawal slip to the effect that all the other joint depositors are still living at the time of withdrawal, and that the withdrawal is subject to 6% final withholding tax.

RMC No. 62-2018 acknowledges that banks are not precluded from requiring pertinent documents to ascertain the identity and the right to claim of the heirs or its authorized representative before allowing any withdrawal from the bank deposit accounts. Banks would have their own policies in this regard, whether internal or in compliance with requirements under applicable laws, rules, and regulations.

The heirs, nonetheless, should bear in mind that it is best to first evaluate if the bank deposit can be exempt from tax, if the estate tax return will be processed. If the taxes are paid through the estate tax return, there is a P5-million standard deduction and a deduction of up to P10 million of the value of the family home. A maximum of P300,000 in estate taxes can be saved, if the cash of up to P5 million is included in the estate and subjected to tax as part of the estate tax return. Likewise, claims of debtors against the estate, as well as unpaid mortgages, are still deductible expenses under the TRAIN Law. These reliefs, if existing, can only be availed of if the estate will be settled by filing an estate tax return.

There are just a few of the possible reliefs from taxes. For estate taxes, these reliefs can be availed of only once in the life and death of a person. Our legislators have fought hard so that these reliefs can be part of our laws. The opportunity should be enjoyed when it comes.


Lina P. Figueroa is a principal of the Tax Advisory and Compliance of P&A Grant Thornton. P&A Grant Thornton is one of the leading audit, tax, advisory, and outsourcing services firms in the Philippines.

As published in BusinessWorld, dated 17 July 2018