Since the TRAIN law amended the Tax Code, banks may release funds from a deceased depositor’s account once they know of the death, subject to a flat 6% final withholding tax, without waiting for prior BIR clearance. In practice, though, most banks still ask for a death certificate, valid IDs, and proof of your right to the funds — such as an affidavit of self-adjudication or an extrajudicial settlement — before releasing the money.
Yes, a bank account left behind by someone who died can be accessed — but not automatically, and not without leaving a paper trail with the Bureau of Internal Revenue (BIR). Philippine banks are legally allowed to release money from a deceased depositor’s account, but the law and standard bank practice both build in safeguards to make sure the government still collects estate tax and that the right people actually receive the money.
The Rule That Changed: Section 97 of the Tax Code
Section 97 of the National Internal Revenue Code, as amended by the TRAIN law, addresses exactly this situation. It provides that if a bank has knowledge of the death of a person who maintained a bank deposit account, alone or jointly with another, the bank shall allow withdrawal from that account, subject to a final withholding tax of six percent (6%) of the amount withdrawn. This is a real simplification compared to the older regime, under which banks generally would not release a deceased depositor’s funds without a prior certification from the BIR. Under the current rule, the bank itself withholds and remits 6% of the withdrawal, instead of the heirs having to secure BIR clearance before the bank will move at all.
The 6% Withholding Is Not the Final Word on Estate Tax
Do not treat the 6% the bank withholds as the full and final settlement of your estate tax obligation. It is a withholding tax on that specific withdrawal — a mechanism that lets the government collect something up front instead of waiting for the complete estate tax return. The heirs are still required to eventually settle the decedent’s estate, file the corresponding BIR estate tax return, and account for all of the decedent’s assets, including any bank funds already withdrawn. Tax already withheld on the bank withdrawal is generally taken into account against the total estate tax ultimately due, so keep the bank’s certificate or receipt for the amount withheld — you or your estate’s counsel will need it when the estate tax return is prepared.
What Banks Typically Ask For in Practice
The law authorizes the withdrawal, but individual banks still have their own internal compliance requirements, and these vary from one institution to another. Expect to be asked for some combination of the following before a bank releases funds from a deceased depositor’s account:
- The decedent’s death certificate, usually a PSA-issued copy;
- Valid government-issued identification for the person requesting the withdrawal;
- Proof of the requesting party’s relationship or right to the funds — commonly an affidavit of self-adjudication (if there is a single heir), a deed of extrajudicial settlement (if there are several heirs, no will, no debts, and no disagreement), letters testamentary or letters of administration (if the estate is being settled through court), or a special power of attorney if someone else is withdrawing on the heirs’ behalf;
- The estate’s own Taxpayer Identification Number, since the estate is treated as a separate taxpayer for the period between death and final settlement; and
- Sometimes an indemnity or hold-out agreement, particularly for larger balances, protecting the bank if a dispute among heirs later surfaces.
Banks are understandably cautious here: if they release funds to the wrong person, they can be held liable to the rightful heirs. That caution is why, in practice, many banks still ask for more documentation than the bare minimum Section 97 requires before processing a withdrawal — the 6% withholding tax rule removes the need for prior BIR clearance, but it does not remove the bank’s own duty to verify who it is paying.
Step-by-Step: Withdrawing From a Deceased Person’s Account
- Step 1 — Notify the bank. Inform the branch in writing that the depositor has died, and ask what its specific requirements are; these differ enough between banks that it pays to ask upfront rather than assume.
- Step 2 — Gather the documents. Secure the PSA death certificate, valid IDs of the heirs or authorized representative, and whichever proof of authority applies to your situation.
- Step 3 — Settle the estate’s paper trail. If there is more than one heir, execute the extrajudicial settlement, or begin the appropriate court process if the estate cannot be settled extrajudicially, before or alongside your dealings with the bank — most banks want to see this document, not just a claim that you are an heir.
- Step 4 — Submit the request and allow the 6% withholding. Once the bank is satisfied with the documentation, it processes the withdrawal, withholds 6% of the amount released, and issues a certificate or official receipt for the tax withheld; keep this for the estate tax return.
- Step 5 — Carry the withheld amount into the estate tax return. When the estate tax return is eventually filed with the BIR, account for the withdrawn amount and the tax already withheld on it, and settle any remaining estate tax due before requesting the Certificate Authorizing Registration needed to transfer the decedent’s other property.
Joint (“AND/OR”) Accounts vs. Sole Accounts
Many Filipino families hold joint “AND/OR” accounts specifically so either depositor can transact independently. Section 97 applies to joint accounts as well as sole accounts — once the bank has knowledge of the death of either depositor, the same 6% withholding mechanism governs withdrawals. In practice, the surviving co-depositor on an AND/OR account can often continue transacting on the account more smoothly than an heir claiming a sole account, since the bank already has that person’s specimen signature on file. But the funds in a joint account are not automatically and entirely the surviving co-depositor’s property; depending on where the money came from and the arrangement between the parties, a portion may still form part of the deceased co-depositor’s estate, which matters for the estate tax computation even though the bank itself does not require that determination before releasing the funds.
When You Need an Extrajudicial Settlement or Court Proceeding First
An extrajudicial settlement generally works when the decedent left no will, left no outstanding debts (or the heirs agree to be liable for them), and all the heirs are of legal age or minors are duly represented and agree on how to divide the estate. When any of these conditions is missing — there is a will to be probated, the heirs disagree, there are minor heirs without proper representation, or there are unresolved debts — the estate generally has to go through court, and a bank will typically wait for letters testamentary or letters of administration naming a court-recognized representative before releasing significant funds, even though Section 97 technically allows withdrawal earlier.
Common Mistakes That Delay the Release of Funds
- Assuming the 6% withholding tax is the entire tax obligation, then being surprised by a larger estate tax bill later;
- Withdrawing funds without keeping the bank’s certificate of tax withheld, then having no proof of it when preparing the estate tax return;
- Delaying the extrajudicial settlement or the court process for letters of administration, assuming the bank will simply accept a birth certificate as proof of heirship; and
- Overlooking that the estate itself needs its own Taxpayer Identification Number, separate from the decedent’s personal one, for transactions occurring after death.
A Practical Note on Timing
Estate tax deadlines run from the date of death, and penalties and interest accrue the longer settlement is delayed, so it is worth starting the bank withdrawal process and the broader estate settlement at the same time rather than treating them as separate errands. Coordinating with the bank early, while also moving forward on the extrajudicial settlement or the court process if needed, tends to get funds released faster than waiting for one step to fully finish before starting the next.
Coordinating With a Lawyer or Accountant
Because the bank withdrawal, the extrajudicial settlement, and the estate tax return are separate but interlocking steps, many families find it worthwhile to loop in a lawyer or accountant early rather than after a bank has already raised questions about the documentation. This is especially true when the estate includes more than a bank account — real property, vehicles, or business interests each carry their own transfer requirements, and the Certificate Authorizing Registration the BIR eventually issues typically needs to account for the estate as a whole, not just the withdrawn funds. Getting professional guidance early tends to prevent the kind of documentation gaps that cause banks, and later the BIR, to ask for more paperwork than expected.
Frequently Asked Questions
Can a bank release money from a deceased person's account without BIR clearance? Yes. Under Section 97 of the Tax Code as amended by the TRAIN law, a bank that knows a depositor has died may allow withdrawals from the account subject to a 6% final withholding tax, without waiting for prior BIR certification.
Is the 6% bank withholding tax the same as estate tax? No. It is a withholding tax on that specific withdrawal, generally credited against the estate tax ultimately due; the heirs still need to settle the full estate and file the corresponding estate tax return.
What documents does a bank usually ask for? Typically a death certificate, valid ID of the person withdrawing, proof of the right to the funds such as an affidavit of self-adjudication or extrajudicial settlement, and the estate's own Taxpayer Identification Number, though exact requirements vary by bank.
What happens to a joint AND/OR account when one depositor dies? The same 6% withholding rule applies once the bank knows of the death, but the funds are not automatically all the survivor's property; depending on their source, a portion may still form part of the deceased depositor's estate for tax purposes.
This commentary is for general informational purposes only and does not constitute legal advice. For guidance specific to your situation, please consult a licensed attorney.
Coordinating the bank withdrawal and the broader estate settlement together, rather than treating them as separate errands, is usually what gets funds released fastest.