Settling the estate of foreign residents in Japan
Increasingly in our globalized world, once rare and uncommon cross-cultural interactions are now rapidly becoming commonplace.
For example, settling the estate of a loved one who has passed away overseas may leave one feeling lost regarding how to proceed in a foreign legal system.
In this article, we discuss the essential elements for resolving the sensitive matter of inheritance from the estate of a foreigner who has passed away in Japan.
The first question to ask yourself is whether or not the decedent left a last will and testament. If they did leave a will, the process differs depending on the type of will that was left.
1. What kind of will?
When a notarized will is made by a Japanese notary public, which is an accredited civil servant in Japan, there is no mistake of its validity as long as it is the newest version of the decedent’s will in existence. In comparison to the other types of wills described below, the inheritance process can be completed quickly without having to go through probate procedures with the Japan family court system. An original certified copy of the notarized will is stored at the notary public’s office and registered in a nationwide database, and if you need a copy they can issue one for you.
Holographic Will (Handwritten Will)
In the case that the decedent wrote their will in their own handwriting, this is valid under Japanese law, but the whereabouts and legality of the will must be established. Locating the will is the first obstacle, as its location may or may not be known. Often a family member or lawyer for the decedent will know this information. It is important to note that for all intents and purposes, if a will cannot be located, it is legally considered to not exist.
If a will of this type is obtained, it will then be necessary to go through the probate process with the family court. Furthermore, if the will is sealed then it must be unsealed with the heirs in attendance, in front of an officer of the family court.
During the probate process, the courts only judge on the style of the will, which means that disputes regarding the validity of the will’s contents may arise even after probate. For wills not written in the Japanese language, an official translation must also be provided. If wills of this type either cannot be found or are not established as legally binding, they will have no legal effect on the distribution of assets to heirs.
Secret Certificate Will
For various reasons, a secret certificate will may have been created by the deceased. A secret certificate will is created by sealing an envelope that is certified by a notary public, but its contents are kept a secret. Similar to a holographic will, its validity may be contested because the contents of the will are not confirmed by the notary public. In addition, since this type of will is not kept at the notary public’s office, it may not be discovered upon death.
This process presents a unique set of challenges. For specific details, please look at our blog on “6 things to know about inheritance without a will in Japan”.
*Competing versions of a will may surface after an individual has died, as in multiple wills of various types and of various dates of signature and notary. Regardless of the type of will, if a newer will exists, the parts of the old wills that conflict with the newest will will be invalidated.
*After a will has been determined to be valid and has been obtained, the next step is verifying the legitimacy of the named heirs. For a Japanese citizen, this process is relatively simple as they would be named in the koseki family registry system. However, foreigners with non-Japanese heirs will be asked by the court to provide documents to prove their relationship with the decedent, which will ultimately need to be officially translated into Japanese.
2. What are the assets?
Once a verified will is obtained and valid heirs have been confirmed, the next step is to establish the existence and legality of the assets mentioned in the will. The process for transferring assets from the decedent to the heir(s) depends on the documentation and procedures required by each respective asset-holding institution (bank, government ministry, private company, etc.).
The documents that a bank might require in order to transfer the contents of an account or safety deposit box tend to be different than those required to transfer real estate property titles by a governmental body. Official translations, notarizations, and even original creation of affidavits may also be required if required documents do not exist or cannot be procured.
Making an overview of the types of assets to be inherited will help give a better understanding of what needs to be done.
All cash assets held by a bank are immediately frozen as soon as the bank learns that the principal has died. If you have (1) a valid will (2) an agreement on division of inheritance or (3) a record of settlement/adjudicative proceedings from the family court, then you can proceed with inheriting cash assets by following the bank’s procedures.
The actual required procedures vary from bank to bank. Once again, official translations, notarizations, original creation of documents, etc. may also be required if required documents do not exist.
Real Estate Property
In Japan, all real estate property is registered at the Legal Affairs Bureau. As with the bank procedures, once the registered owner has died, it will be necessary to check whether or not (1) a valid will (2) an agreement on division of inheritance or (3) a record of settlement/adjudicative proceedings from the family court exists.
Real estate property inheritance registrations can be completed after collecting documents that are required in connection to documents (1) / (2) / (3). If any of the necessary documents do not exist in Japanese, once again official translations, notarization, and original creation of documents will likely be necessary.
In many cases the heir(s) wish to sell the property rather than remain owners. In this case, you need to engage a real estate agency to find a buyer and complete the sale. For this reason, we have an in-house real estate brokerage STK Properties that can assist clients.
Stock holdings for listed companies can be transferred by contacting the brokerage firm that holds the account for the stocks in the name of the deceased. The transfer process here is similar to that of liquidating a bank account, and the brokerage firm will require similar documents.
Stock in privately held companies that are not publicly listed can be transferred by the creation of a document stating the details of the transfer of title. This document must be accepted by the other stockholders in the company. This may also require translation and interpretation services to engage with the other parties involved.
If you become the 100% shareowner of a private company and wish to close the company, there is a separate process for doing so.
Tax and Debt
When inheriting an estate that has a total value over a certain amount, Japanese inheritance tax will be applicable and due within 10 months of the decedent’s passing.
Sometimes heirs do not have enough cash assets or the desire to use personal cash assets to settle the inheritance tax. This usually prompts the decision to sell assets within the 10-month window.
Outstanding debts owed by the decedent are transferred to the heir(s). If the deceased has more debts than assets that would cover the debt, the heirs can go through the inheritance forfeiture process, but forfeiture must be completed within 3 months of finding out that inheritance procedures had begun. We have a blog explaining this in detail here.
Overseas institutions must be properly informed that that the decedent’s will has been properly handled without infringing the laws of the country of the asset-holding institution. The laws of Japan and the laws of the deceased’s home country must be carefully reviewed and navigated, and many documents will have to be officially translated if they are not in the proper format to satisfy either the courts or asset-holding institutions. In this case, document translation and document creation would need to be done in reverse, from the original Japanese to a language accepted by the asset-holding institutions.
It is important to note that in most cases, the law regarding settlement of assets left in a will are presided over by the country where the asset is held.
In summary, once a family member or loved one who holds assets in Japan has passed away, the first step is to locate and verify the legality of their will. From there, the next step is to ascertain the division and transfer of each type of assets.
In settling the estate of a foreign national in Japan, there are certain legal and taxation challenges that strongly benefit from professional assistance.
The Legacy Tomodachi team knows the hurdles that you will encounter. We are committed to making challenging legal processes as trouble-free as possible for our clients. If you want to learn more about the ins and outs of inheritance in Japan, check out our other blogs and like us on Facebook.
If you find yourself in a situation involving Japanese inheritance procedures and would like to know how we can help, contact us today to schedule a free consultation.
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