Inheritance Law: Son-In-Law's Property Rights In Japan

Inheritance laws in Japan are complex and depend on several factors, including the nationality and residency status of the deceased and the heirs, the type of assets involved, and the location of the property. In Japan, the inheritance laws apply only if the deceased is a Japanese national. If the decedent is a foreigner, the laws of their home country apply, even if the heirs are Japanese. In cases where the decedent has more than one nationality, if one of them is Japanese, then Japanese law will govern the inheritance. Now, can a son-in-law inherit property in Japan?

Inheritance laws for foreigners in Japan

Inheritance laws in Japan can be complicated, especially when it involves foreigners. The first step is to determine which country's laws apply. If the deceased is a Japanese national, then Japanese civil law determines the heirs and the line of succession, as well as the division of the estate and matters regarding the acceptance and rejection of an inheritance.

However, if the deceased is a foreign national, the laws of their home country apply, even if the heirs are Japanese. This is the case even if the deceased had permanent residency in Japan. The succession must be legal in both the deceased's home country and Japan, and the legal procedures of succession must be followed according to the laws of the deceased's home country. This can be a difficult and time-consuming process, as the required documents may vary, and it may be necessary to hire lawyers in both Japan and the deceased's home country.

When heirs reside outside of Japan, legal experts in Japan may face difficulties during the inheritance procedure due to communication issues with heirs in a foreign country. In such cases, it is recommended to find an English-speaking Japanese inheritance lawyer who can advise and represent you.

In terms of the inheritance process itself, Japan follows a unified system, where either the law of the home country or the country of domicile is applied exclusively. This means that if a foreigner owns real estate property in Japan, the laws of their home country will determine the heirs and the line of succession. The same rules apply to inheritance tax, where the heirs themselves are taxed, and the number of heirs factors heavily into the overall calculation.

It is important to note that under Japanese law, the primary successors are the spouse and children (including adopted children) of the deceased, followed by the parents and then the siblings. Distribution of the inheritance is typically 50% to the spouse, with the rest divided equally between each child. However, the deceased can freely dispose of their estate by will, with some statutory limitations. For example, there is an elective share, or a minimum share that should be given to the intestate heir regardless of the will's distribution.

Inheritance tax in Japan

Inheritance laws in Japan apply only to its citizens. If the deceased was a foreign national, Japanese laws do not apply, and the laws and legal procedures of their home country do.

In Japan, it is not the estate that is taxed, but the heirs themselves. The number of heirs factors into the overall calculation, and the final payment is divided among the actual recipients. The taxable base includes assets such as real estate, stocks, and personal possessions, with the inheritance tax applied on a progressive scale. Rates range from 10% to 55%, depending on the value of the assets. There are also basic deductions, which include Japanese Yen (JPY) 30 million plus JPY 6 million per heir.

The distribution of the inheritance is as follows: 50% to the spouse, and the rest divided equally between each child. Grandchildren can be beneficiaries only if the children (the parents of the grandchild) were dead when the inheritance commenced. If there are no primary successors (spouse and children), the parents of the deceased become secondary successors and may inherit. Tertiary successors are the brothers and sisters of the deceased, who may inherit only if there are neither primary nor secondary successors.

In terms of overseas assets, foreign nationals who have had a 'Jusho' (tax residency determined based on family, business, days staying in Japan, asset location) in Japan for less than ten out of the last 15 years with a visa issued under Table 1 of the Visa Status Table of Immigration Control and Refugee Recognition Act ('temporary foreigners') are exempt from Japan gift and inheritance tax. However, the transfer of overseas assets to a Japanese national heir or donee who is not a resident of Japan but has had a 'Jusho' in Japan within the ten years before the inheritance is subject to Japan gift and inheritance tax.

Primary successors in Japan

In Japan, inheritance laws apply only if the deceased was a Japanese national, including foreign-born naturalised citizens. If the deceased was a foreign national, their home country's laws apply.

According to Japanese inheritance law, primary successors are the spouse and children (including adopted children) of the deceased. Grandchildren can be beneficiaries only if the children (the parents of the grandchildren) are deceased. In the case of primary successors, 50% of the inheritance goes to the spouse, and the remainder is divided equally between each child.

If there are no primary successors, the parents of the deceased become the secondary successors. If there are no secondary successors, the siblings of the deceased become the tertiary successors.

The role of wills in Japanese inheritance law

In Japan, the role of wills in inheritance law is an important aspect of estate planning and succession. While it is not mandatory to have a will, creating one can provide clarity and prevent disputes among heirs. Here is an overview of the role of wills in Japanese inheritance law:

Freedom of Testation

Japanese inheritance law allows individuals the freedom to dispose of their property and assets through a will. This means that the deceased can decide who inherits their estate and how it is distributed. However, this freedom is subject to certain statutory limitations.

Elective Share

The concept of an elective share in Japanese law ensures that certain heirs receive a minimum share of the estate, regardless of the provisions in the will. Direct ascendants, such as parents or grandparents, are entitled to one-third of the elective share, while other heirs receive one-half. This provision ensures that close family members receive a portion of the estate, even if they are not specifically mentioned in the will.

Primary and Secondary Successors

According to Japanese inheritance law, the primary successors are the spouse and children (including adopted children) of the deceased. Grandchildren can be included as beneficiaries only if the children are deceased when the inheritance process begins. Secondary successors are the parents of the deceased and can inherit only in the absence of primary successors. Tertiary successors are the siblings of the deceased and can inherit only if there are no primary or secondary successors.

Distribution of Inheritance

The distribution of the inheritance among primary successors is typically split evenly between the spouse and children. The spouse receives 50%, while the remaining half is divided equally among the children. This distribution can be adjusted by the deceased through their will, but it should not conflict with the elective share provisions.

Validity of Foreign Wills

In cases where the deceased is a foreign national, Japanese law recognises the validity of foreign wills if they satisfy the requirements under the Hague Convention and Law. This means that the laws of the deceased's home country will govern the inheritance process, including the eligibility of successors, the shares of each heir, and the procedures for leaving a will.

In conclusion, the role of wills in Japanese inheritance law provides individuals with the freedom to dispose of their property as they wish. However, this freedom is balanced by statutory limitations and the need to ensure that close family members receive their elective share. It is important for individuals, especially those with international connections, to understand the laws governing inheritance to ensure a smooth succession process and prevent disputes among heirs.

The process of inheriting real estate in Japan

In Japan, a real estate registration is maintained for each parcel of land and building, which contains information about the owner of the property. When an owner of real estate inherits, it is necessary to change the identity of the owner on the real estate registration to that of the heir (inheritance registration). This application for inheritance registration needs to be made as quickly as possible, and within three years of the start of inheritance. From 1 April 2024, this registration will be mandated, and penalties will be imposed for failure to do so.

In terms of the distribution of the inheritance, the primary successors are the spouse and children (including adopted children) of the deceased. Grandchildren can be beneficiaries only if the children (the parents of the grandchild) were deceased when the inheritance commenced. Secondary successors are the parents of the deceased, who may inherit only when there are no primary successors. Tertiary successors are the brothers and sisters of the deceased, who may be beneficiaries only when there are neither primary nor secondary successors. Distribution of the inheritance amongst primary successors is as follows: 50% to the spouse, and the rest divided equally between each child.

The deceased can freely dispose of the estate by a will. They can give a more substantial portion of the estate to their child or even to a third party who is not an heir. However, there is a statutory limitation to this freedom. The Japanese inheritance law acknowledges an elective share—a minimum share that should be given to the intestate heir regardless of how the will sets forth the distribution of the state. Under current Japanese law, the elective share differs depending on the status of each heir. Direct ascendants (parents or grandparents) are entitled to 1/3, while other heirs are entitled to 1/2.

Assets subject to inheritance tax include tangible, intangible, real, or personal property, unless otherwise specifically exempt under the law. The asset is valued in accordance with the provisions of the Japanese tax rules. In Japan, it’s not the estate that’s taxed, but the heirs themselves—and the number of heirs factors heavily into the overall calculation. The total amount due is calculated based on the statutory amount due to each heir, regardless of whether the heir receives that amount or not. The final payment is divided among the actual recipients, so even if the will cuts someone out, it’s the recipients who have to pay the tax amount.

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