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Recent developments

Have there been any notable recent developments in the provision of private client and offshore services in your jurisdiction, including any regulatory changes or case law?

Under the new information exchange system based on the Common Reporting Standard (CRS), banks and certain other financial institutions must report account holders’ names and certain other information to local tax authorities. The first report was submitted on April 30 2018. 

Since 2017 Japanese resident individuals with foreign assets exceeding Y50 million based on fair market value should file a statement of foreign assets. Since 2015 a statement of assets and liabilities must be filed by individuals, resident or non-resident, being obliged to file tax returns on income:

  • with a taxable income exceeding Y20 million; and
  • with assets of which the total fair market value at the end of a calendar year is Y300 million or more, or assets that are subject to the ‘exit tax’ regime, of which the total fair market value at the end of a calendar year is Y100 million or more.

International transfers of money or securities should be also reported to the tax authority by banks, securities companies or intermediaries of such transfers.

If an individual transfers his or her assets to general incorporated associations and that individual later dies, inheritance tax would not be imposed on such assets since there is no concept of equity interests in general incorporated associations. Under the 2018 tax reform, to counter the measure against such use of general incorporated associations for tax avoidance purposes, on the death of an executive of general incorporated association, inheritance tax will be imposed on the general incorporated association as if it acquired the assets by bequest.

The above tax treatment is applied to general incorporated associations, which satisfy one of the following criteria:

  • the ratio of the number of related executives to the total number of executives exceeds 50% immediately before the inheritance; or
  • the ratio of the total period in which the number of related executives to the total number of executives exceeds 50% is three years or more within five years before the inheritance. 

Under the Civil Code, certain categories of heir (eg, children, spouses and lineal ascendants) are entitled to a certain secured portion of the estate that they cannot be deprived of, even by a will. While such a reservation will contribute to protecting the lives of such heirs, it could be an obstacle for the smooth succession of a business or assets from the current owner to certain promising successors. According to the Civil Code’s bill of amendment submitted to the Diet on March 13 2018 – which aims to enable smooth business succession, especially for small and medium-sized enterprises – assets gifted no fewer than 10 years before the inheritance will not be counted in the calculation of the secured portion of the estate. In addition, even if an heir claims to recover its deprived secured portion of the estate against another heir, such heir may choose to pay a cash equivalent without dividing inheritance itself, by which he or she may prevent any undesirable dispersion of the inherited business or assets.

Individual taxation

Residence and domicile

How is residence/domicile determined for tax liability purposes in your jurisdiction?

Under the Income Tax Act, a ‘resident’ is an individual who has his or her domicile in Japan or who has resided in Japan for a continuous period of one year or more. ‘Non-resident’ means an individual who is not a resident in Japan.

A resident individual is divided into two further categories:

  • permanent residents; and
  • non-permanent residents.

Japanese citizens and non-Japanese citizens who have resided in Japan for a cumulative period of five years in the last 10 years, are considered permanent residents. Permanent residents will be subject to income tax on worldwide income from sources in any country. Non-permanent residents are subject to income tax on Japan-sourced income and non-Japan-sourced income paid in or remitted to Japan. Withholding income tax will be withheld at source from certain kinds of income, while assessment income tax will be levied on income on a calendar-year basis. The amount of withholding income tax will be deducted from the amount of assessment income tax up to the amount of tax payable for a calendar year. 

A non-resident individual will be subject to Japanese income tax only on income derived from sources in Japan. A non-resident’s tax liability will usually be finally settled by withholding income tax which covers a wider range of income than for a resident. Assessment income tax will be levied on non-residents’ income only in limited cases.

Income

Describe the income tax regime in your jurisdiction (including tax base, rates, filing formalities and any exemptions, reliefs or deductions).

In general, Japan-resident individuals are taxed at regular progressive rates on all types of income under the Income Tax Act, subject to the special tax rules under the Act on Special Measures Concerning Taxation. The marginal tax rate of individual income tax is 55.945% until 2037. Among other things, business income and employment income (including directors’ and officers’ remuneration) are subject to regular progressive taxation. Regarding dividends, if the Japanese corporation distributing the dividends is a private or non-listed corporation, Japan-resident individuals are subject to withholding tax at 20.42% and regular progressive tax which must be reported by filing a tax return. If the Japanese corporation distributing the dividends is a publicly listed corporation, Japan-resident individuals are subject to withholding tax at 20.315%. They will be optionally subject to separate taxation at the rate of 20.315%, to be reported by filing a tax return, provided that – for individual shareholders who own 3% or more of the total issued shares of the publicly listed corporation (typically owners or founders of the business) – the treatment is substantially the same as for a private or non-listed Japanese corporation.

Non-resident individuals are taxed in Japan only on certain specifically enumerated types of Japan-sourced income. Regarding dividends, if the Japanese corporation distributing the dividends is a private or non-listed corporation, non-resident individuals with no permanent establishment in Japan are subject to withholding tax at 20.42%. If the Japanese corporation distributing the dividends is a publicly listed corporation, such individuals are subject to withholding tax at 15.315%, provided that – for individual shareholders which own 3% or more of the total issued shares of that publicly listed corporation – the 20.42% withholding tax rate applies. Such taxation is finalised by the withholding tax and does not require a tax return. This taxation can be modified by an applicable tax treaty between Japan and the country of residence of the non-resident individual.

For year-end tax returns and tax payments for individuals, the tax year is a calendar year and an income tax return must be filed by March 15 of the following year. Taxpayers determine the amounts of their taxable income, deductions and credits, among other things, and report their tax liability and tax payments on a tax return filed with the relevant district tax office. However, in practice, most salaried workers in Japan can satisfy their tax obligations through the tax withholding system and are not required to file tax returns.

Capital gains

Describe the capital gains tax regime in your jurisdiction (including tax base, rates, filing formalities and any exemptions, reliefs or deductions).

Resident individuals are taxed on capital gains arising from the sale of securities (eg, shares – whether private or publicly listed – and bonds – for which sufficient disclosures are made) at the flat rate of 20.315%. 

Non-resident individuals with no permanent establishment in Japan are generally not subject to Japanese tax on capital gains arising from sale of shares of a Japanese corporation, unless certain special requirements are satisfied (ie, a non-resident individual who used to own 25% or more of the total shares of a Japanese corporation at any time during the past three years sells 5% or more of such shares during that calendar year (known as the ‘25/5 Rule’) or a non-resident individual sells shares in real estate investment trusts or certain other real property holding corporations). Such taxation can be modified by an applicable tax treaty between Japan and the country of residence of that non-resident individual.

Capital gains from the sale of real property will be subject to income tax, local inhabitant tax and special reconstruction tax (20.315% in total) if the real property has been held for more than five years as of January 1 of the sold year. Meanwhile, it will be subject to income tax, local inhabitant tax and special reconstruction tax (39.63% in total) if the real property has been held for five years or fewer as of January 1 of the sold year. When a non-resident sells real property in Japan, the purchaser will withhold 10.21% of the sales price (10% for income tax and 0.21% for special reconstruction tax) subject to an applicable tax treaty between Japan and the country of residence of that non-resident individual. 

Inheritance and lifetime gifts

Describe the inheritance and gift tax regime in your jurisdiction (including tax base, rates, filing formalities and any exemptions, reliefs or deductions).

Inheritance tax and gift tax are imposed based on the Inheritance Tax Act: 

  • Japanese national and resident taxpayers, if they are an heir or a donee, are subject to Japanese inheritance and gift tax on worldwide (ie, Japanese and non-Japanese) assets acquired by inheritance, bequest or gift.
  • Taxpayers who are a Japanese nationals but not Japanese residents are taxed only on Japanese assets, unless either the deceased, heir or donee resided in Japan at any time during the 10-year period preceding the commencement of the inheritance, bequest or gift.
  • Taxpayers who are neither Japanese national or Japanese resident are taxed only on Japanese assets, unless the deceased resided in Japan at any time during the 10-year period preceding the commencement of the inheritance, bequest or gift. In an attempt to discourage avoidance of inheritance and gift tax on non-Japanese assets by becoming non-resident or even non-Japanese national, waiting periods have increased:
    • from five to 10 years for taxpayers who are Japanese national but not Japanese resident; and
    • to 10 years for taxpayers who are neither Japanese national nor Japanese resident.

Since 2015 the marginal inheritance tax rate is 55% of the total value of the inherited assets succeeded to by an heir as a taxpayer exceeds Y600 million. Standard deductions for inheritance tax were also significantly reduced from 2015. The marginal tax rate of gift tax is 55% of the total value of the gifted assets of a donee as a taxpayer exceeds Y30 million.

Real estate

What taxes apply to individuals’ acquisition and disposal of real estate in your jurisdiction?

On the acquisition of real estate, a real estate acquisition tax will be imposed. The tax rate is 3% for land and residential houses and 4% for non-residential houses. On registration of the transfer of real estate, registration tax will be imposed. The tax rate is 1.5% for transfer of land by sale and 2% for transfer of buildings by sale. In case of transfer by inheritance, the tax rate will be 0.4%. On the disposal of real estate, capital gains tax will be imposed.

Non-real estate assets

Do any taxes apply to the acquisition and disposal of other assets apart from real estate?

The Automobile Acquisition Tax is a special purpose tax used to pay for road maintenance. The tax is collected by the prefecture where the vehicle is usually parked and most of the funds are passed on to local municipalities. The tax rate is 2% for light vehicles and vehicles used for business, and 3% for private-use vehicles. Motorcycles and specified low-emission vehicles are exempt from this tax, as are vehicles owned by the national or local governments. Vehicles acquired by inheritance or succession, or as the result of a corporate merger, are also not subject to this tax. The Automobile Acquisition Tax will be abolished when the 10% consumption tax rate becomes effective.

Other applicable tax regimes

Are any other direct or indirect tax regimes relevant to individuals?

A person or legal person that sells or leases assets with consideration as a business or receives foreign cargo from a bonded area must pay consumption tax. The current rate is 8% and this will be raised to 10% from October 1 2019. 

Other notable taxes include:

  • registration and licence tax;
  • stamp duty;
  • fixed property tax; and
  • city planning tax.

Planning considerations

Are there any special tax planning considerations for individuals with a link to your jurisdiction?

Considering that income tax on financial assets for non-resident individuals is limited when compared to resident individuals (particularly regarding tax on capital gains arising from the sale of shares of a Japanese corporation), there is some motivation on the side of high-net-worth resident individuals to leave Japan in order to be recognised as non-resident so as to avoid tax on capital gains. In order to prevent high-net-worth resident individuals from leaving Japan and preventing any loss of Japan’s tax revenue, an ‘exit tax’ was introduced on July 1 2015 by an amendment to the Income Tax Act. Under this regime, Japanese resident individuals owning certain financial assets (eg, shares, bonds and derivatives) of Y100 million or more (on a fair market value basis) will be taxed on the unrealised gains on these financial assets at the time of the individual’s exit from Japan as though that individual had sold such financial assets. This exit tax is now a significant deterrent for high-net-worth resident individuals migrating to foreign low-tax jurisdictions.

The value of assets for inheritance and gift tax purposes is measured in accordance with the Asset Valuation Basic Circular of the Japanese Tax Authority. Because room for creative tax planning is limited, a major part of planning in practice is to try to reduce the value of the assets, taking advantage of the circular. However, the circular contains a general anti-avoidance provision called General Rule Paragraph Six, which has been actively invoked by the Tax Authority to disallow ‘creative’ (or in the authority’s view, ‘abusive’) tax planning to reduce the value of the assets.

Trusts, foundations and charities

Trusts

Are trusts legally recognised in your jurisdiction? If so, what types are available and most commonly used?

Trusts are legally recognised in Japan under the Trust Act. There are three types of trust:

  • trust by contract;
  • trust by will; and
  • declaration of trust. 

Traditionally, trusts have been used as substitutes for bank deposits and securities investments, as well as for vehicles for securitisation and other commercial transactions. However, it has recently become popular as a vehicle for succession of business or assets from the owner to its family member as a substitute for a will.

What rules and procedures govern the establishment and maintenance of trusts?

Trusts may be set up under the Trust Act. Once the granter entrusts its properties to a trust, such properties will not be affected by the bankruptcy of the grantor or the trustee (so-called ‘bankruptcy remoteness’) and the trusted properties are managed and disposed of by the trustee in accordance with the terms in the trust certificate and in compliance with its duties of care and loyalty. By setting up the trust, the grantor acquires the trust’s beneficial interests and may with relative ease transfer such interests to a third party for succession of business, financing or another purpose.

How are trusts taxed in your jurisdiction?

For Japanese tax purposes, there are three categories of trust:

  • Beneficiary-taxed trusts – such trusts are generally treated as conduit beneficial interests and the holder of the trust will be deemed to directly own the underlying entrusted property. Generally, beneficiary-taxed trusts cannot defer tax on income arising from the entrusted property or alienation of the underlying entrusted property from the inheritance estate for tax purposes.
  • Trusts taxable on distribution – such trusts will be taxed when the distribution of the profit is made to the beneficiaries. Collective investment trusts or lending trusts will be included in this category.
  • Trusts taxable as a corporation – such trusts are taxable in a similar manner as an ordinary corporation. A specific purpose trust with no beneficiary will be categorised as a trust taxable as a corporation. 

Foundations and charities

Are foundations and charities legally recognised in your jurisdiction? If so, what forms can they take?

Associations and foundations are legally recognised and popular vehicles for a family’s wealth management use in Japan. The most typical associations and foundations are:

  • general incorporated associations;
  • general incorporated foundations;
  • public interest incorporated associations; and
  • public interest incorporated foundations.

There are various other non-profit organisations approved by various acts – for example:

  • social welfare corporations;
  • medical corporations;
  • private school corporations;
  • religious corporations; and
  • non-profit corporations.

What rules and procedures govern the establishment and maintenance of foundations and charities?

A general association corporation or general foundation corporation may be incorporated by registration if certain corporate law criteria are satisfied without demonstrating their public purpose. There is the option to apply for transfer into public interest incorporated associations or foundations. Public interest approval is made by the prime minister or the governor of prefecture after receipt of recommendation by an independent commission based on certain criteria (eg, whether such an organisation has public interest projects as its primary goal).  

Social welfare corporations, medical corporations, private school corporations and religious corporations will be incorporated if certain criteria are satisfied and the relevant incorporation processes under each relevant specific law are pursued. 

Non-profit corporations may be incorporated in the prefecture in which their main offices are located once they have been authenticated by the prefecture following the submission of the required documents and pursuit of certain processes required under the Act on Promotion of Specific Non-profit Activities of Japan.

How are foundations and charities taxed?

Public-interest corporations are generally not subject to corporation tax on income from non-profit public activities. As such, public-interest incorporated associations and foundations are sometimes used as vehicles through which to own the shares of a publicly listed Japanese operating company as transferred from the owner-individual. As stable shareholders they prevent hostile takeovers of the Japanese operating company. By doing so, the owner-individual can alienate these shares from his or her inheritance estate to reduce a future inheritance tax burden. Gift or donation of an asset to public-interest incorporated associations is generally deductible as a qualified donation for the donor’s income or corporation tax purposes. Gift or donation of appreciated assets (eg, shares of the Japanese operating company) by a resident individual to public-interest incorporated associations (and certain other qualifying corporations) may be exempt from capital gains tax subject to specific approval of the Japanese tax authority.

When a taxpayer has made certain qualified donations (eg, donations to the government or municipalities, certain specified organisations or foundations for educational, scientific, social welfare or other public-interest purposes, or the Japanese Red Cross or certain authorised non-profit corporations), donations exceeding Y2,000 in one year may be deducted from the total income, provided that the deducted amount does not exceed 40% of the taxpayer’s total income.

Compliance issues

Anti-avoidance and anti-abuse provisions

What anti-avoidance and anti-abuse tax provisions apply in the context of private client wealth management?

Japanese resident individuals are subject to Japanese anti-tax haven or controlled foreign corporation (CFC) rules. When a wealthy Japanese resident individual owns shares in a foreign corporation (eg, as a holding company), he or she will be subject to the CFC rules and be taxed on a pro rata portion of the profits earned by the foreign corporation (ie, to be aggregated with his or her own income), if:

  • Japanese resident individuals (including non-resident individuals with certain special relationships to the resident individuals) and Japanese corporations collectively own, directly or indirectly, more than 50% of the foreign corporation;
  • the Japanese resident individual owns, directly or indirectly, 10% or more of the foreign corporation; and
  • the effective tax burden in a fiscal year of the foreign corporation is less than 20% (less than 30% if the foreign corporation is a shell or cash-box company).

In response to the Base Erosion and Profit Shifting (BEPS) Action Plan 3, this CFC rule has been overhauled and tightened by the 2017 tax reform and will enter effect from April 2018.

While not yet enacted, in response to the BEPS Action Plan 12, it has been reported that the government is planning to introduce reporting obligations for tax professionals and promoters who are involved in certain tax planning.

Anti-money laundering provisions

What anti-money laundering provisions apply in the context of private client wealth management (eg, beneficial ownership registers)?

In Japan, money laundering of proceeds from certain serious crimes is prohibited under the Narcotics Special Provisions Act and the Punishment of Organised Crimes and Control of Crime Proceeds Act. Further, to prevent money laundering and terrorist financing, the Criminal Proceeds Transfer Prevention Act requires that specified business operators (SBOs) (eg, financial institutions and real estate agents):

  • conduct verification of the counterparty of a transaction;
  • prepare and preserve records of verification and transaction; and
  • report suspicious transactions to the relevant authority. 

In 2016, responding to the Financial Action Task Force’s critical statement, the Criminal Proceeds Act was amended to include:

  • changes to the procedures for assessment of suspicious transactions;
  • additional obligations for SBOs to confirm that a new counterparty to a transaction has adopted a similar level of internal anti-money laundering measures;
  • expanded obligations for SBOs on adoption of internal anti-money laundering measures; and
  • requirements regarding strict verification when making transactions with foreign politically exposed persons and confirmation of substantial beneficial owners (natural persons) in case of transactions with judicial persons.

Wills and probate

Succession rules

What rules and restrictions (if any) govern the disposition of and succession to an individual’s property and assets in your jurisdiction?

The disposition of property and assets is generally governed by the property law under the Civil Code. The succession system was overhauled by the amendments to the Civil Code following World War II. There are two kinds of succession:

  • testate; and
  • intestate.  

An individual may dispose of his or her property and assets by sale, gift or otherwise during his or her lifetime, unless such disposition is against public order or it conflicts with another heir’s statutory secured portion of the estate which might be claimed to be returned to such heir.

Certain categories of heir (eg, children, spouses and lineal ascendants (not including siblings)) have a secured portion of the estate that they cannot be deprived of, even through a will. If the lineal ascendants are the only heirs, one-third of the estate will be reserved for them; otherwise, half of the estate will be reserved. An heir can claim for such statutory reserved shares within one year of learning of the commencement of inheritance and the existence of a gift or a testamentary gift which may be abated. Such claim will also be extinguished by prescription if 10 years have passed since the commencement of inheritance.

Intestacy

What rules and procedures govern intestacy?

In case of intestate, the surviving spouse is always an heir:

  • children of the deceased are first-rank heirs;
  • lineal ascendants (eg, parents and grandparents) are second-rank heirs; and
  • siblings are third-rank heirs.

If there is a spouse and children, the spouse will take half the estate and the other half is divided equally among the children. Second and third-rank heirs have no share in the estate. If there is a spouse but no children:

  • the spouse will receive two-thirds; and
  • the lineal ascendants will receive one-third.

If the lineal ascendants have already died, the spouse will receive three-quarters of the estate and the siblings will receive a quarter.

If a prospective heir dies before the deceased, such heir’s lineal descendant will become the heir. In addition, in cases where a child’s lineal descendant also dies before the deceased, such lineal descendant’s lineal descendant will become the heir.

Governing law

What rules and restrictions (if any) apply to the governing law of a will?

Under the Japanese conflict-of-law rules, succession is generally governed by the laws of the deceased’s nationality. The execution and effect of a will is governed by the laws of the testator’s nationality when the will is executed. However, Japan has ratified the Convention on the Conflicts of Laws Relating to the Form of Testamentary Dispositions (October 5 1961) and pursuant to the domestic law enacted thereunder (the Hague Convention and Law), a will is legally valid if it complies with:

  • the laws of country where the will was executed;
  • the laws of the country of the testator’s nationality when the will was executed or the testator is dead;
  • the laws of the country of the testator’s domicile when the will was executed or the testator was dead;
  • the laws of the country of the testator’s habitual residence when the will was executed or the testator was dead; or
  • in case of a will regarding immovable property, the laws of the country where such immovable property is located. 

Formalities

What are the formal and procedural requirements to make a will? Are wills and other estate documents publicly available?

If there is a will, the distribution of the estate will be effected in accordance with the will. Any person over 15 years of age can make a will. A will must follow the strict formalities set out in the Civil Code. There are three kinds of ordinary will:

  • a will written in the testator’s own hand (a holographic will);
  • a will by notarised document (no fewer than two witnesses must be in attendance); and
  • a will by a sealed secret document.

A will can be revoked at any time by the testator. Wills and other estate documents are not publicly available.

Validity and amendment

How can the validity of a will be challenged? Can the will be amended after the decedent’s death?

The validity of a will may be challenged if:

  • the will does not satisfy any of the statutory requirements;
  • the content of the will is against public order;
  • the will was made by mistake or fraudulently;
  • the testator lacked the capacity necessary for making a will;
  • the descendant died before the testator;
  • the subject asset did not belong to the inherited properties on the testator’s death; or
  • the will was withdrawn by the testator before he or she died.

If a decedent dies, his or her lineal descendant will generally not replace the descendant and the will shall be void to the extent of the relevant property, unless it was specifically intended to have the linear descendant succeed such property, in which case the property will be separately subject to the intestate succession process and such lineal descendant may participate in this process.

How is the validity of a will established in your jurisdiction?

Executors designated by the testator or family court will execute the will as the heirs’ representative.

To what extent are foreign wills recognised? Do any special rules and procedures apply to establishing their validity in your jurisdiction?

If foreign wills satisfy the requirements under the Hague Convention and Law, they will be valid (practically speaking, most foreign wills will be valid). There are no special rules or procedures for foreign wills, but some Japanese banks are unfamiliar with them and may take time to recognise their authenticity.

Estate administration

What rules and procedures govern:

(a) The appointment of estate administrators?

In general, no estate administrators will be appointed and all heirs will administrate the estate. However, if all the heirs agree, an estate administrator may be appointed, and if the claimant for division of the estate is filed with the family court, the family court might appoint an estate administrator to preserve the estate. If there is a will, the executor may administrate the estate to the extent necessary for the will’s execution.

(b) Consolidation and administration of the estate?

There is no consolidation of an estate in Japan.

(c) Distribution of the estate to heirs?

If there is no will, the estate of the deceased, as well as his or her debts, passes directly to the heirs. Until the estate is distributed among the heirs, it will be jointly owned by the heirs and each heir may dispose of his or her own share. The division of the estate will take effect retrospectively on the death of the deceased; however, the division may not affect the third party who acquires an interest in the estate before the division. Therefore, if an heir has sold his or her share in the succeeded land to a third party before the division, such a sale is valid even after the division.

Under the Supreme Court’s old view, the bank deposit in the estate of the deceased will be automatically divided in proportion to the statutorily determined ratio of succession and will belong to the statutory successors on the death of the deceased. However, in 2016 the Supreme Court took a new approach, whereby the bank deposit in the estate of the deceased will not automatically be divided on the death of the deceased and will be dealt with by the division of the estate agreed or conciliated among the heirs or adjudicated by the family court.

(d) Settlement of the decedent’s debts and payment of any taxes and fees?

An heir can accept or renounce succession. An heir may also accept succession with a reservation by declaring that he or she is liable for the debts of the deceased only up to the amount of the succeeded estate. Renunciation or acceptance with reservation must be made within three months of the heir becoming aware of the death of the deceased and of the fact that he or she is to succeed to the estate. The heir must prepare an inventory of the estate and declare renunciation or acceptance at the family court in order to effect renunciation or acceptance with reservation. When an heir fails to renounce or accept succession with reservation within the three-month period, he or she is deemed to have accepted the succession.

Planning considerations

Are there any special considerations specific to your jurisdiction that individuals should bear in mind during succession planning?

For a foreign testator, a will by notarised document will be recommended based on the grounds that:

  • it was pre-certified by a notary public (an honourable profession in Japan, usually occupied by ex-judges, ex-prosecutors or other legal professionals);
  • the execution process will be made more smoothly;
  • it is less likely that a will shall be lost, since original wills are held at the notary public office; and
  • notarised wills are not required for the probate process, while holographic and secret-sealed wills are submitted to family courts and certified through the probate process.

Capacity and power of attorney

Loss of capacity

What rules, restrictions and procedures govern the management of an individual’s affairs where he or she loses capacity and the grant of power of attorney in such cases?

If an individual loses the capacity to discern right and wrong due to mental disability, a family court may order the commencement of guardianship upon the request of certain relevant parties. If an individual’s capacity to discern is substantially insufficient, a family court may order the commencement of curatorship upon the request of certain relevant parties. If an individual’s capacity to discern right and wrong becomes insufficient due to mental disability, a family court may order the commencement of assistance upon the request of certain relevant parties. Such an individual’s acts without the consent of the guardian, curator or assistance may be rescinded.

Minors

What rules, restrictions and procedures govern the holding and management of a minor’s assets until the minor reaches the age of capacity?

Under the Civil Code, if the minor is a Japanese citizen, his or her act without the consent of the statutory agent (usually the parents) may be rescinded, unless such act grants only rights or interests to the minor or discharges the duty.

Family links

Marriage and civil partnerships

What matrimonial property regimes are recognised in your jurisdiction?

The property of a married couple can belong separately to either spouse. Property which belonged to one spouse before marriage, or which one spouse obtained in his or her own name during the marriage, belongs to that spouse. Property whose ownership cannot be determined is presumed to be jointly owned by the married couple.

While pre-nuptial agreements are not very popular in Japan, a couple may execute an agreement regarding their properties (ie, a couple’s property agreement) before filing their marriage notice to the authority pursuant to the Civil Code. Such an agreement will be registered at the Legal Affairs Bureau so that it may be legally claimable against their heirs or other third parties.

Are same-sex marriages and/or civil partnerships recognised in your jurisdiction?

No legislation has been made regarding same-sex marriage and therefore no particular legal protection has been given to same-sex couples in Japan. However, some local municipalities have recently enacted certain local regulations under which the municipality commenced to issue ’partnership certificates’ to same-sex couples, but the legal effect of such certificates is unclear and arguably same-sex couple with such certificates might be treated equally as de facto heterosexual couples.

Children

Is there a legal distinction between legitimate and illegitimate children in terms of estate and succession planning?

Until recently, an illegitimate child’s share of an estate was half of that of a legitimate child. However, on September 3 2013 the Supreme Court declared that the relevant provision of the Civil Code was unconstitutional (violation of equal protection) and invalid. Thereafter, such discriminatory treatment between an illegitimate and legitimate child was abolished.

Is there a legal distinction between natural and adopted children in terms of estate and succession planning?

There are no legal distinctions between natural and adopted children in terms of estate and succession planning.