Succession

Estate constitution

What property constitutes an individual’s estate for succession purposes?

In principle, any and all rights and duties attached to the property of the decedent, including a legal title to tangible and intangible property, and co-ownership interest in property, claims and obligations, are succeeded to at the time of the death of the decedent. This, however, shall not apply to rights or duties of the decedent that are purely personal, such as the right to welfare or public assistance.

Disposition

To what extent do individuals have freedom of disposition over their estate during their lifetime?

In principle, individuals may make any and all dispositions over their estate, whether by sale or through gifts, during their lifetime, except where such disposition is against public policy (eg, a lifetime gift for the purposes of maintaining an adulterous relationship) and thus should be considered void. However, if the heirs who are entitled to a statutory reserved share claim for abatement of the gift so requested, the recipient must make monetary compensation equivalent to the statutory reserved share claim..

To what extent do individuals have freedom of disposition over their estate on death?

In principle, individuals have testamentary freedom over their estate, except in cases where such disposition is against public policy. However, if the heirs who are entitled to a statutory reserved share claim for abatement of the gift so requested, the recipient must make monetary compensation equivalent to the statutory reserved share claim.

Intestacy

If an individual dies in your jurisdiction without leaving valid instructions for the disposition of the estate, to whom does the estate pass and in what shares?

If the intestate is survived by his or her spouse, such spouse shall, in principle, always be an heir. Other heirs are determined according to who survives the decedent.

 

Intestate survived by spouse and children

In this case, the spouse and children of the decedent become heirs. If the decedent is survived by his or her spouse and one or more children, the surviving spouse will take half of the estate, and the surviving children will take the other half in equal shares. If any of the decedent’s children died prior to the death of the decedent, or lost the right to inheritance due to disqualification or disinheritance, and if any of his or her lineal descendants is surviving, then such lineal descendant (ie, a grandchild or a further descendant of the decedent) will be an heir per stirpes.

 

Intestate survived by spouse and lineal ascendants with no surviving children

The lineal ascendants of the decedent, such as his or her father or mother, may become heirs only if the decedent has no children (and no heirs per stirpes). In this case, the surviving spouse will take two-thirds of the estate, and the surviving lineal ascendants will take one-third of the estate in equal shares.

 

Intestate survived by spouse and siblings with no surviving children or surviving lineal ascendants

The siblings of the decedent may become heirs only if the decedent has neither surviving children (and no heirs per stirpes) nor surviving lineal ascendants. If the decedent is survived by his or her spouse and siblings, the surviving spouse will take three-quarters of the estate, and the surviving siblings will take one-quarter of the estate in equal shares. If any of the decedent’s siblings died prior to the death of the decedent, or lost the right to inheritance due to disqualification or disinheritance, and if his or her children are surviving, then the child (ie, a nephew or a niece of the decedent) will be an heir per stirpes.

 

Special benefit and contributory portion

The above-mentioned shares of each heir are subject to adjustment according to the amount of special benefit that the heirs have already received from the decedent, and the contributory portion of heirs who made a special contribution relating to the decedent’s business, medical treatment or nursing of the decedent or other means.

Adopted and illegitimate children

In relation to the disposition of an individual’s estate, are adopted or illegitimate children treated the same as natural legitimate children and, if not, how may they inherit?

Adopted and illegitimate children are treated in the same way as natural legitimate children. In the past, article 900 of the Civil Code stipulated that an illegitimate child was only entitled to half the estate to which a legitimate child was entitled. For many years, there were strong criticisms of the fairness of this clause. On 4 September 2013, the Supreme Court of Japan finally decided that such unequal treatment was in violation of article 14 of the Constitution of Japan, which provides for equal protection for all. Following the ruling of the Supreme Court, article 900 was formally amended in December 2013, and the distinction between legitimate and illegitimate children was abolished.

Distribution

What law governs the distribution of an individual’s estate and does this depend on the type of property within it?

It depends on the nationality of the decedent. If the decedent’s nationality is Japanese, the Civil Code governs the distribution of the individual’s estate. The explanations in this section on succession are based on the Civil Code. Even if a foreign law governs the succession or distribution of an individual’s estate because of the nationality of the decedent, the heirs, testamentary donees and the recipient legal entities who succeed to real property within Japan must register their share to perfect the changes in rights through the procedure required by the laws of Japan.

Formalities

What formalities are required for an individual to make a valid will in your jurisdiction?

This depends on which law governs the formality of a will. Under Japanese law, a will is considered valid in its formality if it complies with:

  • the law of the place where the act was performed;
  • the law of the country where the testator had nationality, either at the time he or she made the will, or at the time of his or her death;
  • the law of the place where the testator is domiciled, either at the time he or she made the will, or at the time of his or her death;
  • the law of the place where the testator was habitually resident, either at the time he or she made the will, or at the time of his or her death; or
  • the law of the place where the real property is located in the case of a will concerning real property.

 

If the Civil Code applies to a will in question, then (1) a holographic document, (2) a notarised document or (3) a sealed and notarised envelope document is considered valid in terms of formality.

With regard to (1), the testator must write the entire text, the date and his or her name in his or her own hand and affix his or her seal. The testator is allowed to prepare the list of assets using a word processor.

With regard to (2), the following requirements must be satisfied:

  • no fewer than two witnesses must be in attendance;
  • the testator must give oral instruction of the tenor of the will to a notary public;
  • the notary public must write the testator’s dictation and either read it aloud, or submit it to the testator and witnesses for inspection;
  • the testator and witnesses must each sign and affix his or her seal to the certificate after having approved its accuracy; and
  • the notary public must provide supplementary registration to the effect that the certificate has been made in compliance with the formalities listed in each of the preceding items, and sign and affix his or her seal thereto.

 

With regard to (3), the following requirements must be satisfied:

  • the testator must sign and affix his or her seal to the certificate;
  • the testator must seal the certificate and affix the same seal;
  • the testator must submit the sealed certificate before one notary public and no less than two witnesses, with a statement to the effect that it is his or her own will, giving the author’s name and address; and
  • after having entered the date of submission of the certificate and the statement of the testator upon the sealed document, the notary public must, together with the testator and witnesses, sign it and affix his or her seal thereto.

 

Apart from a will, which is required to comply with considerable formality in order to be valid, it is possible to make a gift in the form of a gift agreement by and between a donor and a recipient, which will become effective at the time of the donor’s death. Gift agreements are required to comply with relatively lower standards of formality in order to be valid.

Foreign wills

Are foreign wills recognised in your jurisdiction and how is this achieved?

The law of the nationality of the testator governs the execution and effect of foreign wills.

Administration

Who has the right to administer an estate?

If there is only one heir and no will, he or she will inherit the entire estate and will be allowed to administer it. If there are two or more heirs and no will, most of the inherited estate, such as real estate, will belong to those heirs in co-ownership, and such co-ownership will only be terminated after it is decided which of the heirs should take which specific assets by effect of an out-of-court agreement or the completion of a formal court procedure. Until such decision is made, the joint heirs administer the inherited estate. However, the family court may appoint a manager of such estate, if it considers it necessary to do so to preserve such estate.

If there is a will, an executor, in principle, has the right and duty to administer the estate until the succession of the estate under the will is fully completed. An executor may be designated by the will itself or be appointed by the family court.

How does title to a deceased’s assets pass to the heirs and successors? What are the rules for administration of the estate?

In principle, if a person dies intestate, his or her estate automatically and directly passes to the heirs upon the commencement of the inheritance and, if there are two or more heirs, they will co-own the decedent’s assets. However, a bank deposit was not considered to be co-owned, but was automatically divided among the heirs. In this respect, on 19 December 2016, the Supreme Court decided that the court precedent that had treated bank deposits as divisible claims should be revoked, and thus that bank deposits should not treated as divisible claims. Under the new court precedent, no heir is, in principle, able to withdraw deposits of the decedent before the division of the estate without obtaining consent from all the other heirs, regardless of the necessity for withdrawing deposits to pay, for example, expenses for funeral services. This may cause some inconvenience. To address this issue, the revised Civil Code, which, in principle, took effect on 1 July 2019, introduced temporary payment rules such that the court may issue a temporary order to grant partial withdrawal of deposits in a more flexible and expeditious manner than in the case of the formal preliminary injunction procedures. A new measure has also been introduced such that heirs can withdraw certain small deposit amounts without obtaining consent from all the other heirs.

If a person dies testate, his or her estate will be passed to his or her heirs, testamentary donees and recipient legal entities in accordance with his or her will. 

If there is only one heir and no will, he or she will inherit the entire estate and will be allowed to administer it. If there are two or more heirs and no will, most of the inherited estate, such as real estate, will belong to those heirs in co-ownership, and such co-ownership will only be terminated after it is decided which of the heirs should take which specific assets by effect of an out-of-court agreement or the completion of a formal court procedure. Until such decision is made, the joint heirs administer the inherited estate. However, the family court may appoint a manager of such estate, if it considers it necessary to do so to preserve such estate.

If there is a will, an executor, in principle, has the right and duty to administer the estate until the succession of the estate under the will is fully completed. An executor may be designated by the will itself or be appointed by the family court.

Challenge

Is there a procedure for disappointed heirs and/or beneficiaries to make a claim against an estate?

Heirs other than siblings have statutory reserved shares. If only lineal ascendants are heirs, they have statutory reserved shares that are equal to one-third of the decedent’s estate. In the other cases, heirs have statutory reserved shares that are equal to half of the decedent’s estate. Heirs must claim for monetary compensation equivalent to the statutory reserved shares, in principle, within one year of having knowledge of the commencement of inheritance and the existence of a gift or testamentary gift to be claimed.

Law stated date

Correct on:

Give the date on which the information above is accurate.

18 September 2020