In recent years, more and more foreign nationals are choosing to become a long-term resident of Japan. Many decide to settle down and spend the rest of their live in Japan. With that decision comes the issue of how to prepare so that inheritance does not become a burden for your loved ones.
So what exactly happens if you die in Japan with no will?
Does your money and property automatically go to your closest family? How long does the process take? There are a lot of questions to be answered.
1) What country’s laws apply?
First of all, which law applies: your home country or Japan?
If a foreigner who owns or has rights to real estate property dies and the inheritance process begins, the laws of the decedent’s home country 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. This means that if the decedent is a Japanese national, Japanese civil law determines these factors. If the decedent is a foreigner, the law of their home country applies even if the heirs are Japanese.
In each country’s international private law, the governing law for inheritance is determined by two systems: a unified system and a non-unified system.
In a non-unified system, the governing law depends on the type of asset involved. In the case of real estate, the law of the country in which the property is located applies. In the case of personal possessions, the law of the decedent’s country of domicile applies.
In a unified system, either the law of their home country, or the law of their country of domicile is applied exclusively.
Countries that adopt a non-unified system include common law countries (countries like the USA and England), France, Belgium, China, and North Korea (The Democratic People’s Republic of Korea).
Countries that adopt a unified system include Japan, South Korea, Taiwan, Germany, Italy, the Netherlands and Brazil in terms of applying their own law, and Switzerland and Denmark in terms of applying the law of the country of domicile.
2) Who inherits what according to Japanese law?
You may be wondering, where does inheritance go according to Japanese law? Here is an outline of the lines of succession determined by civil law.
- Spouse: will always be an heir (a spouse meaning someone who is married to the decedent by law).
- First line of succession: Children (direct descendants) including both biological children and adopted children.
- Illegitimate children who are born outside of marriage have the same inheritance rights as legitimate children. However, in the case of children that don’t have paternity acknowledged, they will not receive their father’s inheritance because the father-children relationship cannot be affirmed. Further, the grandchildren shall receive the inheritance if the children have already passed away, and if the children and the grandchildren have already died then the great-grandchildren shall receive the inheritance.
- Second line of succession: Parents (direct ancestors)
- If your parents have already passed away then the rights to your inheritance go to your grandparents, and if your parents and grandparents have already passed away then the rights to your inheritance go to your great-grandparents.
- Third line of succession: Siblings (half-siblings included)
- If your siblings have already died then your inheritance is passed on to your niece or nephews.
How inheritance is divided by law:
- If the heirs are your spouse and children: your spouse will receive half and the children half.
- If the heirs are your spouse and direct ascendants: your spouse will receive 2/3 and the direct ascendants will receive 1/3.
- If the heirs are your spouse and siblings: your spouse will receive 3/4 and your siblings will receive 1/4.
3) What happens if you die with no heirs?
If you don’t have any heirs, the court will appoint an administrator of inherited property to manage your inheritance. The administrator will conduct an investigation, and if they confirm that you don’t have any heirs, persons who had a special connection to you (those who worked with you, those who medically nursed you, and other persons who had a special connection with you) can request a portion of your wealth.
Claims for distribution of inherited property to persons with a special connection is a system where even if there aren’t any heirs, a person with a special connection with the descendent can receive all or a part of the inheritance. In the end, inheritance that doesn’t go to persons with a special connection will go to the state (specifically, the national treasury).
4) What happens if your heirs are overseas?
If your heirs are overseas, their relationship with you must be proved with official documents. If you do not have a Japanese family register (koseki), you will need to obtain official documents from overseas to prove family relationships.
Claiming the inheritance of decadents from countries without a family register system adds a layer of complexity, and usually requires an affidavit from a notary public. In this case, the amount of time it takes to complete inheritance procedures can increase significantly.
5) Will your heirs inherit your debts?
If the decedent has loans, the burden of repayment is passed onto the heirs. If you are about to claim inheritance, do not neglect to investigate negative assets. If negative assets are greater than positive assets, heirs can consider renunciation of inheritance, which is an accepted procedure in Japanese inheritance law.
Renunciation of inheritance is a procedure where you can refuse to exercise your right to inherit, often used in situations when negative assets (such as loans) exceed the value of positive assets. Inheritance consists of both positive and negative assets so if the decedent has loans, as mentioned above, the heir will inherit the obligation of repaying the loan.
If your heir choses to renounce their inheritance, they will not have to inherit the negative assets, in exchange for giving up the positive assets. Renunciation of inheritance has to be done quickly: there is a time window that is decided by law. In Japan, the heir must apply to the family court within 3 months of finding out that inheritance procedures had begun.
Options for accepting or rejecting inheritance:
- Unqualified acceptance: Inherit all of the decedents rights and obligations
- Renunciation of inheritance: Do not inherit any of the decedents rights and obligations
- Qualified acceptance: Pay off the decedents debts at the limit of the inherited assets and inherit the rest
If the heirs do not choose renunciation of inheritance or limited consent within 3 months of finding out that they are an heir (without applying for an extension to the family court), it is considered to be unqualified acceptance.
If a legal heir appeals to the family court for renunciation of inheritance and the court accepts, they will receive none of the positive or negative assets and will not be considered an heir. If all of the heirs on the same line of succession renounce their inheritance, the inheritance will go to the heirs on the next line down.
- First line of succession (decedent’s children)
- Second line of succession (direct ascendants that are heirs)
- Third line of succession (siblings that are heirs)
If all lines of succession give up their inheritance, there are no heirs.
In cases where the decedent has large loans, the situation will not get resolved just by renunciation of inheritance. In this situation, all of the decedent’s relatives will become involved. When you are considering renouncing your inheritance, consider the situation thoroughly and give care to tell the next heir(s) in line or they could be held liable.
6) How long does the inheritance process take?
The time it takes will depend on your situation, however more complex cases can take several years.
Unfortunately, how long it takes depends greatly on the details of your situation. By definition, international inheritance situations in Japan add an additional layer of complexity.
In the Japanese inheritance process, all documents submitted to Japanese authorities must be drafted in the Japanese language, and all official documents in foreign languages must be translated into Japanese in order to be admitted. Ultimately, heirs must successfully prove to the Japanese authorities that they have a valid inheritance claim.
Legacy Tomodachi is often called upon to solve complex inheritance situations, including those where there is a foreign decedent who did not leave a will.
If you are reading this as someone who is considering whether they need to make a will, we highly suggest creating a will to reduce the burden of inheritance on your loved ones.
Our bilingual specialists provide consultations in person and via Skype for matters related to wills and inheritance.
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