You have lived abroad for some time now and may have come to the realization that your stint in Japan is not as temporary as you first thought when you first arrived (however many years ago). You may have also asked the question “what happens if I die in Japan?” and become aware that Japanese law operates on a civil-law basis of forced heirship whereby the estate of the deceased (all your assets) are separated into two portions; the indefeasible portion, whereby the allocation of wealth is pre-determined by government legislation with an emphasis on the spouse and immediate family, and the discretionary portion, whereby you are able to choose of your own free will how and to whom the assets are disposed. This will no doubt come as a surprise to most- especially those hailing from common-law jurisdictions whereby the power of the individual to distribute their wealth as they please is irrefutably absolute. One way to mitigate the process here in Japan (in theory) is to have a qualifying last will and testament in your home country.
There may however be issues come your time of death, as this document is produced to Japanese authorities (no doubt in English, or another foreign language). As is often the case with Japanese administrative procedure involving tax, your family will often be pitted against the full force of Japanese bureaucracy in their effort to have the non-Japanese will acknowledged and honored. In some cases this may go as far as to having the documents scrutinized in court. If it takes that route, the process will likely be protracted and not without cost.
Wills for foreign people in Japan
Unfortunately this is one of the scenarios whereby straddling two different jurisdictions (your passport holding home country and Japan) with differing legal systems complicates things. Your will in your home country will be non-standard in Japan and runs the risk of being contested. Any will you prepare in Japan will be non-standard in your home country and runs the risk of being contested. The solution? Two wills.
Most commonly in Japan peoples last will and testament will take the form of a Notary Deed. In essence, this is a record of your wishes, made official by a notary. A notary, attached to the Legal Affairs Bureau or a District Legal Affairs Bureau, is a type of public official appointed by the Minister of Justice, who undertakes notarisation duties. The duties of a notary include creation of notarial deeds, authentication of private documents and articles of incorporation, and the attachment of officially-attested dates. Creation of the document entails you verbalizing your wishes to the notary in Japanese (you can hire a translator at your own expense if required) in front of two witnesses. The notarized document is then dated, signed and sealed in an envelope. You retain a copy of the document. The notary retains the original. This is traditionally the most fool-proof of methods.
If you are looking to avoid the cost associated with creating a Notary Deed then you may wish to consider a handwritten will (although this may prove to be a false economy should the will be contested in a Japanese court and they void it, ignoring your wishes….). As the name suggests you simply commit your wishes to paper by hand, date it, sign it and seal it. This document should, for obvious reasons, be held in a safe place and instructions should be given to the executor(s) of the will how to attain it when the time comes. This could potentially be the complicated part, as it is probably a good idea to have a person with no vested interest in the contents (i.e. not a beneficiary in the will) to manage the process so as to avoid any tampering or attempts to forge another version of your will.
In some cases Japanese courts may deem a handwritten will to be void. This may happen due to an unforeseen technicality or if they deem it to be a forgery. The criteria for assessing whether a completely non-standardised document written in a foreign language decades ago is “real” or not is unclear. More likely than the court questioning the veracity of the will is the likelihood of a claim of a creditor against the deceased’s estate; enter disgruntled ex-wife, bitter business partner, alcoholic third cousin. If the executor of the will is foreign then challenging any decisions rendered by the authorities will again be time consuming and costly, and ultimately may result in no change to the original verdict. There also exists a conflict of interest whereby allowing a foreign resident’s assets to be distributed outside of Japan inadvertently reduces the revenue of the Japanese government; be this through inheritance tax (trying to prove that the assets are outside of the scope of the deceased’s estate entirely and avoiding an up to 55% Japanese tax haircut) and letting capital flow freely out of Japan.
In summary, there is no turn-key solution the address the problems of multi-jurisdictional wills for an expat living in Japan with assets of various domicility. A will written in compliance with the laws of your home country will provide the largest sense of having taken appropriate measures, and may well eventually be accepted by Japanese authorities, but will undoubtedly create an administrative burden upon the executor in your absence, as they are forced to validate the documents via a series of onerous and time consuming requests from the Japanese authorities (and then translations of all those documents deemed relevant..which themselves will probably need to be notarized…). There is nothing to stop you from having one will for each jurisdiction’s assets but you should ensure that they are mutually-exclusive and that there is no overlap in asset contents; so that the former cannot be contested by claimants to be superseded by the latter. In any case, it is usually prudent to consult with a professional advisor before committing to any arrangement. The handling of your life’s wealth depends upon it.
– Nippon Koshonin Rengokai Document – How To Make Good Of Japanese Notaries
– White and Case, International Estate Planning Guide Individual Tax and Private Client Committee
– PWC: Tax Insights from Global Mobility: Japan: Gift and inheritance tax issues for expatriates, 2014
– Deloitte: Japan: Inbound Tax Alert Japan’s Inheritance Tax – A Reminder