An Overview of How to Resolve Inheritance Issues and Partition Estates in Japan! Explained by a Specialist Japanese Attorney!

When a Japanese passes away and leaves behind an estate, what the heirs must do is “partition the estate.” The procedure is complex, and due to misunderstandings or lack of knowledge, it is often seen that family relationships deteriorate or mental stress accumulates before resolution in Japan.

This article provides an explanation that anyone can understand, covering everything from the basics of estate partition in Japan, to how to conduct heir investigations and estate partition negotiations, and even legal solutions such as mediation and adjudication when negotiations fail to reach an agreement. We will also introduce how to utilize Japanese attorneys in Japan.

By reading this, you will understand how inheritance and estate partition can be resolved in Japan. Since this is an explanation by a specialist attorney in Japan, please use it as a reference to resolve your inheritance issues in Japan.

1. How to Resolve Inheritance Issues in Japan: What is Estate Partition?

Estate partition is a procedure recognized by Japanese law that determines how to divide the property (estate) left by the deceased (decedent) among multiple heirs.

If there is no will, the inheritance issue cannot be resolved without completing this process. This procedure is important for heirs to resolve estate issues amicably while respecting the  deceased.

2. Basics of Estate Partition in Japan

In Japan, estate partition is necessary when a Japanese person passes away and therefore inheritance procedures starts in Japan, in cases where there is no will or where the will does not specifically designate the method of estate partition.

All heirs participate to discuss how to divide the inherited property left by the deceased (including not only positive assets such as real estate, savings, and stocks, but also negative assets such as debts) and aim to reach an agreement for the final estate partition.

Through this discussion, they negotiate how much property each heir will receive, how to evaluate that property, and how to distribute it fairly. Among inherited property, some items are easy to divide like cash, while others are difficult to divide like real estate. The basic purpose of estate partition is to divide such diverse property in a way that all heirs can accept. When there is a large estate or various types of assets, dividing them is not easy, so please seek the support of a specialist attorney in Japan.

3. What Types of Cases Are Likely to Cause Trouble in Estate Partition?

Estate partition is a procedure among heirs and emotional conflicts are likely to be involved. Additionally, when heirs have had estranged relationships, emotional issues are more likely to be seen and resolution through negotiation is difficult.

Cases that are particularly difficult to resolve are explained below.

• When there is strong attachment by some heirs to specific property:

When there is property that a specific heir has attachment to, such as the family home or ancestral land, and they claim to want exclusive ownership of it.

• Differences in perception of contribution among heirs:

When a specific heir feels that “I contributed more than other heirs” because they cared for the decedent during their lifetime or helped with the family business, and seeks more property.

• When there are lifetime gifts (special benefit):

When a specific heir received substantial gifts or assistance from the decedent during their lifetime, yet claims estate partition without considering that amount.

• When there are heirs who cannot be contacted:

When there are estranged or missing persons among the heirs, discussions cannot proceed and the procedure stalls.

• When the estate is difficult to assess:

When the estate includes property that is difficult to objectively evaluate, such as unlisted stocks, antiques, or some complicated property, opinions may conflict over the valuation.

4. Three Steps to Resolve Estate Partition

In Japan, to proceed with estate partition smoothly, it is important to follow the steps. There are three steps to resolve estate partition, and by understanding and properly following these steps, you can aim for resolution of estate partition in an efficient way.

4-1. Step 1 : Investigation of Estate and Heirs

When beginning estate partition, the first thing to do is to accurately understand what kind of property the Japanese deceased had, how much, where it was located, and who will be the heirs. If this investigation is insufficient, new property may be discovered or heirs may be overlooked during later discussions, which can interrupt negotiations or cause troubles.

Specifically, not only positive assets such as savings, real estate, securities, automobiles, and antiques, but also all negative assets such as debts and unpaid amounts are identified. Additionally, for Japanese persons, family register certificates from birth to death of the deceased are collected to accurately identify the legal heirs. This clarifies the full picture of the inherited property and those who have inheritance rights, establishing the foundation for fair estate partition. Even for non-Japanese persons, the names of foreign heirs are usually listed in the family register certificates.

4-2. Step 2 : Proceeding with Estate Partition Negotiation

Once the investigation of the estate and heirs is complete, all heirs then conduct an estate partition negotiation. This negotiation involves all heirs participating to discuss how to divide the property left by the deceased and aims to reach a consensus. In the discussion, it is important not to become emotional, to respect each person’s opinions, and to seek a fair method of division.

The statutory inheritance share is merely a guideline and does not necessarily need to be followed. It is most important to consider each heir’s circumstances and wishes and reach an agreement in a way that everyone can accept. Once the negotiation is concluded, to prevent future troubles, a memorandum of estate partition negotiation documenting the contents is prepared and signed and sealed by all heirs. For the preparation of this document, special documents such as affidavits are also required for heirs residing abroad.

This memorandum of estate partition negotiation is a very important document required for procedures such as changing real estate registration and withdrawing savings in Japan.

4-3. Step 3 : Solutions When Negotiation Fails to Reach Agreement

Even when all heirs conduct estate partition negotiations outside of court in Japan, there are many cases where agreement simply cannot be reached due to conflicting opinions or emotional grudges. Even in such cases, there is no need to give up on resolution. Resolution of problems can be achieved through procedures at Japan’s family courts. Even heirs who are not Japanese nationals can initiate this procedure and become parties to this procedure.

5. What is Estate Partition Mediation?

When estate partition negotiation fails to reach agreement, an application for estate partition mediation can be filed with the family court having jurisdiction in Japan. Estate partition mediation is a procedure in which mediation commissioners of the family court intervene between heirs, listen to each person’s opinions, and support reaching agreement through discussion.

In Japan, mediation is conducted at family courts in private, and since judges and mediation commissioners provide advice based on specialized knowledge, calm discussions can be expected. If mediation is successful, its contents are prepared as a mediation record, which under Japanese law has the same legal effect as a final judgment.

6. What is Estate Partition Adjudication?

If agreement is not reached even through estate partition mediation, it automatically transitions to estate partition adjudication. Estate partition adjudication is a procedure in which a judge of Japan’s family court determines the method of estate partition based on the parties’ claims and submitted evidence.

In the adjudication, the judge makes the final decision considering the statutory inheritance share, contributory portions, special benefits, and other factors. Decisions made in adjudication have binding force, and the parties must comply with their contents. Compared to mediation, it is a more legal and formal procedure, and parties must comply even if they are not satisfied. However, an appeal can be filed with the High Court to contest the decision.

7. The Secret to Avoiding Estate Partition Troubles: The Importance and Preparation of a Will

One of the most effective means to prevent troubles in estate partition is the preparation of a will. However, in Japan, the majority of people do not prepare a will.

A will is an important document that can clearly state who should inherit what property and how much based on one’s own wishes, but it is not widely utilized. If there is a will, flexible property distribution becomes possible without being bound by statutory inheritance shares, such as when you want to give more property to a specific heir or leave property to someone other than heirs.

In Japan, there are two types of wills: “holographic wills” and “notarized wills.” While holographic wills can be easily prepared at low cost, it should be noted that they may become invalid due to formal deficiencies, there are risks of loss or falsification, and probate procedures at family court are required. On the other hand, notarized wills involve a notary public in their preparation at a notary office, so there is no concern about formal deficiencies, the original is stored at the notary office reducing the risk of loss or falsification, and probate is not required. There are costs involved, and preparation takes time.

In a will, it is important to specifically identify the property. Additionally, it is necessary to specifically designate who will inherit which property. In Japan, a will can also include “”supplementary notes”” explaining why such contents were written, allowing messages to be conveyed to heirs.

8. How to Find an Inheritance Attorney in Japan

To avoid estate partition troubles, it is very important to consult with an attorney at the appropriate time. After inheritance occurs, we recommend consulting an attorney before starting estate partition negotiations or as soon as you feel any disagreement beginning to emerge among heirs. By doing so, you can move toward resolution before emotions escalate and before problems become complicated.

Experts regarding estate partition include attorneys, judicial scriveners, and tax accountants. Attorneys are professionals in dispute resolution, including representation in negotiations when estate partition negotiations fail to reach agreement, representation in mediation and adjudication procedures, and claims for infringement of legally reserved portions.Judicial scriveners handle inheritance registration procedures for real estate. Tax accountants handle inheritance tax declarations.

While it is attorneys who resolve disputes, we recommend taking advantage of free consultations at multiple law firms, explaining your situation, and meeting with attorneys in person. Based on that, you should confirm whether they can explain their approach to resolution, whether they have extensive experience, whether their fee structure is clear, and above all, whether they are a good fit for you. Finding a trustworthy attorney is a significant step toward resolving estate division quickly. However, it may not easy to find the inheritance attorneys who handle the international cases in Japan.

9. Specific Solutions for Estate Division

Estate division solutions vary significantly depending on the types of inherited assets and the circumstances of each heir. Here, we focus on common specific cases in Japan and explain the solutions for each in detail in the context of the Japanese practices.

10. Estate Division When Real Estate Is Involved

When inherited assets include real estate, the division tends to become complex. Since real estate cannot be easily divided like cash, it is important to find a solution that all heirs can accept.

First, a proper valuation of the real estate is required. Inheritance tax valuations (road value or fixed asset tax value) may be used. However, these most likely are different from market prices. Therefore, with the consent of all heirs, appraisals by real estate appraisers or valuations from multiple real estate companies are often used.

There are four main methods for dividing real estate, as listed below.

• Partition in kind:

This is a method where a specific heir acquires the real estate in its original form. For example, this includes cases where multiple parcels of land are acquired by different heirs, or where a single building is held under joint ownership. Since joint ownership can cause future problems, careful consideration is necessary.

• Partition by sale:

This is a method where the real estate is sold and the proceeds are divided among the heirs. This is one of the fairest methods and least likely to cause disputes. However, selling takes time and costs money, and there is also a risk that the sale price may not meet expectations.

• Compensatory partition:

This is a method where a specific heir acquires the real estate and pays money from their own assets to the other heirs. This is effective when an heir absolutely does not want to give up the real estate. This solution assumes that the heir paying the compensation has sufficient financial resources.

• Joint ownership:

This is a method where the real estate is held under joint ownership by all heirs. This method avoids immediate division. However, when sale or repairs of buildings become necessary in the future, the consent of all joint owners will be required, which is highly likely to become a source of new disputes. This is considered a division method that should be avoided as much as possible.

From the above methods, you need to select the optimal division method considering the circumstances and wishes of all heirs. Inheritance lawyers in Japan will support you to avoid joint ownership if you request.

11. Estate Division of Bank Deposits and Stocks

Financial assets such as bank deposits and stocks are relatively easier to divide compared to real estate. Nevertheless, there are things to be aware of or resolved.

Bank deposits are subject to estate division, and financial institutions generally will not process withdrawals from accounts in the decedent’s name without the consent of all heirs. Therefore, bank deposits will be frozen until the estate division discussion is concluded. However, a provisional payment system has been established under the Japanese law only to cover heirs’ living expenses and funeral costs, allowing individuals to withdraw up to a certain amount on their own.

Stocks are also subject to estate division discussions. Stock valuation often references the closing price on the date of inheritance commencement or the average stock price over the past several months including the date of inheritance commencement. For unlisted stocks, more specialized valuation may be required.

For methods of dividing stocks, there are the following options.

• Partition in kind: This is a method of allocating stocks in their original form to each heir. This is suitable when there are multiple stock issues or when the number of shares is easy to divide.

• Partition by sale: This is a method where stocks are sold and the proceeds are divided among the heirs. This is the fairest method and makes it easy to avoid disputes.

• Compensatory partition:

This is a method where a specific heir acquires the stocks and pays money to the other heirs. This is used when you want to concentrate company shares in a specific heir for business succession purposes.

Procedures at financial institutions and securities companies require submission of documents with signatures and seals together with the Certificates of such Seal Registration of all heirs, as well as family register certificates. Confirming the required documents in advance and preparing them leads to smoother procedures.

For heirs outside Japan, the Certificate of Seal Registration is not available. Therefore other documents will be requested by such institutions or companies.

12. Handling Cases with Contributory Shares or Special Benefits

In estate division, when there are “contributory shares” where specific heirs contributed to maintaining or increasing the decedent’s assets, or “special benefits” where heirs received special benefits from the decedent during their lifetime, adjustments are necessary to achieve fair division in accordance with Japanese inheritance law.

13. What Are Contributory Shares

Contributory shares refer to a system where, if among joint heirs there is someone who made special contributions to maintaining or increasing the decedent’s assets through providing labor for the decedent’s business, financial contributions, or nursing care for the decedent, that person can acquire additional assets corresponding to their contribution on top of their inheritance share.

This is a legal system under Japanese law designed to evaluate heirs’ contributions and ensure fairness.

For contributory shares to be recognized under the Japanese inheritance law, the contribution must be a “special contribution.” For example, actions within the scope of mere support obligations under the Japanese family laws are not be recognized as such shares. Calculating the specific amount is difficult, and if all heirs cannot reach an agreement through discussion, you should seek the family court’s judgment as early as possible to avoid the delay of the division.

14. What Are Special Benefits

Special benefits refer to benefits. If among joint heirs there is someone who received bequests or gifts from the decedent during their lifetime (such as gifts for marriage or adoption, or gifts as capital for livelihood), that benefit is added back to the estate for calculation and the inheritance shares are adjusted. This is established to ensure fairness among heirs under Japanese inheritance laws.

For example, if an heir who is a son received a large gift from the parent during their lifetime as funds for purchasing a house, an adjustment is made by adding that gift amount to the total estate to calculate inheritance shares and deducting that amount from the son’s inheritance share. This is called “bringing into hotchpot” or mochi modoshi in Japanese. This calculation often becomes an important issue in estate division discussions.

Contributory shares and special benefits tend to create emotional conflicts among heirs and are causes of difficulties in estate division discussions. It is essential to make claims based on objective evidence and proceed with calm discussions, so use the family court early to reach a resolution for the inheritance disagreements.

15. Conclusion

Estate division in Japan is an important procedure for heirs in Japan and overseas to divide inherited assets and reach an amicable resolution. By taking appropriate steps together with specialized Japanese attorneys, short-term resolution is possible in many cases. If problems arise and seem likely to be prolonged, aim for resolution in family court together with an attorney.

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