Inheritance tax. Leave japan and come back?

[___shadow___]

Some people Amy consider this immoral or something but I need to ask if someone has done this and if it’s possible.

Me and my sister will inherit 3 properties collective value is 2 million dollars (about)

Liquid assets is about 5-6 split two ways.

Then there’s stock and bonds and some other weird investments that amount to I think maybe 3-4 at the moment.

So let’s say I get 6 million.
Tax is pretty high in Japan.
My country has tax free inheritance.

Has anyone ever left Japan for, let’s say 6 months, reapplied for visa and then come back?

My fear is that it would be considered tax evasion but I’m not really sure.

Otherwise I’m considering telling my father to rewrite the will so all the assets etc will be locked in the same place and I get it as soon as I move home to my country.

Edit: inheritance tax is high in Japan is what I meant. From my understanding if it’s a substantial amount of money it’s almost 50%.
Whilst I in general don’t mind paying taxes, I think inheritance tax is a load of crap.

Edit 2: first. Thank you for wishing my dad the best. Hopefully he will be fine but one never knows when they’re pretty far gone with an illness.
Discussing money in a situation like this seems a bit macabre but kind of have to.

I was also thinking about giving my sister the majority of the assets that are holiday homes/apartment. Do t know if that will change anything regarding property tax (don’t know the term) you have to pay when inheriting land.
If I’m not a majority owner maybe I can avoid paying on those. The value of the land is just too high for me being able to pay for it if I also have to pay taxes on the liquid assets.
This I will talk to a lawyer about because its a real bitch to plan if that’s a way to at least avoid a portion of the taxes.

 

[jhalay]

@___shadow___ At this point in my life, for 6 million dollars I'd leave Japan for good.

 

[kristhuy]

@___shadow___ I assume you hold a table 2 visa or have lived in Japan for at least 10 years (otherwise you wouldn't be worried about paying inheritance tax on overseas assets).

My fear is that it would be considered tax evasion but I’m not really sure.

All that matters is whether your 住所 (as defined by Article 22 of Japan's Civil Code) is in Japan at the time of the death. Your 住所 is "the base of your life". It's the residential location you are most closely tied to by virtue of your occupation, family, and living arrangements.

There is a rule-of-thumb that once you have a 住所 in Japan you will keep a 住所 in Japan unless you leave Japan with the clear intention to live outside Japan for more than one year. But this can vary depending on individual circumstances. The main problem with the kind of plan you are describing is that your stay outside Japan appears temporary in nature, in which case you would normally retain a 住所 in Japan while you are gone.

In any event, considering the amounts of money involved and the fact-heavy nature of 住所 determinations, you should probably seek professional advice on the matter.

rewrite the will so all the assets etc will be locked in the same place and I get it as soon as I move home to my country

That sounds like a trust, which would not prevent you from owing inheritance tax on the assets. Japanese tax law requires someone to own the assets after the death occurs. They can't just sit unowned waiting for you. If that's what the will says, you will be deemed the owner from the moment of death (for Japanese tax purposes).

So the type of will that would work is one that explicitly leaves you no share of the inheritance. (If you move back to your home country, you could perhaps hope that the other heirs gift you some proportion of their inheritance?) I'm not sure if that would be a risk worth taking though. After all, a taxed inheritance is still better than no inheritance.

 

[___shadow___]

@kristhuy I’m coming up on 10 years.
My father is not deceased but he is not doing well (obviously don’t want to get into details) so I’m just checking here if anyone has a similar situation or has done anything like that.

I don’t have PR and nor am I married.
However work is here obviously.

Yeah, trust fund is the word. It would be an arrangement that it’s written in my sisters name but it’s not accessible without my consent.
We’re in good terms and all that and my father has divided the inheritance accordingly(he himself used to be a lawyer) so there is not a chance that we can fight over it.

I will seek legal help here as well when the time comes but needed to ask here if there’s any basic things I need to know.

I appreciate you taking the time to reply!

 

[ethzz]

@kristhuy

That sounds like a trust,

Curious--is there any distinction between a revocable trust, which I think an inheritor would become trustee/controller of, and an irrevocable trust, where the inheritor has no control over what happens within the trust, and no choice about when any money/assets are distributed?

An analogy for a similar lack of control might be stock XYZ. I own it, and the ex-dividend date goes by, meaning I'll get the dividend, it is owed to me, but then I'm only taxed on it when it is paid, the pay date.

 

[kristhuy]

@ethzz To avoid potential terminological confusion:

A revocable trust is one where the settlor (person who owns the assets before the trust has been created) retains control over the terms of the trust during its operation. For example, they can add/remove beneficiaries, add/remove assets, be a trustee or beneficiary themselves, and even terminate the trust.

An irrevocable trust is one where the settlor has basically no ongoing control over the terms of the trust. Once the trust has been set up, any changes would need the consent of all beneficiaries.

In terms of Japanese gift and inheritance tax, the critical factor is whether the named beneficiary is truly a beneficiary (which would make the creation of the trust a taxable event for the beneficiary) or whether they are merely a "future beneficiary" (someone who will become a beneficiary of the trust when some event happens in the future).

This issue was discussed in more detail here, for example.

 

[mariangel]

@___shadow___ 6 million is well into retire live off investments for the rest of your life territory. You may want to break your ties with Japan for 3-5 years. The money you save in taxes would buy you a nice place in Japan when you return. But get professional advice on how to do it right.

 

[twm]

@mariangel That's my thought. I mean...Japan is nice, but, with that amount you could basically take a vacation for 5 years. Why even tie yourself down in one location tbh? Not sure what taxes would be on a 6M inheritance, but I wouldn't want to pay it if I were OP just for the right to remain a PR in Japan.