Inheritance question

[Gulliver]

Hypothetical question: A US citizen/JapanTax resident (JTR) receives inheritance in the US that includes real estate and Mutual funds. There are, let’s say, two beneficiaries. The other beneficiary is A US citizen living in the US and not a JTR.

Since selling the real estate and mutual funds would create capital gains in both Japan and the US would it be beneficial to have the entire inheritance transferred to the non-JTR, before probate is finalized or perhaps in the will, who would then sell the assets in the US and transfer the proper portion of cash to the JTR entirely within the US (US Bank to US Bank)?

[gsnod]

Following this topic as it relates to my possible situation also.

[captainspoke]

... who would then sell the assets in the US and transfer the proper portion of cash to the JTR entirely within the US (US Bank to US Bank)?

Assuming both are statutory heirs, and not some other kind of inheritor), I guess you'd have to look at the tax the one in the US would be paying on the gains, and then calculate in the amount of gift tax you'd pay when you received the money via transfer.

I'm no expert, but I think any inheritance tax that you'd pay here would be less than that combination (the US person's tax on gains, plus the gift tax you'd owe).

Given that you're both statutory heirs, and they are outside of japan, for an inheritance you'd get the entire deduction, I think ¥42M in this case (30+6+6), and then any inheritance tax would begin--which I think would be pretty advantageous.

*
OTOH, if you're thinking of using this plan to keep the money in the US and not declare it here, that would be tax fraud.

[Gulliver]

... who would then sell the assets in the US and transfer the proper portion of cash to the JTR entirely within the US (US Bank to US Bank)?

I'm no expert, but I think any inheritance tax that you'd pay here would be less than that combination (the US person's tax on gains, plus the gift tax you'd owe).

Doh! I forgot about the Japanese gift tax trap. I guess it wouldn’t be much of an advantage then. (Unless the gift tax doesn’t apply if the money is exchanged outside Japan?)

[Tkydon]

.

[Gulliver]

may or may not be subject to a 20% Surtax on the positive tax amount...
If you are the Spouse, then there is a huge Spouse Deduction (Y160M with some caveats)...

I appreciate your concise reply, as always.

I am unclear about the 20% surtax you mentioned, however. Where does that originate? Is this independent of the inheritance tax?

[Tkydon]

may or may not be subject to a 20% Surtax on the positive tax amount...
If you are the Spouse, then there is a huge Spouse Deduction (Y160M with some caveats)...

I appreciate your concise reply, as always.

I am unclear about the 20% surtax you mentioned, however. Where does that originate? Is this independent of the inheritance tax?

If you are not a direct blood relative; parent spouse or child, such as a grandchild or non-blood-relative, then the inheritance tax amount due is multiplied by 1.2. (20% surcharge)

[Vander]

Hi all,

I have been told as it currently stands, my family and I (3 siblings with no links to Japan) will each receive about 750000 AUD (73,000,000) JPY.
Would I be right in saying that I could deduct 24,000 + 30,000 as non taxable and I would then be taxed on the remainder 19,000,000 JPY?

Cheers

[emikami]

I appreciate your concise reply, as always.

I am unclear about the 20% surtax you mentioned, however. Where does that originate? Is this independent of the inheritance tax?

If you are not a direct blood relative; parent spouse or child, such as a grandchild or non-blood-relative, then the inheritance tax amount due is multiplied by 1.2. (20% surcharge)

Actually, it is if you are not a statutory heir, then your portion of inheritance tax is raised by 20%. You can be not-blood related and still be a statutory heir through adoption. I believe there can be a maximum of 4 adopted children whom can become statutory heir.

[Tkydon]

Actually, it is if you are not a statutory heir, then your portion of inheritance tax is raised by 20%. You can be not-blood related and still be a statutory heir through adoption. I believe there can be a maximum of 4 adopted children whom can become statutory heir.

Thanks for the clarification.

Please see

https://www.nta.go.jp/law/shitsugi/sozoku/07/02.htm