TOKYO - As Japan’s entire baby boomer generation enters the late-stage elderly bracket, the country is approaching what experts call the 'Great Inheritance Era' — a period marked by a sharp rise in asset transfers after death.
With the number of inheritances increasing and real estate prices climbing, more households are now being required to pay inheritance tax. Against that backdrop, three specialists gathered for a roundtable discussion to explain how families can avoid costly mistakes and respond to recent tax reforms.
The panel featured an inheritance-focused tax accountant — a rarity even within the profession — an administrative scrivener who handles complex legal procedures such as property title transfers, and a former Bungeishunju reporter turned freelance writer who has covered tax audits and related issues.
At a seminar held in Tokyo in early April, attendees were warned that failing to plan ahead can significantly increase tax liabilities.
'There is a world of difference between inheriting with a proper plan and doing nothing,' one speaker said.
Interest in inheritance planning has grown further this year following tax rule revisions. Measures previously used to reduce taxes, including the transfer of rental properties and lifetime gifting strategies, have become more restricted.
Meanwhile, soaring land prices have pushed up property valuations, causing more estates to cross the taxable threshold. Combined with the aging of the baby boomer generation, the total number of inheritance cases has also risen.
As a result, more than 160,000 people a year are now paying inheritance tax in Japan.
Freelance writer Sakata, who has written extensively on inheritance issues, stressed the importance of understanding repeated changes to the tax system.
'If you don’t know the rules, you lose out,' Sakata said. 'Some special exemptions are optional, so failing to use them is not technically a mistake — but using them can lower taxes substantially.'
He cited adoption as one example. If a spouse or child legally adopts someone, the estate’s deduction allowance can increase. However, only one adopted child generally qualifies for the deduction in many cases.
'Some people proceed assuming four or five adopted children will all count. That misunderstanding can be expensive,' he said.
Ota, a specialist tax accountant who has advised more than 3,000 clients, pointed to another common misconception involving spouses.
'A surviving spouse can inherit up to 160 million yen without paying inheritance tax,' Ota said.
While that sounds highly advantageous, he warned that leaving too much of the estate to the spouse can create a larger tax burden later when assets are passed on to the next generation.
'Many people think everything should go to the wife once they hear about the exemption. In some cases, that can become the most expensive option overall,' he said.
The discussion also covered practical measures families can take now, including family trusts and wills.
Experts warned that poor planning can also create problems with real estate. In some cases, land may become difficult to sell while fixed asset taxes rise sharply.
They also stressed the importance of choosing a qualified adviser, noting that mistakes by tax professionals can be costly. One case reportedly involved a family paying 20 million yen more in inheritance tax than necessary.
The program concluded that early action, careful adviser selection and a clear understanding of current rules are now essential as Japan enters an unprecedented wave of wealth transfer.
Source: テレ東BIZ
