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International Estate Planning

Japan With Kids - Forums: General Discussions: Finances: Banking, Insurance, Taxes, etc.: International Estate Planning
By Ruth McCreery on Thursday, May 10, 2001 - 3:34 pm:

Tax and Estate Planning Issues for US Citizens Abroad

Who: Barbara Hauser, a lawyer specializing in estate and tax issues affecting U.S. citizens who live outside the U.S.
When: 7-9 p.m., May 14
Where: Minami Aoyama, 5 minutes from Omotesando Station. (Call or e-mail McCreery, rsm@gol.com, 045-314-9324, for a map.)
Why: If you are new to living abroad, you may not be aware of some of the wrinkles in tax law affecting you. If you are an old hand at this, you may still not be up on the latest in tax law. And, though estate planning is a topic many think they can put off until middle age (definition: ten years above your current age), not planning is also planning . . . and the default plan, for people living abroad, may be other than you and your family had imagined.

Barbara Hauser, an internationally recognized lawyer specializing in estate and tax issues affecting U.S. citizens who live outside the U.S., is back in Tokyo briefly and has volunteered to share her knowledge. Barbara's presentation to Democrats Abroad Japan several years ago was a great success, and we are delighted that she is willing to meet with us again. She is special counsel at Cadwalader, Wickersham & Taft (New York) and lives in Minnesota, where she teaches at the U. of MN law school. (You can see her photo and credentials on their site: www.law.umn.edu (faculty
profiles). Barbara is great about answering questions and giving practical advice. So bring your tax and estate questions and prepare to unburden yourself.
This event is open, free of charge, to all U.S. citizens (regardless of political persausion).
Please spread the word!


By Cornelia on Friday, May 18, 2001 - 11:50 am:

Barbara Hauser did the section on the United States for the International Estate Planning Commission which works to promote understanding of multinational succession and inheritance tax issues. You can read it on the web at http://www.uianet.org/english/e_comiep.htm

Basically if you have assets and are married to a person with a different nationality than yours who also has assets, there are things you need to think about if one spouse dies. The inheritance tax laws differ depending on which country the assets are in and whose name is on them, etc., etc. For example, a U.S. citizen married to a Japanese has a different set of rules to take into consideration than if married to another U.S. citizen.


By Tom Marlowe on Friday, November 28, 2003 - 11:23 pm:

Does anyone have knowledge about or experience in estate planning for US citizens who have a foreign spouse? By chance I learned yesterday that when one party in a marriage is a non-US citizen, whether in Japan or the US, the couple loses their entire IRS exemption for any estate taxes on assets (ie, bank accounts, mutual funds) that are owned by the US citizen if the surviving party is the non-citizen. Thus, assets that would ordinarily pass untaxed to the surviving spouse and kids are first taxed by the US government, beginning at the hefty rate of 34% and moving up to 57%. That pretty much translates into a financial calamity for the surving family.

I would imagine there are numerous US citizens in Japan who are unknowingly in the same situation and possibly putting their families' future at risk. If anybody has any information on this subject or knows of a reliable estate tax attorney here or in the US, I would appreciate hearing from you.


By Jill on Saturday, November 29, 2003 - 2:42 pm:

You are correct that the estate tax situation is different for foreign spouses. There is a form which I believe is called a QDOT ( I did this many years ago so my memory is rusty) that a lawyer can help you with. It gives the spouse some exemption but I believe it still isn't the same amount as a U.S. spouse would receive. We decided to do both the QDOT and establish a family trust. I just found this website that explains what a QDOT is http://www.globalassignment.com/1-21-2002/estatetax.html about half way down the page. One other alternative is for the spouse to become a U.S. citizen. We were told that any lawyer who had prepared QDOT's could help us and we didn't have any trouble finding one - of course it isn't cheap.

Like you, I found out about this accidentally and was appalled that I could have had no clue until it was too late. I am sure many people don't know about it.

Jill


By Scott Hancock on Friday, November 12, 2004 - 10:50 am:

To Cornelia's question -
Just this week my Japanese attorney said flatly that inheritance taxing is according to the deceased person's nationality.

But, as always "your mileage may vary" and one always needs to get personal and specific counsel on these things. These discussions can be good for learning questions to ask, but always check with authoritative figures for your specifics.


By Cornelia on Friday, November 12, 2004 - 4:33 pm:

Yes, your attorney gave you a very cursory answer and one that we all know already I think. You either are or you aren't a Japanese national. Likewise in the USA you either are or you aren't a US citizen. The ownership of real estate by a non-citizen in the USA is taxed as an investment property when sold. But in the case of death, a different story, because you don't get the first $800,000USD (this number is increasing annually so may be an inaccurate quote) of your estate tax-free.

I imagine that if you have any estate in Japan at all, your death tax might be different from a Japanese national's. But I haven't looked for this info just yet (since I am one of the near zero estate people). I also imagine that very few of us actually invest in Japan in any sizeable amount. There is that one New Zealander out in Chiba that has bought up a number of parcels that adjoin each other... But I don't know if he's joining in here ;-) And obviously equally few of us would go out of our way to tell the Japanese tax office what we might have stashed away abroad.

But what if you have a Japanese life insurance policy? Does your estate pay death tax on it or does it stay out of probate as it would in the USA? This would be one of many small niggly questions that I would consider if I were actively planning in this country.


By Scott Hancock on Friday, November 12, 2004 - 4:45 pm:

Yes, I took that flat answer as tip of an iceberg to dive into another time. That's where each person's situation becomes a different answer.


By ccm on Monday, March 28, 2005 - 11:31 pm:

Does anyone have a recommendation for a real estate planning attourney here in Tokyo? I'm American, married to a Japanese, and we just had our first baby. We have to start putting our life/future in order but I feel unsure as to where to start. Thanks in advance!


By Kurz on Friday, April 11, 2008 - 2:38 pm:

I think I mentioned it before: Japan has extremely high death tax, as I just saw again in this comparison chart from http://www.devereoffshore.com/estate_planning.htm:

International Comparison of Top Marginal Death Tax Rates

Argentina, Australia, Canada, China, India, Indonesia and Mexico 0%
Brazil 6% Poland 7% Singapore 10%
Denmark and Hongkong 15%
Chile and Italy 25%
Netherlands 27% Belgium 28.5% Germany and Sweden 30%
Great Britain and France 40%
Korea 45% Taiwan 50%
United States of America 50%
Japan 70%
Canada (varies from state to state and is Capital Gain Tax)

So, it makes sense to get rid of assets located in Japan, before dying and head off to other parts (if you have any assets). Japan thinks of you as totally taxable after you have been here for 5 years, regardless of your visa status (1 year, 3 year or spouse or permanent or whatever). From what I read before the "exempt amount" is very low in Japan (it was $1 million USD in the USA in 2006). So before you run, make sure that you actually have assets worth more than the amount exempted.

Of course it will also depend on your nationality, because of the various tax treaties that have been signed between Japan and other countries. So there is a fair bit of research to be done. I think if you have a Japanese spouse and have made a life here with children and all, then it's definitely something worth doing! There are ways to avoid paying the tax man more than necessary. After all you already paid income tax, and you pay tax every time you buy something, and then there's tax on any money you earn on the money you already earned, etc.


By Tesselator on Friday, April 11, 2008 - 10:13 pm:

I'm sorry this is complete hog-wash! I recently had a death in the family. My wife. We live in Japan. Death taxes and fees from about Y20,000,000 in assets was less than Y100,000. The funeral was the most expensive item at about Y1,000,000.

So what are you talking about with this 70% bs?


By Dannyjiavitz on Saturday, April 12, 2008 - 1:40 am:

Sorry to hear about the passing of your wife.

Best regards


By Iancopsey on Saturday, April 12, 2008 - 9:59 am:

I don't know a great deal about this but it has been a subject that my wife has been talking about recently and if the information I was given is correct the tax is applied slightly differently here. Wheareas tax is levied on the estate overseas here it is levied on the beneficiaries. The amount that can be given to EACH beneficiary without tax is JPY 65mn (I'm a bit uncertain on that figure). So if there are three children and the estate is worth 150mn then there is no tax. I believe that mother/father are treated as two separate estates.

They also currently have a scheme where the parents can pass over some of the estate now for the purposes of buying a property and for which the tax is not payable until they die.

Obviously please check all the numbers out!


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