InheritanceTo protect your spouse's living environment and livelihood, ,Japan has several preferential systems in place.Spousal residency and spousal short-term residency are systems that guarantee that a spouse can continue to live in a familiar home with peace of mind. In addition, the carryback exemption system for special benefits, the spousal exemption for gift tax, and the spousal tax reduction system protect spouses from being disadvantaged in inheritance by allowing them to receive their estates without taking into account gifts or special benefits they have received in the past. These programs play a major role in ensuring the stability of spouses' lives and fair inheritance in an aging society.
Five systems to protect the remaining spouse
1. presumptive rule for exemption from reversion of special benefit of spouse's residential property
As mentioned in another column, if the decedent gave a gift (transferred property) to his or her heirs during his or her lifetime, the gifted property will be brought back as a special benefit upon inheritance.
For example, if a home is gifted to a wife before her death, the home property is subject to reversion as a special benefit, and the value of the property ultimately inherited by the spouse is the same as if the home had not been gifted.
Therefore, if the following requirements are met, the building and grounds will be excluded from the special benefit and the estate will be divided excluding the home property, "presuming that there was a reversionary exemption.
- The marriage must have lasted at least 20 years.
- A living gift to a spouse of a building or its site for residential use
- Or make a gift in your will.
Let us compare the case with and without this presumptive provision.
(Example) The heirs are a wife and two children, and the inheritance is a savings account of 30 million yen. He gives his wife a house worth 30 million yen (the value at the time of inheritance is also 30 million yen) before his death. He has been married to his wife for more than 20 years.
<In the absence of a presumption of exemption from carryback
The portion of the living gift to the wife is added to the inheritance as a special benefit when dividing the estate.
Wife's share of inheritance
30 million yen + 30 million yen (portion donated before death) x 1/2 (legal inheritance) - 30 million yen (portion donated before death) = 0
In other words, there is no share for the spouse, and the two children inherit 15 million yen each out of the 30 million yen in savings.
<When there is a presumption of exemption from carryback
The portion of the living gift to the wife is not added to the inheritance when the estate is divided.
Wife's share of inheritance
30 million yen x 1/2 (legal inheritance share) = 15 million yen
In other words, the spouse's share is 1/2 of the 30 million yen in savings, or 15 million yen. The remaining 15 million yen is divided equally between the two children, who inherit 7.5 million yen each.
This allows the spouse to inherit 1/2 of the savings account along with the home in which they live.
2. spousal short-term residency
short-term residency for spousesHa,The right to continue to reside in the residence where the spouse continued to live after his/her death for a certain period of time.This program is a temporary protection measure to ensure that a spouse does not suddenly lose his or her place of residence if the spouse lived in a residence owned by the decedent (the deceased).
Key Features:
- Eligible Housing
A residence owned by the decedent and occupied by the spouse at the time of the inheritance. - Circumstances under which rights arise
The spouse may continue to live in the residence for a certain period of time until the estate is divided or if there are no instructions regarding the residence in the will. Basically.The spouse is able to keep the residence until the division of the estate is determined. - Period
In principle, until the estate is divided, but also until the decedent'sUnconditional for 6 months after death.This right is guaranteed. - Objective.
It prevents spouses from suddenly losing their place of residence and allows them to continue to live in their familiar home until the next home is secured or the division of property is adjusted.
This system, together with the spousal residence right, is one of the most important systems to ensure the stability of a spouse's life.
3. spousal residency
right of spousal residence (i.e. right to live with one's spouse)is a system that guarantees a spouse the right to continue to live in the home he or she was living in at the time of inheritance as part of the estate. This right was established so that the spouse can equally acquire inherited property other than the home without losing the home in which he or she lived, and the other heirs can decide to acquire ownership of the home.
Key Features:
- Subject of rights
To the residence owned by the decedent (the deceased),Applies if the spouse was living free of charge at the start of the inheritance.
The right of spousal residence can be acquired through estate division discussions, bequests (gifts made by will), and gifts upon death (gifts made prior to death as the cause of death), and can be registered to claim the right to reside in the property against third parties. - Period
Spousal residency rights are basicallyIt is set for an indefinite period of time and allows the spouse to continue living in the home as long as he or she is alive.However, it is possible to limit the period of time through a legacy division agreement or a will. - Advantages
- Flexibility in property division
Instead of inheriting the home outright at the time of inheritance,By acquiring only the right of residence, it is easier to secure other inherited assets (such as savings).This will allow for a balance between continuing to live in the house and acquiring other property. - stability of one's residence
A major advantage is that you do not lose your place of residence immediately after the death of your spouse, allowing you to continue your life with peace of mind.
- Flexibility in property division
- Restrictions on spousal residency
Spousal residency is not transferable. The portion of the house that was originally used as a store, etc. can continue to be used even after the spousal right of residence arises.
However, if the residential portion is newlyIf the property is to be used for profit (e.g., to rent), the building owner's approval is required.
Furthermore, if the building is co-owned by a third party other than the decedent (the deceased) and the spouse, the spousal residence right cannot be applied because it would infringe on the third party's rights.
There is no limitation on the length of marriage for the establishment of spousal residence rights. - Extinction of right of spousal residence
Spousal residency rights are,It is extinguished upon the death of the spouse or the expiration of a predetermined period of time.Thus, it is not subject to the estate upon the spouse's death and the children acquire full ownership.
Let us compare the case with and without this institutional presumption of spousal residency provision.
(Example) The heirs are a wife and one child, and the estate consists of a savings account of 30 million yen and a residential building (valued at 30 million yen).
<If spousal residency rights are not established
If the total inherited property of 60 million yen is divided according to the legal inheritance share
Wife's share of inheritance
30 million yen + 30 million yen (residential building) x 1/2 (legal inheritance share) - 30 million yen (residential building) = 0
In other words, the spouse acquires ownership of the residential building.
Two children inherit 15 million yen each from a savings account of 30 million yen.
In other words, the spouse acquires ownership of the residential building but cannot inherit the cash, which would be a hindrance to his or her subsequent life.
<When a spousal residence right is established
Wife's share of inheritance
30 million yen + 30 million yen (residence building) x 1/2 (legal inheritance share) = 30 million yen + spousal right of residence
Share of inheritance of a child
30 million yen + 30 million yen (residence building) x 1/2 (legal inheritance share) = 30 million yen + building ownership
In other words, the spouse would get 30 million yen in cash and the right to continue living in the home, while the children would get 30 million yen in cash and ownership of the home. In addition, upon the spouse's death, the home building will not become an inheritance, and the children will acquire full ownership of the home.
This system, introduced in 2020, is an important mechanism to protect the lives of spouses and ensure that they are not disadvantaged in inheritance.
4. spousal deduction for gift tax
If you receive a gift from your spouse of residential real estate or funds to purchase residential real estate that meets the following requirements, the amount of the giftIn addition to the basic exemption of 1.1 million yen, a spousal deduction of up to 20 million yen can be applied.
In addition, with respect to the donated property under this special exception, the portion equivalent to the deducted amount (up to 20 million yen) will be treated as a "gift.additional living donationThis is not subject to the "1.
Application Requirements
- The marriage must have lasted at least 20 years.
- Residential real estate (land, house or money to purchase residential real estate) where the donated property is located in Japan
- The donor must reside in the residential property by March 15 of the year following the year in which the gift is received and be expected to continue to reside there thereafter.
- Not have received this special exception in the past from the same spouse.
Filing of tax returns
Even if the gift property is less than ¥21.1 million (¥20 million spouse exemption + ¥1.1 million basic exemption) and the gift tax after the special exception is applied is zero, a gift tax return must be submitted in order to qualify for the special exception.
5. tax reduction for spouses
Tax Reduction for SpousesThe "spousal inheritance tax exemption" is a system that reduces inheritance taxes up to a certain amount for property received by the spouse. This system is designed to ensure the livelihood of the spouse when he or she inherits, and significantly reduces the inheritance tax burden.
Main Points
- Tax Abatement Eligibility
Property inherited by the spouse of the decedent (deceased) is eligible. - Limits on the amount of inheritance tax that can be reduced
There are two criteria for spousal tax reduction, and the inheritance tax is reduced to the greater of the following amounts.
- Up to 160 million yen
There is no inheritance tax on the total amount of property inherited by a spouse up to 160 million yen. - Up to the legal share of inheritance
Property received by a spouse in proportion to the statutory inheritance share (the inheritance ratio determined by the Civil Code) may also be exempt from inheritance tax. In this case, even if the amount of property exceeds 160 million yen, it is exempt from tax up to the statutory inheritance share.
- Up to 160 million yen
- Declaration required
In order to apply for spousal tax relief, you must file an estate tax return. If you do not apply, you will not automatically receive the reduction.
For example, if the decedent leaves a fortune of ¥500 million and the spouse inherits ¥300 million of it, the actual tax burden will be considerably reduced because no inheritance tax will be imposed if the inheritance is within the range of ¥160 million or the statutory inheritance share.
summary
How was it?
The reason for the establishment of the spousal protection system is to ensure the stability of the spouse's life at the time of inheritance and to prevent him or her from being put at a disadvantage. Specifically, the background and objectives are as follows
To stabilize spouse's life
With the aging of the population, cases of inheritance often occur when the surviving spouse is elderly or financially unable to remain independent. In order to maintain their existing lifestyle, it is important for them to continue to live in their familiar home.The right of spousal residence was introduced to ensure that spouses have a place to live and to protect their livelihood.
Ensuring fairness in the division of property
When dividing an estate, heirs typically include not only the spouse, but also children and other relatives. If the majority of the inherited property is a home,The spouse had to inherit the house in order to continue to live in it, but an unfair situation could arise because the spouse's acquisition of the house would reduce the other heirs' share.The right of spousal residence recognizes the spouse's "right to live" whileThe system is designed to adjust the division of the estate so that it is fair to other heirs.
Social conditions that make it difficult to secure housing
Soaring real estate prices and changing housing conditions are making it difficult for older spouses to purchase or rent new housing. Under these circumstances,If your spouse has to give up the house in an inheritance, you could lose your place to live.The purpose of the spousal residence right is to avoid these risks and to allow the spouse to continue to live in peace.
For these reasons, preferential treatment for spouses, such as spousal residency, spousal short-term residency, and the exemption system for bringing back special benefits, have been introduced to guarantee the rights and livelihood of spouses at the time of inheritance.
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