Estate planning for Americans in Japan

[timtrowbridge]

Hello,
This question is for Americans who have assets in the USA, such as 401(k)'s or IRA's, that they want to bequeath to someone in Japan. How have you gone about making arrangements? Have you worked with an English-speaking estate planner in Japan? Could you recommend anyone or any place in particular? Thank you.

 

[johnnyG]

Estate tax exemptions/deductions are for statutory heirs--think immediate family (and not grandkids, not nieces/nephews, etc).

Two wiki that I know of:

Inheritance tax - RetireWiki.jp

retirewiki.jp

https://www.reddit.com/r/JapanFinance/wiki/index/tax/inheritance

Outside of statutory heirs, I think standard inheritance rate apply (similar to gift tax rates?). In japan there is no step-up in basis for inherited assets, as in the US (tho physical real estate supposedly has some advantages). It's like gifting someone a stock/ETF in the US--the receiver retains the original cost basis for any later sale.

Also, trusts don't work in japan--they are 'transparent' and don't shield anything. Even if the funds/assets are to be dribbled out slowly according to the terms of the trust, the tax agency here sees (and so taxes) the full value of what is in it immediately.

Finally, depending on the brokerage, people in Japan may have trouble maintaining a US account (and this is due to US compliance regulations that it tries to enforce globally, which makes it an expensive hassle for US outfits to deal with international clients). Since neither 401k or IRA is tax-sheltered outside the US, it may be easier overall to simply liquidate them and then transfer the funds--which the recipient(s) can then use to fund japan's versions of those.

 

[salyavin]

I did not know about that wiki, that link will be good for me as well. Yes things like ROTH IRAs are tax free in the US but are indeed taxed in Japan.

interactive brokers is one who is a US company operating in Japan many Americans who live in Japan use as it is a huge pain for Americans exactly as you say. I already have an account with them.

 

[mdchachi]

Hello,
This question is for Americans who have assets in the USA, such as 401(k)'s or IRA's, that they want to bequeath to someone in Japan. How have you gone about making arrangements? Have you worked with an English-speaking estate planner in Japan? Could you recommend anyone or any place in particular? Thank you.

Does that person have a U.S. social security number? If so it should be relatively easy to set them up as beneficiaries.
Even if they don't have ss#, they can get a tax payer id number. This would allow you to more easily set them up as beneficiaries to your accounts.

About Form W-7, Application for IRS Individual Taxpayer Identification Number | Internal Revenue Service

Information about Form W-7, Application for IRS Individual Taxpayer Identification Number (ITIN), including recent updates, related forms, and instructions on how to file. Form W-7 is used to apply for an ITIN, or to renew an existing ITIN.

www.irs.gov