When a Foreign Property Owner Dies: The Complexities of Inheriting Real Estate in Japan

In the previous two articles, I explained how problems within Japan's inheritance system have contributed to the growing number of abandoned properties, as well as the legal measures that have recently been introduced in response to this issue.

In this article, I would like to discuss what happens when a foreign national dies while still owning real estate in Japan.

Most people purchase property without giving much thought to what will happen to it after their death. However, owning real estate in a foreign country often makes posthumous procedures far more complicated than the purchase process itself.

If the deceased leaves behind a spouse, children, or other family members in Japan, those family members will generally handle the inheritance procedures. However, if the deceased has no relatives or close contacts in Japan, the disposition of their property can become considerably more complicated.

When the death of a foreign national without close family in Japan is confirmed, authorities such as the police, the Ministry of Foreign Affairs, embassies or consulates in Japan, and the relevant authorities in the deceased's home country may cooperate to verify the deceased's identity and locate surviving family members using information contained in residence cards or passports. If relatives are located, they are notified of the death.

If no relatives can be found or contacted, interested parties or, in some cases, public prosecutors may petition the Family Court to appoint an administrator for the deceased's estate. If the court grants the petition and appoints such an administrator, the estate liquidation process can begin.

Interested parties may include creditors, co-owners of the property, individuals with special relationships to the deceased such as adopted children, guardians, or caregivers, and local governments that have been left dealing with the deceased's remaining property.

However, as explained in my earlier article, applying for the appointment of an estate administrator involves significant hurdles, including the requirement to deposit funds with the court in advance to cover administrative costs and professional fees. As a result, there is a substantial risk that nobody will file the petition, leaving the property abandoned indefinitely.

If the deceased clearly left behind valuable assets, creditors or local governments that incurred expenses related to recovering the body or arranging cremation may decide to initiate the procedure in order to recover those costs. However, when the deceased was a foreign national, additional expenses such as overseas family investigations and document translations are often required. Furthermore, international procedures tend to take considerably longer than domestic cases.

As a result, the court deposit required for the procedure is often higher, and the risk of not recovering that deposit becomes greater. Consequently, the barriers to initiating estate liquidation become significantly higher in cases involving foreign nationals.

Another issue that requires particular attention is the nationality of the property owner.

As a general rule, Japanese conflict-of-law rules determine inheritance matters according to the law of the deceased's nationality. Therefore, if you die while owning real estate in Japan but do not possess Japanese nationality, the inheritance law of the country whose nationality you held at the time of your death will generally govern your estate.

If you possess multiple nationalities, the situation becomes even more complicated.

If one of your nationalities is Japanese nationality, Japanese law will generally apply. However, if you hold multiple foreign nationalities without Japanese nationality, the law of the country where you maintained your habitual residence — in other words, the country that served as the center of your daily life — will generally apply. If determining habitual residence proves difficult, the law of the country with which the deceased had the closest connection may be selected instead.

Broadly speaking, countries around the world tend to follow one of two major approaches to inheritance law.

The first is the principle of applying the inheritance law of the deceased's home country to the entire estate. The second is the principle of applying the law of the country where each asset is located.

If the deceased's country adopts the latter approach, Japanese law will generally apply to property located in Japan. However, if the deceased's country follows the former approach, the inheritance law of that country may apply even to Japanese real estate, making the procedures considerably more complex.

If you have a spouse, children, or other heirs, these complicated procedures can place a substantial burden on them. For this reason, it is advisable to consult lawyers or judicial scriveners who are familiar with international inheritance matters and prepare a will in advance that clearly describes the procedures to be followed after death, the details of assets and liabilities, the intended distribution of the estate, and information about heirs such as their relationship to the deceased,
names, addresses, and contact information.

However, caution is necessary because legally valid forms of wills differ from country to country, and a will that is valid in one country may not necessarily be valid in another.

For example, under Japanese law, recording your wishes on an audio tape is generally not recognized as a legally valid will. However, if the deceased's country follows the principle of applying its own inheritance law worldwide and recognizes recorded wills as legally valid, there is a
possibility that such a will could also be recognized in Japan.

Conversely, even if a will satisfies Japanese legal requirements, problems may arise if it does not satisfy the legal requirements of the country whose inheritance law governs the estate.

For this reason, it is important not to rely solely on personal judgment when preparing a will.
Instead, you should consult professionals who specialize in international inheritance law and ensure that your will is created in a legally effective form.

It is also possible to prepare a will in another country. However, in order to facilitate inheritance procedures in Japan, it is advisable to keep both the original document and a Japanese translation available within Japan.

As I have discussed throughout this series, abandoned buildings and land resulting from unresolved inheritance issues have become a major problem in Japan.

Japan's legal and institutional frameworks for returning such properties to productive use remain insufficient, and when the registered owner is a foreign national, resolving these problems often becomes even more difficult.

For that reason, cooperation from property owners and their families in preparing for inheritance issues in advance can play an important role in reducing the burden placed on heirs, neighboring residents, and local governments, while also helping to preserve Japan's towns, neighborhoods, and architectural heritage.