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Tuesday, Jan. 22, 2013
Sharing assets with same-sex partner: a tax, legal minefield
By MASAMI KITTAKA
A reader writes: "I'm a foreigner in a long-term same-sex relationship with a Japanese national. The deed to our house is registered in the name of the Japanese national. Is it possible to have my name put on the deed so that I am not rendered homeless should my partner not survive me? A rather cold reality to think about but . . .
"As well, is there anything we can do about our bank accounts? I am the saver in the relationship, so if I go first, how can my partner access this money?"
You can register as an owner of the house if you buy a certain portion of the property from your partner or your partner gives it to you as a gift. However, you should bear in mind the range of taxes levied in these types of transactions. If you buy part of the house, the seller (in this case, your partner) could be subjected to a land transfer tax. Conversely, if you receive it as a gift, you would have to pay a gift tax. The rate of this tax could be as high as 50 percent, depending on the value of the gift. In addition, a registration license tax is levied when any changes are made to the deeds of the property. And if the sale price is lower than the market rate, the transaction could be regarded as a gift by the tax office.
Of course, your partner could leave the house to you in a will (yuigon). In this case, the recipient (you) would have to pay inheritance tax, but generally speaking this would be much lower than the gift tax.
On the other hand, in such situations there is the issue of iryūbun (the "legally reserved portion," or what you might call the "heirs' share") to consider. According to Articles 887-890 of the Civil Code, if your partner is survived by statutory heirs, these individuals are entitled to a portion of the deceased's assets. By statutory heirs, the law means a current spouse, children or, in cases where the deceased was childless, his/her parents. These are the family members who would inherit all of the deceased's assets in the event that he/she hadn't made a will. They are also entitled to iryūbun even if they are not written into the will. (Siblings are also considered statutory heirs if the deceased was childless. They can claim a share of the assets if no will was written, but they are not entitled to iryūbun.)
For example, suppose you are given all of your partner's assets in the will, but he has a son, his only statutory heir. In this case, if the son were to choose to exercise his right to his heir's share, you may be required to hand over half of the assets — or cash to the value of half of the assets — to him. Even if they are left out of the will, children and/or a spouse are entitled to claim half of the deceased's assets between them.
As another example, let's say your partner is survived by his mother and father. In the case of spouses and children, the iryūbun portion is a half, whereas parents are entitled to a smaller total share of one-third. Even if the parents were to claim for iryubun, this would leave you with two-thirds of your partner's assets if, God forbid, the worst came to the worst. Such claims would be barred if more than a year had elapsed since the heir(s) learned of the death or the existence of the deceased's assets.
With regard to a bank account, joint accounts are not offered by major Japanese banks. If you were to bequeath your money to your partner in a will, he would of course then be able to access the account.
You may want to analyze your case from both the legal and tax perspectives to decide what works best for you.