Disputes over How to Divide an Estate (Estate Division)
Inheritance
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- Disputes over How to Divide an Estate (Estate Division)
- I want to consult about inheritance in Yaizu/Makinohara
- The heirs cannot agree on how to divide the estate
- The eldest son is unilaterally deciding how to divide the estate
Are you facing any of these issues in Yaizu, Makinohara, Omaezaki, Fujieda, Shimada, Yoshida Town, or other nearby areas?
At Yaizu Sogo Law Office, we offer a free first-time legal consultation on inheritance and estate matters. Consulting us once does not obligate you to retain us. We are also available on weekday evenings and on Saturdays. Please feel free to contact us by phone or email.
Inheritance Disputes Can Happen to Anyone
When a family member passes away, inheritance inevitably occurs. If the deceased left little property, it may not become an issue. However, when a person passes away leaving substantial assets or when there are multiple heirs, disputes over how to divide the property and the share each heir receives are very common.
Below, we explain estate division, which is the process of dividing an inheritance.
Typical Cases Where Estate Division Leads to Disputes
- Multiple real estate properties exist
- Poor relationships among siblings
- Someone was living with the parent before their death
- Disparities in lifetime gifts or financial assistance
- A successor to a business or farm exists
- Children from a remarriage or former spouse exist
What Is Estate Division?
Estate division is the process of specifically distributing property that has temporarily become jointly owned by all heirs, typically when the decedent dies without leaving a will.
The discussion among heirs regarding this estate division is called an estate division agreement (isan bunkatsu kyogi).
There is no specific deadline for estate division (however, there is a deadline for filing inheritance tax returns).
The specific methods of dividing property are described later in <Methods of Estate Division>.
If there is no will, the property temporarily becomes "jointly owned by all heirs."
The specific method of division is then determined through estate division discussions, but the agreement cannot be reached if even one person objects.
If discussions stall midway,
- Transfer of real estate title
- Withdrawal of bank deposits
- Inheritance tax filing
and all other procedures will come to a halt.
Property Subject to Estate Division
Property that the decedent possessed at the time of the commencement of inheritance (provided it still exists at the time of division) is generally subject to estate division. However, rights exclusive to the decedent personally (such as the right to receive public assistance) are not included.
Assets Commonly Overlooked in Estate Division
- Online bank accounts
- Securities company accounts
- Cryptocurrency
- Refunds from canceled insurance policies
- Cars and motorcycles
→ If assets are "discovered later" due to insufficient investigation, the estate division agreement may need to be redone.
Property Not Subject to Estate Division
(1) Life Insurance Proceeds
Life insurance proceeds are not subject to estate division when the beneficiary is designated and the contract provides for direct payment to that person.
(2) Monetary Claims (Other Than Deposits)
Monetary claims (such as loans receivable) are generally not subject to estate division. Because they are divisible, they are in principle automatically divided among the heirs according to their statutory shares at the time of the commencement of inheritance. However, if all heirs agree, monetary claims can also be included in the division. Note that although deposits are also monetary claims and were previously considered outside the scope of estate division, a recent Supreme Court decision has established that they are naturally included in estate division.
(3) Debts
Debts (such as loans) are also generally not subject to estate division for the same reason as monetary claims, but they can be included in the division with the consent of all heirs. However, since this is merely an internal agreement among heirs, unless the creditor consents, the heirs cannot assert against the creditor that they have no obligation to pay based on such an agreement.
Methods of Estate Division
There are mainly three methods of estate division: (1) Division in Kind, (2) Division by Sale, and (3) Compensatory Division. The method is determined based on the content of the inherited property and the intentions of the heirs.
(1) Division in Kind
Division in kind is a method of distributing property as-is to each heir.
For example, if the inherited property consists of a home, deposits, and stocks, and the heirs are the wife, eldest son, and second son, then having the wife take the home, the eldest son take the deposits, and the second son take the stocks is called division in kind.
The advantage of division in kind is that it is straightforward and the procedures are relatively simple, as each heir acquires a single asset independently.
On the other hand, since inherited assets rarely have equal value, a disadvantage is that when there is a large difference in the value of acquired assets (for example, when the estate contains many real properties), inequity may arise among the heirs.
(2) Division by Sale
Division by sale is a method of selling assets such as land, buildings, and stocks, converting them into cash, and distributing it among the heirs.
The advantage of division by sale is that, unlike division in kind, all property is converted into cash, allowing equal distribution among the heirs.
However, if any heir wishes to use and acquire the family home, for example, division by sale becomes difficult. Therefore, division by sale is typically used when there is real property that no one uses, or when there is no real property at all.
Note that when real property is sold through division by sale, all heirs will be subject to capital gains tax.
(3) Compensatory Division
Compensatory division is a method in which one heir acquires specific real property, and in return, pays the difference in acquired assets to the other heirs as compensatory payment.
Compensatory division is used when division in kind is difficult, such as when the estate contains many real properties but little cash. This method allows real property to be distributed without selling it, but the heir must prepare compensatory payment to make up the difference with other heirs, so its use is limited. Additionally, how to calculate the value of real property is often a point of contention among heirs.
Because compensatory division is prone to disputes among heirs, we strongly recommend consulting an attorney.
When Real Property Is Involved
Disputes almost always arise over "who will live there" and "whether to sell."
→ In practice, compensatory division is often used.
Compensatory Division Causes the Most Disputes
The appraised value of real property becomes the issue
→ The basic approach is to use "fair market value" rather than the fixed asset tax assessed value
→ When conflict among heirs is severe, a professional real estate appraisal may be necessary
Flow of Estate Division Procedures
Below, we explain how the estate division process actually proceeds.
Investigation of Wills
In recent years, end-of-life planning has become an increasingly popular topic, and more people are coming to our office for consultations on this subject. It is possible that the decedent left a will as part of their end-of-life planning.
First, investigate whether the decedent left a will. If one of the heirs is keeping the will (whether handwritten or notarized), no investigation is needed. However, if it is unknown whether a will exists, search the home and safe deposit boxes, or request confirmation from the notary public office.
Note that a handwritten will must go through a probate procedure at the family court. If you open it yourself without going through the probate procedure, you may legally be subject to a fine of up to 50,000 yen.
Also, a handwritten will may have been deposited under the Legal Affairs Bureau storage system, so verification is necessary.
Investigation of Heirs
Along with the investigation of wills, an investigation of heirs is conducted.
The investigation of heirs is carried out by obtaining the decedent's family register records from birth to death.
Estate division discussions must be conducted with all heirs participating. If an estate division agreement is reached without all required heirs participating, it becomes void and all efforts are wasted. There are many cases where there are unrecognized heirs, such as those arising from representation succession, children born out of wedlock, or acknowledged children.
Therefore, the investigation of heirs must be conducted carefully to ensure no heirs are overlooked.
Investigation of Inherited Property
Along with the investigation of wills and heirs, an investigation of inherited property is conducted.
The investigation of inherited property is basically carried out by searching the places where the decedent lived, such as their home. Additionally, property registry records are obtained from the local government office, and inquiries are made to financial institutions where the decedent may have had deposit accounts (such as nearby banks).
Since discovering overlooked assets after the estate division agreement may require the agreement to be redone, this investigation must be conducted carefully.
Discussion Among Heirs (Estate Division Agreement)
(i) When a Valid Will Exists
If a valid will has been left, estate division is carried out according to the will.
However, with the consent of all heirs, it is also possible to divide the estate in a manner different from the will. In that case, an estate division agreement with content different from the will must be prepared.
(ii) When There Is No Will
If there is no will (or if a will exists but has defects in content or form), estate division discussions are held. In addition to how to distribute the property, the method of valuing assets, special benefits, and contributions are also discussed.
While estate division discussions require the participation of all heirs, it is not necessary for everyone to gather in one place. Communication by phone or correspondence is also acceptable.
Typical Cases Where Agreement Cannot Be Reached
- Someone refuses to disclose assets
- Someone insists on a division different from the statutory shares and will not compromise
- Intense conflict over special benefits or contributions
- The eldest son tries to take control unilaterally
→ In cases where discussions are not progressing, moving to mediation early often leads to faster resolution.
Preparation of the Estate Division Agreement Document
Once all heirs have reached an agreement through discussions, an estate division agreement document is prepared.
The estate division agreement document is necessary for inheritance registration of real property, as well as for changing the title of deposits, stocks, automobiles, and other assets. Additionally, preparing an estate division agreement document serves as evidence of the existence and content of the agreement if someone later denies or disputes the agreed terms. Therefore, it should always be prepared.
The agreement document is essential for real estate registration, deposit withdrawals, and other procedures.
Having an attorney review the document is extremely effective in preventing future disputes.
Estate Division Mediation
If the heirs cannot reach an agreement through estate division discussions, a petition for estate division mediation is filed with the family court. In mediation, a judge and mediation commissioners listen to each heir's wishes from a neutral standpoint, present proposed solutions, and provide necessary advice to facilitate discussions toward an agreement. Mediation sessions are held approximately once every one and a half months, and the process generally takes six months to one year.
If an agreement is reached with the opposing party in mediation, the court prepares a mediation record, which serves as an agreement document. This record has the same legal effect as a court judgment, so if, for example, the opposing party fails to pay the compensatory amount, enforcement proceedings can be initiated.
Mediation involves a "neutral third party" and is especially effective in cases with strong emotional conflict.
Because preparing submission documents (asset inventories, valuation materials) is difficult, involvement of an attorney often leads to faster resolution.
Transition to Adjudication
If mediation discussions also fail to reach an agreement, the mediation is terminated as unsuccessful. However, since this would leave the estate undivided indefinitely, when mediation fails, the case automatically transitions to adjudication proceedings.
In adjudication proceedings, the court renders a decision based on the materials submitted during mediation and adjudication, as well as the arguments of both sides. An adjudication, like a judgment, means the court decides how the estate will be divided.
The adjudication process may take only a few months for the court to render a decision, or it may take over a year, depending on the case.
Adjudication is a procedure in which the court compulsorily determines how to divide the estate. Decisions are made based on laws and precedents regarding real property valuation, contributions, special benefits, and other factors.
Benefits of Retaining an Attorney for Estate Division
The above is an explanation of estate division. As you can see, it is a very complex and demanding process.
In estate division situations, there are many points of contention among heirs, including how to value property and which method of division to use, and there are many cumbersome procedures such as investigating heirs and inherited property. Therefore, the benefits of retaining an attorney are significant.
A summary of the benefits of retaining an attorney is as follows:
- Asset investigation can be entrusted to the attorney
- Accurate valuation of real property, deposits, stocks, and other assets
- Negotiation on behalf of the client among heirs
- Avoiding emotional conflict and moving discussions forward
- Consistent representation from mediation through adjudication
Consultations such as "my siblings will not disclose the assets" or "the eldest son is controlling everything" are extremely common, and it is precisely in such cases that attorney involvement is most effective.
If you are troubled by estate division issues, please consult Yaizu General Law Office.
Frequently Asked Questions
Can we divide the estate differently from what the will states?
Yes, it is possible if all heirs agree.
We are about to divide the estate, but one of my siblings has already passed away. What happens in this case?
If the deceased sibling has children, those children become heirs in their place (this is called representation succession).
A child from my late father's former wife is requesting to be included in the estate division discussions.
As a child of your father, that person is an heir and must be included in the estate division discussions.
An estate division agreement becomes void if not all heirs participate.
There is an heir we cannot contact. Can we still proceed with the estate division discussions?
Since an estate division agreement becomes void if not all heirs participate, you cannot proceed with the discussions as they are.
If the heir's whereabouts are truly unknown, you will need to have the family court appoint an absentee property manager before conducting the estate division discussions.
What is the best way to divide real property?
The heirs may divide it in any way they agree upon. Methods include selling the property and splitting the proceeds (division by sale) or having one person acquire the property and paying compensatory amounts to the other heirs (compensatory division). In compensatory division, disputes may arise over how to calculate the property's value.
We are unable to reach any agreement on the estate division discussions.
You should file a petition for estate division mediation with the family court.
In mediation, mediation commissioners and a judge participate from a neutral standpoint to discuss appropriate methods of division. While you can handle mediation on your own, since estate division often requires legal knowledge, we recommend consulting and retaining an attorney.
I received mediation documents from the court regarding estate division. Should I retain an attorney?
While you can handle mediation on your own, there is a risk that the outcome may be unfavorable to you. Since estate division often requires legal knowledge, we recommend consulting an attorney at least once.
My brother refuses to disclose our late mother's bank books and other assets, and will not engage in any discussions.
In such cases, you should file for estate division mediation.
In mediation, discussions take place at the court with mediation commissioners and a judge involved, and the other party may agree to disclose documents and participate in discussions. If an agreement still cannot be reached, the court will issue an adjudication.
Our father provided substantial financial assistance to my brother during his lifetime, including tuition and home purchase costs. Will this be taken into account in the estate division?
If it is recognized as a special benefit, it will be taken into account.
A special benefit refers to a benefit that an heir specially received through a lifetime gift or similar means.
Whether something qualifies as a special benefit is determined by considering factors such as the parent's financial resources, the amount of the benefit received, and comparison with other heirs.
Whether something will be recognized as a special benefit is a complex issue, so we recommend consulting an attorney.
I was the only one who cared for my late mother. Will this be taken into account in the estate division?
If it is recognized as a contribution, it will be taken into account.
A contribution is a system designed to correct inequities among heirs when someone has contributed to the maintenance or increase of the decedent's property.
There is a possibility that your caregiving may be recognized as having maintained your father's property, but whether it will actually be recognized is a complex issue. We recommend consulting an attorney.
The eldest son is attempting to dispose of the property without authorization. Can this be stopped?
Any disposal without the consent of all heirs is void.
My brother has been withdrawing deposits without authorization. Can we recover them?
There may be grounds to demand return as unjust enrichment or to treat it as a special benefit.
How should I prepare so as not to be disadvantaged in mediation?
Organizing asset documents, valuations, and arguments is important, and attorney involvement is effective.
For Your Inheritance Concerns, Consult Yaizu Sogo Law Office
Yaizu Sogo Law Office handles a wide range of inheritance-related matters, including the drafting and execution of wills, renunciation of inheritance, division of estate, and claims for reduction of the statutory reserved share (iryubun).
Inheritance disputes are so notorious for the intense emotional conflict they stir up among heirs — hence their nickname, the "inheritance war" — that disputes can drag on for a long time. This is why consulting a lawyer offers significant benefits.
If you are facing an inheritance issue, please feel free to consult us. The first consultation on inheritance matters is free of charge.
At Yaizu Sogo Law Office, consultations are available not only during weekday daytime hours but also on weekday evenings and on Saturdays. Please call or email us first to make an appointment for a legal consultation.
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