Accessing a Deceased's Bank Accounts in Japan Before Formal Estate Division: What Are the New Rules for Heirs?

When an individual passes away in Japan, their assets, including bank deposits, typically become part of their estate. While the ultimate distribution of these assets is determined through the estate division process (遺産分割 - isan bunkatsu), heirs often face immediate financial needs for funeral expenses, outstanding debts of the deceased, their own living costs, or upcoming inheritance tax payments. Historically, accessing the deceased's bank accounts before the completion of this formal division could be challenging. However, recent amendments to Japanese law have introduced clearer and more accessible pathways for heirs to obtain necessary funds provisionally.

The Challenge: "Frozen" Assets After the 2016 Supreme Court Shift

Prior to a landmark Supreme Court decision on December 19, 2016 (Minshu 70-8-2121), divisible assets like ordinary bank deposits were often treated as automatically divided among heirs according to their statutory inheritance shares (法定相続分 - hōtei sōzoku bun) at the moment of death. This, in theory, allowed individual heirs to claim their respective portions directly from financial institutions.

However, the 2016 Supreme Court ruling fundamentally changed this landscape. It determined that common types of bank deposits (ordinary, current, and fixed-term) are not automatically divided but instead form part of the collective inheritable estate, subject to a formal division process among all co-heirs. This was later affirmed for other deposit types, such as installment savings (Supreme Court, April 6, 2017, Shūmin 255-129).

The consequence of this shift was significant: individual heirs could no longer unilaterally withdraw what they considered their "share" of the deceased's bank accounts. The accounts were effectively "frozen" pending a collective agreement or a court decision on the estate division. This created a considerable liquidity problem for many heirs who needed funds to cover immediate post-mortem expenses.

Before the most recent reforms, heirs had limited options:

• "Ben'i-barai" (便宜払い - "Convenience Payments"): Some financial institutions might, at their own discretion and risk, allow the withdrawal of small sums for urgent needs like funeral costs. The withdrawing heir would typically be treated as a representative of all heirs. However, this was not a legal entitlement, and banks became more cautious after the 2016 ruling, as their legal basis for discharging their obligation by paying only one heir (even up to their statutory share) became weaker.
• Provisional Court Orders (Domestic Relations Case Procedure Act, Article 200, Paragraph 2): Heirs could petition the Family Court for a provisional order (仮分割の仮処分 - kari-bunkatsu no kari-shobun) to allow a partial withdrawal from estate accounts. However, the legal hurdles for such an order were relatively high. The applicant typically had to demonstrate an "urgent danger" (急迫の危険 - kyūhaku no kiken) that needed to be prevented by the withdrawal and show a strong likelihood that they would ultimately be entitled to that amount in the final estate division. This was not always a swift or straightforward solution for immediate needs.

Solution 1: The Direct Provisional Withdrawal System (Civil Code Article 909-2)

To directly address the liquidity issues faced by heirs, the amended Civil Code introduced Article 909-2, establishing a system for "provisional payment of inherited deposits and savings" (預貯金の仮払い制度 - yochokin no harai-modoshi seido). This allows heirs a direct, albeit limited, right to withdraw funds from the deceased's accounts without needing a court order.

Purpose and Overview:
The primary goal of Article 909-2 is to enable heirs to meet their comparatively small-scale, urgent financial needs promptly after inheritance commences, while still safeguarding the overall fairness of the eventual estate division among all co-heirs.

Who Can Use This System?
Each co-heir is individually entitled to make a demand under this provision.

How Much Can Be Withdrawn?
The amount an heir can withdraw directly from any single financial institution is subject to a two-tiered calculation:

1. The base amount derived from the deceased's accounts at that institution: For each distinct type of deposit claim (e.g., ordinary deposit, fixed-term deposit) held with the financial institution at the time of the inheritance commencement, calculate:
   (Value of that specific deposit claim) × (1/3) × (The requesting heir's statutory inheritance share)
2. An overall cap per financial institution: Regardless of the sum derived from the formula above, the total amount an heir can withdraw from any single financial institution under Article 909-2 is capped by a Ministry of Justice Ordinance. This cap is currently set at ¥1.5 million.

The heir is entitled to withdraw the lesser of the sum calculated from their proportionate share of one-third of the deposits and the ¥1.5 million institutional cap.
The ¥1.5 million figure was determined by considering standard living costs for an individual and average funeral expenses in Japan.

Important Nuances in Calculation:

• The 1/3 formula is applied to the balance of each specific deposit type (e.g., ordinary savings, time deposits) within a financial institution at the time of death.
• The ¥1.5 million cap applies per financial institution, not per account within an institution, nor as a total cap for the heir across all institutions where the deceased held accounts. An heir could potentially use this system at multiple banks where the deceased held accounts, subject to the ¥1.5 million cap at each.
• If an heir is entitled to withdraw an amount that could come from multiple accounts within the same bank (and the total sum of 1/3 of their share across those accounts exceeds ¥1.5 million, or they wish to withdraw less than their full entitlement), the specific accounts from which the funds are drawn (up to the ¥1.5 million limit for that institution) would be determined in consultation with the financial institution.

Process:
This is a direct right exercisable by the heir against the financial institution. No prior court approval is needed. Heirs will typically need to provide documentation such as proof of death, evidence of their status as an heir (e.g., family register excerpts), identification, and details of the deceased's accounts.

Treatment in the Final Estate Division:
Any amount withdrawn by an heir under Article 909-2 is legally deemed to have been received by that heir as a result of a partial estate division concerning that specific deposit claim. This means the withdrawn amount will be factored into the final estate division. The heir's ultimate share of other assets will likely be reduced accordingly, or they might need to make a balancing payment to other heirs to ensure overall fairness.

Applicability to Pre-Existing Inheritances:
Significantly, Article 909-2 can be utilized even for inheritances that commenced before its effective date (July 1, 2019), as long as the request for withdrawal is made after this date.

Financial Institution Defenses:
It's important to note that financial institutions are not entirely without recourse. They can still assert standard legal defenses against a withdrawal request, such as:

• A right of set-off (e.g., if the deceased or the requesting heir owed money to the bank).
• Contractual restrictions on the deposit (e.g., a fixed-term deposit that has not yet reached maturity).

Solution 2: Relaxed Provisional Court Orders for Deposits (Domestic Relations Case Procedure Act Art. 200, Para. 3)

For situations where the funds needed by an heir exceed the limits of Article 909-2, or where other complexities warrant court oversight, the reforms also amended the Domestic Relations Case Procedure Act. A new Paragraph 3 was added to Article 200, establishing a more accessible procedure for obtaining a Family Court provisional order for the partial division of deposit claims.

Purpose and Overview:
This amended court procedure aims to provide a more flexible, court-supervised mechanism for heirs to access inherited deposits when necessary, under conditions less stringent than the previously existing Article 200, Paragraph 2.

Key Requirements for a Provisional Order under Art. 200, Para. 3:

1. Pending Estate Division Case: An estate division case (either mediation - 調停, chōtei, or adjudication - 審判, shinpan) must already be pending before the Family Court. This provisional measure is an ancillary proceeding to an ongoing main case.
2. Applicant: The application for the provisional order must be made by a party involved in that pending estate division case.
3. Subject Matter: The provisional order can only concern "deposit claims belonging to the estate" (遺産に属する預貯金債権 - isan ni zokusuru yochokin saiken). Other types of assets, like shares or real estate, if needing urgent provisional handling, would still fall under the stricter requirements of Article 200, Paragraph 2.
4. "Necessity" for Withdrawal: The applicant must demonstrate a "necessity to exercise" the deposit claim. The law provides examples: "payment of debts belonging to the inherited property, defraying the living expenses of an heir, or other circumstances". This "necessity" standard is considered a lower threshold than the "urgent danger" (急迫の危険) that needed to be proven under the older Paragraph 2 procedure. This allows for a broader range of legitimate needs to be considered.
5. No Harm to Other Co-Heirs' Interests: A crucial condition is that granting the provisional order must "not harm the interests of other co-heirs" (他の共同相続人の利益を害しない - hoka no kyōdō sōzokunin no rieki o gaishinai). In practice, this generally means the amount authorized for withdrawal by the applicant should not exceed what they are reasonably likely to receive as their final share of the entire estate (considering all assets and liabilities, as well as any special benefits or contributions that might affect final shares). If an heir seeks an amount that might encroach upon other heirs' presumptive shares, they would need to provide strong justifications, such as evidence that other heirs have expressed no interest in those particular funds or are expected to receive specific, high-value assets in the final division.

Process:
The heir applies to the Family Court handling their main estate division case. The court will consider the application based on the evidence of necessity and the potential impact on other heirs.

Treatment in the Final Estate Division:
Similar to withdrawals under Article 909-2, any funds received through a provisional order under Article 200, Paragraph 3 are treated as an advance on the heir's final share and will be accounted for in the ultimate estate division. The provisional order itself does not dictate the final outcome of the estate division.

Applicability to Pre-Existing Inheritances:
This revised court procedure under Article 200, Paragraph 3 also applies to inheritances that commenced before its effective date, provided the application for the provisional order is made after the amendment came into force.

Interplay Between the Two Systems

The direct withdrawal system under Civil Code Article 909-2 and the court-ordered provisional division under Domestic Relations Case Procedure Act Article 200, Paragraph 3 are parallel and not mutually exclusive. An heir can:

• Utilize Article 909-2 for immediate, smaller withdrawals.
• Separately (or subsequently) apply to the Family Court under Article 200, Paragraph 3 if larger sums are needed or if the direct withdrawal is insufficient or problematic.

When calculating the withdrawal amount under Article 909-2, the base is the "amount of deposit claim at the time of inheritance commencement." This calculation base is not reduced by any prior withdrawals that might have been made under a court order pursuant to Article 200, Paragraph 3 (though, naturally, the bank will only disburse funds that are actually remaining in the account). Similarly, when the court considers an application under Article 200, Paragraph 3, it will take into account any amounts already withdrawn by the applicant under Article 909-2 to ensure the "no harm to other co-heirs" principle is maintained.

Practical Steps for Heirs

For heirs in Japan needing to access funds from a deceased's bank accounts before formal estate division, the following practical approach is advisable:

1. Assess Immediate Needs: Determine the amount urgently required for funeral costs, critical debt payments, essential living expenses, etc.
2. Gather Documentation: Collect necessary documents, which will generally include:
   • Proof of the deceased's death (e.g., a copy of the family register showing death).
   • Proof of the applicant's status as an heir (e.g., family register excerpts establishing the relationship).
   • The applicant's personal identification.
   • Details of the deceased's bank accounts.
   • Information about other co-heirs (as their existence and number affect the applicant's statutory share).
3. Approach Financial Institutions (for Art. 909-2): Contact each financial institution where the deceased held accounts to inquire about making a withdrawal under Civil Code Article 909-2. Be prepared to provide the required documentation.
4. Consider Family Court Application (for Art. 200, Para. 3): If the amounts obtainable under Article 909-2 are insufficient, or if the situation is complex (e.g., disputes among heirs regarding immediate withdrawals), an application to the Family Court for a provisional order under the amended Article 200, Paragraph 3 should be considered. This application is made in the context of (or by initiating) formal estate division proceedings (mediation or adjudication).

Conclusion

The introduction of Civil Code Article 909-2 and the amendments to Article 200 of the Domestic Relations Case Procedure Act represent a significant improvement in Japanese inheritance law. They provide heirs with much-needed, clearly defined mechanisms to access a deceased person's bank funds for essential short-term expenses prior to the final settlement of the estate. These reforms strike a balance between addressing the immediate financial pressures on bereaved families and protecting the ultimate distributive shares of all co-heirs, thereby fostering a smoother and more equitable preliminary phase of the inheritance process.