Estate Division Taking Too Long? How Japan's New Rules Clarify When "Partial Estate Division" is Possible

Japanese Attorney at Law - Bengoshi L.L.

• 8 min read

The process of estate division (遺産分割 - isan bunkatsu) in Japan, where co-heirs determine how the deceased's assets will be distributed among them, can sometimes be a lengthy and complex undertaking. While the traditional goal is often a comprehensive, one-time settlement of the entire estate, practical realities can intervene. Certain assets might be easily divisible, while others require intricate valuations (like a family business or unique real estate), are subject to ongoing disputes, or necessitate protracted legal procedures. This can lead to situations where the entire estate division process stalls, preventing heirs from accessing even the undisputed portions of their inheritance in a timely manner.

Recognizing these challenges, Japan's revised Civil Code, with amendments to Article 907 effective from July 1, 2019, has brought greater clarity and formal recognition to the concept of "partial estate division" (一部分割 - ichibu bunkatsu). These changes provide heirs with more flexible pathways to manage the division process.

What is Partial Estate Division (一部分割 - Ichibu Bunkatsu)?

Partial estate division refers to the process of dividing only a selected portion of the deceased's estate assets among the co-heirs, while deferring the division of the remaining assets to a later time. The primary purpose of allowing partial division is to enable heirs to receive their shares of assets that are readily available, easily valued, or undisputed, without being held up by the complexities or disagreements surrounding other parts of the estate.

Even before the 2019 reforms, partial estate division was sometimes achieved in practice. Co-heirs could informally agree to it, and courts occasionally facilitated or ordered such divisions if there was a rational basis and if doing so did not compromise the fairness of the overall, eventual settlement of the entire estate. However, the precise legal foundation and the conditions under which a partial division could be formally requested or ordered by a court were not explicitly detailed in the Civil Code. The recent amendments to Article 907 now provide this clear statutory framework.

Mechanisms for Partial Estate Division Under the Reformed Article 907

The revised Civil Code outlines two primary ways in which a partial estate division can occur:

1. Partial Division by Agreement of Co-Heirs (Article 907, Paragraph 1)

The amended Article 907(1) now explicitly states: "Co-heirs may, except in cases where the decedent has prohibited division by will pursuant to the provisions of Article 908, divide the whole or part of the inherited property by consultation at any time."

  • Codification of Practice: This provision formally codifies the long-standing practice where co-heirs could mutually agree to a piecemeal division of the estate. It provides clear statutory authority for such agreements.
  • Heirs' Dispositional Authority: The basis for this is the collective dispositional authority that co-heirs have over the inherited property. If they all agree, they are generally free to decide how and when to divide portions of it.
  • No Special Conditions (Beyond Agreement): Beyond the requirement of unanimous agreement among the participating co-heirs, no special conditions (like demonstrating "necessity") are imposed for a partial division by agreement.
  • Testamentary Prohibition: The only explicit limitation mentioned is that this right is subject to any valid prohibition on division (or a prohibition for a specified period, not exceeding five years) that the deceased may have included in their will (as per Article 908 of the Civil Code).

2. Partial Division by Family Court Petition (Article 907, Paragraph 2)

When co-heirs cannot reach a mutual agreement, the path of judicial intervention is available. The revised Article 907(2) states: "If consultation among co-heirs regarding the division of inherited property is not concluded, or cannot be held, each co-heir may make a claim to the family court for the division of the whole or part thereof; provided, however, that this shall not apply to a partial division if there is a risk that dividing part of the inherited property would harm the interests of other co-heirs."

  • Explicit Right to Petition for Partial Division: This amendment clearly empowers any co-heir to petition the Family Court (家庭裁判所 - Katei Saibansho) not just for a complete division of the entire estate, but specifically for a division of only a part of it, even if other heirs do not agree to limit the scope.
  • The Critical Proviso: "No Harm to Other Co-Heirs' Interests": The most significant aspect of this judicial route is the proviso attached: a court-ordered partial division is not permissible if "there is a risk that dividing part of the inherited property would harm the interests of other co-heirs" (他の共同相続人の利益を害するおそれがある場合 - hoka no kyōdō sōzokunin no rieki o gaisuru osore ga aru baai).

The "No Harm to Other Co-Heirs' Interests" Test

This proviso is the central safeguard ensuring that the flexibility of partial division does not lead to overall unfairness in the ultimate settlement of the entire estate. It essentially codifies the "permissibility" (許容性 - kyoyōsei) requirement that was implicitly considered by courts even before the reform.

What constitutes "harm" to other co-heirs' interests?

  • Compromising Overall Equitable Distribution: A partial division would be deemed harmful if it makes it impossible or significantly more difficult to achieve a just and equitable distribution of the entire estate at a later stage. For instance, if a partial division quickly distributes all liquid assets (cash, easily sold securities) to some heirs, it might leave insufficient means to balance out the distribution of indivisible or hard-to-value assets (like real estate or a family business) that other heirs might receive in the final division.
  • Prejudicing Specific Entitlements: The partial division should not unfairly prejudice an heir's ability to eventually receive their rightful share considering complex factors that are often fully assessed only in a comprehensive division. These factors include:
    • Special Benefits (特別受益 - tokubetsu jueki): Lifetime gifts or bequests that are treated as advancements on an heir's share.
    • Contributor's Portion (寄与分 - kiyobun): Recognition for an heir's special contribution to maintaining or increasing the deceased's estate.
    • Legally Secured Portion (遺留分 - iryūbun): The minimum inheritance share guaranteed to certain heirs.
  • Need for a Clear Outlook on Final Fairness: Before ordering a partial division, the Family Court must be reasonably satisfied that a fair and complete division of all remaining estate assets can still be achieved. This means, for example, if an heir receives assets in a partial division that might exceed their ultimate proportional share, there must be a reliable prospect of achieving balance later, perhaps through the payment of equalization money (代償金 - daishōkin) by that heir from other assets or sources.

If the court cannot gain this clear outlook that overall fairness will be preserved, it must refuse the request for a partial division, even if some (but not all) heirs are in favor of it.

Practical Scenarios Favoring Partial Estate Division

The option of partial estate division is particularly useful in a variety of common situations:

  • Mixed Estate with Disputed and Undisputed Assets: Co-heirs can agree to divide assets whose ownership, value, and distribution are clear and undisputed, while setting aside more contentious assets for later negotiation or court determination.
  • Valuation Challenges for Specific Assets: An estate might include cash and publicly traded shares (easy to value and divide) alongside a privately-held family business, unique real estate, or valuable artwork that requires time-consuming and potentially expensive expert valuation. A partial division can allow for the timely distribution of the former.
  • Urgent Financial Needs of Heirs: Some heirs might have pressing financial needs that could be addressed by an early, partial distribution of specific liquid assets from the estate.
  • Assets Subject to Contingencies or Restrictions: An asset might be encumbered, involved in separate litigation, or subject to a condition that will only be resolved in the future. Other, unencumbered assets can be divided without waiting for these issues to clear.
  • Discovery of Additional Assets Later: If a seemingly complete estate division has already taken place and further assets belonging to the deceased are subsequently discovered, the division of these newly found assets is, in effect, a partial division of the then-remaining (i.e., newly identified) part of the total estate.

Procedural Aspects and Distinctions

Understanding the procedural context is important:

  • Initiation: As noted, partial division can be initiated either by the unanimous agreement of co-heirs or by a single co-heir petitioning the Family Court specifically for the division of a defined part of the estate.
  • Scope of Court Decision: If an heir petitions for a partial division of specific assets, the Family Court's judgment (審判 - shinpan) will generally be confined to those assets. Once that part is divided, the court case concerning those specific assets concludes. The division of any remaining, undivided assets would then require a new agreement among heirs or a separate, future court petition.
  • Distinction from "Partial Judgment/Decision" (一部審判 - ichibu shinpan): It's important to distinguish a partial division sought under Article 907(2) from a "partial judgment" (or partial decision) that a court might issue under Article 73, Paragraph 2 of the Family Affairs Procedure Law. A partial judgment typically occurs when a petition for the full division of the entire estate has been filed, and the court, during those proceedings, decides on a portion of the estate that is ready for a ruling, while the case concerning the remaining assets continues to be pending before the court. In contrast, a petition under the revised Article 907(2) can be for a limited, pre-defined set of assets from the outset, seeking a final resolution for just that part.
  • Overlapping or Expanding Petitions: If one heir files for a partial division, and another heir subsequently files a petition for a full division (or a more extensive partial division), the Family Court would typically consolidate these related petitions. The scope of the division proceedings would likely then expand to cover the broader range of assets requested in the more comprehensive petition, as the initial, narrower request is effectively subsumed.
  • The Role of "Necessity" (必要性 - hitsuyōsei): Interestingly, while the practical "necessity" or reasonableness of a partial division was a factor courts considered even before the reforms, the revised Article 907(2) does not explicitly list "necessity" as a distinct statutory requirement for a court-ordered partial division. The legislative drafters appear to have reasoned that:
    • If all co-heirs agree to a partial division (Article 907(1)), necessity is self-evident from their agreement.
    • If certain assets are clearly disputed or complex, creating a practical need to divide other parts first, this situation is often handled through the "partial judgment" mechanism if a full division was initially sought.
    • If an heir petitions for a specific partial division and other participating heirs do not object to that limited scope (or do not request a broader division), there's an implicit consensus on focusing on that part.
      Therefore, the primary statutory filter for court-ordered partial division under Article 907(2) remains the crucial "no harm to other co-heirs' interests" proviso.

Benefits of the Clarified Partial Division Rules

The explicit recognition and refined conditions for partial estate division in Article 907 offer several advantages:

  • Increased Flexibility and Efficiency: Co-heirs gain more control over the timing and scope of the division process, allowing them to manage it in a way that better suits the estate's specific characteristics and their individual circumstances.
  • Faster Access to Inherited Assets: Heirs can receive their shares of undisputed or easily divisible assets more promptly, without being held hostage by delays affecting other, more problematic assets.
  • Potential for Reduced Conflict: By enabling the resolution of simpler parts of the estate first, it may help to build momentum, reduce overall tension among co-heirs, and allow them to focus their energies on the more complex or contentious issues later.
  • Enhanced Legal Certainty: The reforms provide a clear and explicit statutory basis for a practice that, while existing previously, lacked this level of formal legal definition and clear conditions.

Conclusion

The amendments to Article 907 of the Japanese Civil Code, clarifying the rules for partial estate division, represent a significant practical enhancement to the inheritance process. By formally allowing co-heirs to divide an estate in stages—either by mutual agreement or, under specific conditions, through a Family Court petition—the law provides much-needed flexibility. The crucial safeguard that a court-ordered partial division must not harm the interests of other co-heirs ensures that this flexibility does not compromise the ultimate goal of achieving an equitable distribution of the entire estate. This reform can help make what is often a lengthy and emotionally charged process more manageable, allowing heirs to move forward with less delay and uncertainty.