How Do Japan's Inheritance Law Changes Affect "Sōzoku Saseru" Wills (Wills Designating Specific Heirs for Specific Assets)?

In Japanese estate planning, a frequently utilized tool for directing specific assets to particular heirs is a type of testamentary disposition commonly known as a "sōzoku saseru" will (「相続させる」旨の遺言). This phrasing, which translates to a will "causing inheritance" or "having [an heir] inherit," has long offered a distinct way to manage the succession of property. Recent amendments to Japan's Civil Code have refined the legal understanding and practical effects of these wills, particularly concerning how the heir's rights are asserted against third parties. This article examines these developments.

Understanding "Sōzoku Saseru" Wills: The Pre-Amendment Landscape

Before the recent reforms, the precise legal nature of a "sōzoku saseru" will was a subject of considerable academic and practical discussion. The debate centered on whether such a provision constituted a "specific testamentary gift" (特定遺贈 - tokutei izō) under the then-existing Civil Code Article 964, or if it was a "designation of the method of estate division" (遺産分割方法の指定 - isan bunkatsu hōhō no shitei) under Article 908.

The Supreme Court of Japan provided significant clarification in a judgment on April 19, 1991 (Minshu 45-4-477). The Court ruled that, in the absence of special circumstances, a "sōzoku saseru" will should be interpreted as a designation of the method of estate division. However, critically, the Court also held that the effect of such a will is that the specified property passes directly and immediately to the named heir upon the testator's death. No further act, such as a formal estate division agreement among all heirs, is required for the designated heir to acquire the property.

This ruling offered a practical and often preferred approach for testators. It combined the straightforwardness of direct succession (akin to a specific gift) with certain procedural advantages associated with "inheritance" rather than a "gift." For instance:

• Direct Transfer: The property was considered to be directly inherited by the designated heir at the moment of the testator's passing.
• Registration Simplicity (Real Property): The designated heir could typically apply unilaterally for the registration of ownership transfer due to "inheritance" (pursuant to Article 63(2) of the Real Property Registration Act). This was simpler than the process for a specific testamentary gift, which often required a joint application by the executor (if any) or all heirs along with the legatee.
• Registration and License Tax: Historically, registering a property transfer as "inheritance" incurred a lower registration and license tax than registering it as a "testamentary gift." While this particular advantage was nullified by an amendment to the Registration and License Tax Act in 2003 which equalized the rates, the procedural ease often remained a factor.

A crucial aspect related to third-party rights. Before the recent amendments, if an heir acquired a specific asset through a "sōzoku saseru" will, a Supreme Court judgment on June 10, 2002 (Katei Saibansho Geppo 55-1-77) indicated that the heir could assert their right to the entire property against third parties, even for the portion of the asset's value that exceeded their statutory inheritance share (法定相続分 - hōtei sōzoku bun), without having first registered this excess portion. This was a significant point of difference from specific testamentary gifts. For a specific testamentary gift, an heir (legatee) generally needed to register the transfer to assert rights to any portion exceeding their statutory share against third parties who might later acquire a conflicting interest (Supreme Court, March 6, 1964, Minshu 18-3-437).

The 2018/2019 Amendments: Clarification and Convergence

The recent wave of inheritance law reforms, largely effective from 2019, brought important clarifications and changes affecting "sōzoku saseru" wills.

New Terminology: "Specific Property Succession Will"

The amended Civil Code now provides a formal legal term for these types of wills. Article 1014, paragraph 2, refers to "a will that designates, as a method of division of the decedent's estate, that a specific property belonging to the decedent's estate shall be succeeded to by one or several of the co-heirs" as a "Specific Property Succession Will" (特定財産承継遺言 - tokutei zaisan shōkei igon). This codifies the nature of such wills in line with the Supreme Court's previous interpretation.

The Impact of Civil Code Article 899-2 on Perfection

The most significant change comes from the newly enacted Civil Code Article 899-2. As discussed in a prior article, this provision mandates that if an heir succeeds to a right (to real property, movables, or claims) that exceeds their statutory inheritance share, they must fulfill the relevant perfection requirements (e.g., registration for real estate, delivery for movables, notice for claims) for that excess portion to assert it against a third party.

This has a direct and substantial impact on Specific Property Succession Wills:

• Alignment with Specific Testamentary Gifts regarding Third-Party Perfection: Now, even if an heir receives an entire asset through a Specific Property Succession Will, for the portion of that asset's value that exceeds their statutory inheritance share, they must complete the necessary perfection steps to defend their rights against third parties. For example, if an heir with a statutory share of 1/2 inherits an entire piece of real estate valued at ¥100 million via a Specific Property Succession Will, they must register their ownership for the ¥50 million value exceeding their ¥50 million statutory share to assert that excess ¥50 million against a subsequent purchaser from another heir (who theoretically had no right to sell it).
• Change from Previous Precedent: This effectively modifies the previous position established by the June 10, 2002 Supreme Court ruling, where the entire asset under a "sōzoku saseru" will could be asserted against third parties without immediate registration of the portion exceeding the heir’s statutory share. The protective umbrella for the "excess" portion without perfection has been removed by Article 899-2.

The rationale behind this change is to enhance transactional security and the protection of third parties who might rely on public records or other indicators of ownership. It brings greater consistency to the perfection requirements, regardless of whether the "excess" portion is acquired via a Specific Property Succession Will or a specific testamentary gift.

Comparing Specific Property Succession Wills and Specific Testamentary Gifts Post-Amendment

While Article 899-2 has aligned these two types of testamentary dispositions in terms of perfection against third parties for portions exceeding statutory shares, some important practical distinctions remain.

1. Perfection of Rights to Real Property Against Third Parties:
   • Statutory Share Portion: For the part of the asset corresponding to the heir's statutory share, the heir can likely still assert their right against a third party without prior registration, based on the principle that the third party is dealing with someone lacking authority over that portion.
   • Portion Exceeding Statutory Share: As stated, Article 899-2 now mandates registration for this excess portion under both Specific Property Succession Wills and specific testamentary gifts to be assertable against third parties.
2. Real Property Registration Procedure:
   • Specific Property Succession Will: It is generally understood that the designated heir can still unilaterally apply for registration of ownership transfer on the grounds of "inheritance". This is a significant procedural convenience.
   • Specific Testamentary Gift: The registration for a property received through a specific testamentary gift is typically based on "testamentary gift" as the cause. This usually requires a joint application by the will executor (or all other heirs) and the legatee. Despite discussions during the reform process about potentially allowing unilateral registration for specific gifts as well, the prevailing approach has been to maintain the joint application requirement for them. This procedural difference can impact the ease and speed with which an heir can formally register their title.
3. Perfection of Claims (e.g., Bank Deposits, Loans Owed to the Deceased):
   This area reveals a more pronounced continuing distinction post-amendment.This difference is significant. An heir under a Specific Property Succession Will has a statutory pathway to perfect their right to an inherited claim without needing the active cooperation of other heirs for the notice, provided they can appropriately present the will. A legatee of a specific testamentary gift of a claim might face more hurdles if cooperation is not forthcoming.
   • Specific Property Succession Will: If such a will directs a specific claim (like a bank account) to an heir, that heir can take advantage of the special provision in Civil Code Article 899-2, paragraph 2. This allows the heir, by "clarifying the contents of the will" pertaining to the claim, to unilaterally give notice of the succession of that claim to the debtor (e.g., the bank). This notice is then deemed to have been given by all co-heirs, effectively perfecting the heir's right to the portion of the claim exceeding their statutory share against the debtor and other third parties (if the notice includes a certified date).
   • Specific Testamentary Gift of a Claim: For a claim transferred by a specific testamentary gift, the general rules of claim assignment under Civil Code Article 467 apply. To perfect the transfer against the debtor and third parties, notice must generally be given by the assignor (in an inheritance context, this would be the will executor or all heirs acting collectively) to the debtor, or the debtor must consent. A legatee typically cannot unilaterally perfect the gift of a claim solely on their own behalf by merely notifying the debtor; the cooperation of the executor or other heirs is usually necessary (this draws an analogy from cases like the Supreme Court judgment of April 26, 1974, Minshu 28-3-540, which dealt with claim assignments). While some legal scholars suggest a potential analogical application of Article 899-2(2) to specific testamentary gifts of claims, this is an interpretative view and not explicitly stated in the law.

Practical Implications and Strategic Considerations

The choice between using a Specific Property Succession Will and a specific testamentary gift still carries strategic weight, despite the convergence on third-party perfection rules for excess shares.

• Why Choose a Specific Property Succession Will?
  • Simpler Real Property Registration: The ability for the designated heir to unilaterally register real property can be a considerable advantage.
  • Easier Perfection of Claims: The mechanism under Article 899-2(2) for unilateral notification regarding claims is a powerful tool for the heir.
  • Conceptual Alignment: For many testators, the intention is for the heir to "inherit" the asset directly, and this form of will aligns closely with that concept.
• Why Might a Specific Testamentary Gift Still Be Used?
  • Clearer Distinction from "Inheritance": In some complex estate plans, or where the testator wants to make it unequivocally clear that an asset is passing as a distinct "gift" outside the standard flow of inheritance shares, a specific testamentary gift might be chosen.
  • Non-Heir Beneficiaries: If the intended recipient is not an heir, a specific testamentary gift is the appropriate instrument (a "sōzoku saseru" will is for heirs).

Regardless of the form chosen, the amendments underscore:

• The Importance of Clear Will Drafting: Wills should be drafted with precision by legal professionals familiar with these nuances to ensure the testator's intentions are accurately reflected and legally effective. Using the formal terminology like "Specific Property Succession Will" can add clarity.
• Prompt Action by Heirs: Heirs receiving assets, especially those exceeding their statutory shares, should act promptly to fulfill perfection requirements to secure their rights against potential third-party claims.

Conclusion

Specific Property Succession Wills ("sōzoku saseru" wills) remain a vital and effective instrument in Japanese estate planning for directly transferring specific assets to chosen heirs. The recent legal reforms, chiefly through the introduction of Civil Code Article 899-2, have brought their treatment closer to that of specific testamentary gifts concerning the need to perfect rights for portions exceeding statutory inheritance shares when asserting against third parties. This change promotes greater legal certainty and protection for third parties.

However, important practical distinctions persist, notably in the procedures for real property registration and, more significantly, in the mechanisms for perfecting inherited claims. The ability for an heir under a Specific Property Succession Will to unilaterally effectuate notice for claims provides a distinct advantage. Testators and their legal advisors must carefully consider these differences when choosing the most appropriate form of testamentary disposition to achieve their estate planning goals in Japan.