How is the Inheritance Share Calculated in Japan? Explanation of Statutory Shares and Adjustments

Japanese Attorney at Law - Bengoshi L.L.

• 9 min read

When an individual passes away in Japan, determining how their estate is divided among their heirs involves a multi-layered calculation process. While the Japanese Civil Code provides a default framework of "statutory shares" (hōtei sōzokubun - 法定相続分) for intestate succession, and respects a decedent's wishes expressed through "designated shares" (shitei sōzokubun - 指定相続分) in a will, these initial entitlements are often subject to significant adjustments. These adjustments, primarily for "special benefits" (tokubetsu jueki - 特別受益) received by an heir during the decedent's lifetime and for "contributions" (kiyobun - 寄与分) made by an heir to the decedent's estate, are crucial for achieving fairness among co-heirs. This article explains the calculation of these shares and the impact of these equitable adjustments.

I. The Starting Point: Statutory and Designated Shares of Inheritance

The initial calculation of an heir's potential share of the estate depends on whether the decedent left a valid will specifying shares, or if the rules of intestate succession apply.

A. Statutory Shares of Inheritance (法定相続分 - Hōtei Sōzokubun) (Article 900, Civil Code)

In the absence of a will dictating otherwise, Article 900 of the Civil Code prescribes the following statutory shares:

  1. Spouse and Children:
    • The surviving spouse receives 1/2 of the estate.
    • The children (collectively) receive the remaining 1/2, divided equally among them.
    • A significant caveat is that the share of a non-marital child (acknowledged by the father) is one-half that of a marital child when inheriting from the common parent (Article 900(4) proviso). The constitutionality of this differentiation has been challenged but upheld by the Supreme Court (e.g., Supreme Court (Grand Bench) decision of July 5, 1995, 最(大)決平成7年7月5日民集49巻7号1789頁), though societal debate and reform proposals for equalization continue.
    • If a child has predeceased the decedent or is disqualified, their lineal descendants inherit their share by representation (daishū sōzoku), divided equally among those representatives (subject to the non-marital child rule) (Article 901(1)).
  2. Spouse and Lineal Ascendants (if no children or their descendants):
    • The surviving spouse receives 2/3 of the estate.
    • Lineal ascendants (parents, or if deceased, grandparents, etc., in closest degree) receive the remaining 1/3, divided equally among them.
  3. Spouse and Siblings (if no children/descendants and no lineal ascendants):
    • The surviving spouse receives 3/4 of the estate.
    • Siblings (collectively) receive the remaining 1/4, divided equally among them.
    • The share of a half-blood sibling is one-half that of a full-blood sibling (Article 900(4)).
    • Representation by a predeceased or disqualified sibling's children (the decedent's nieces/nephews) is permitted (Article 901(2)).

The share allocated to the surviving spouse was notably increased in 1980, reflecting a greater emphasis on their financial security and recognition of their contribution to the marital estate.

B. Designated Shares of Inheritance (指定相続分 - Shitei Sōzokubun) (Article 902, Civil Code)

A decedent can, by will, specify inheritance shares for their co-heirs that differ from the statutory shares, or they can delegate the task of determining these shares to a third party (Article 902(1)).

  • If a will designates shares for only some co-heirs, the shares of the remaining co-heirs are determined according to the statutory rules (Article 902(2)).
  • A universal testamentary gift (hōkatsu izō - 包括遺贈), which bequeaths a fraction of the entire estate (e.g., "1/3 of my estate to X"), is treated similarly to a designation of an inheritance share, especially if made to an heir.
  • The decedent's freedom to designate shares is, however, limited by the legally secured shares (iryūbun) of certain heirs (spouse, children, lineal ascendants) (Article 902(1) proviso).
  • Importantly, while designated shares affect the internal distribution among heirs, they do not alter the proportion of the decedent's debts for which each heir is liable towards external creditors; creditors can generally pursue claims based on the heirs' statutory liability proportions.

II. Achieving Equity: Adjustments for Special Benefits (Tokubetsu Jueki - 特別受益) (Article 903, Civil Code)

To ensure fairness among co-heirs, Japanese law requires that certain lifetime gifts or testamentary gifts received by an heir from the decedent be treated as an advance on their inheritance. This is the system of "special benefits."

A. The Concept of Special Benefits

Article 903(1) provides that if a co-heir has received from the decedent:

  1. A testamentary gift (izō - 遺贈), or
  2. A lifetime gift (zōyo - 贈与) for the purpose of marriage, adoption, or as capital for making a living,
    then this benefit must be accounted for in calculating their final inheritance share. The scope of "capital for making a living" can be broad and includes significant financial assistance beyond ordinary familial support (e.g., funds to start a business, a down payment for a house). Routine allowances or standard educational expenses, especially if provided to all children relatively equally, might not be considered special benefits, but this can be context-dependent.

B. The "Hotchpot" (持戻し - Mochimodoshi) Calculation

The process of accounting for special benefits is often referred to as "hotchpot." It involves the following steps to determine each heir's "concrete inheritance amount" (gutaiteki sōzokubun-gaku - 具体的相続分額):

  1. Determine the "Constructive Estate" (Minashi Sōzoku Zaisan - みなし相続財産): The value of the special benefit(s) is added back to the value of the actual property owned by the decedent at the time of the commencement of inheritance. This total forms the "constructive estate" upon which notional shares are based.
  2. Calculate Notional Shares: Each co-heir's initial inheritance share (statutory or designated) is applied to this constructive estate value to determine their notional entitlement.
  3. Deduct Special Benefit: From the notional entitlement of an heir who received a special benefit, the value of that benefit is deducted. The result is their concrete inheritance amount from the actual remaining estate.
  4. No Repayment of Excess: If the value of the special benefit received by an heir exceeds their calculated notional share from the constructive estate, that heir typically receives nothing further from the actual estate. However, they are generally not required to repay the excess amount to the estate, unless doing so is necessary to satisfy the legally secured shares (iryūbun) of other heirs (Article 903(2)).

Example: Decedent H has an estate of ¥12 million at death. Heirs are spouse W and children A, B, C. During H's lifetime, A received a ¥6 million gift as capital for business.

  1. Constructive Estate: ¥12 million (actual) + ¥6 million (A's gift) = ¥18 million.
  2. Notional Shares:
    • W (spouse): 1/2 of ¥18m = ¥9 million.
    • A, B, C (children, each 1/6 of total, or 1/3 of children's 1/2): 1/6 of ¥18m = ¥3 million each.
  3. Deduct A's Special Benefit:
    • A's concrete share: ¥3 million (notional) - ¥6 million (gift) = -¥3 million. A receives ¥0 from the remaining estate.
  4. Shares of W, B, C from the actual ¥12 million estate would then be adjusted based on their entitlement from the constructive estate, considering A receives no more. (W: ¥9m; B: ¥3m; C: ¥3m. Total: ¥15m. The actual distribution from the ¥12m estate will be proportional to these adjusted entitlements: W gets 9/15, B gets 3/15, C gets 3/15 of the ¥12m. W=¥7.2m; B=¥2.4m; C=¥2.4m. A gets ¥0 but keeps the ¥6m gift).

C. Valuation of Special Benefits (Article 904, Civil Code)

  • Special benefits are generally valued as of the time of the commencement of inheritance (i.e., the decedent's death).
  • Even if the gifted property was destroyed or its value changed due to the recipient's actions, it is valued as if it still existed in its original state at the time of inheritance.
  • For monetary gifts made in the past, their value is adjusted to reflect the currency value at the time of inheritance to ensure fairness (Supreme Court decision of March 18, 1976, 最判昭和51年3月18日民集30巻2号111頁).

D. Exemption from Hotchpot by Decedent's Will (Article 903, Paragraph 3)

The decedent can, by will or other expression of intent, stipulate that a particular lifetime gift should not be brought into hotchpot (i.e., it should not be deducted from the recipient heir's share). This is known as an "exemption from hotchpot" (mochimodoshi no menjo - 持戻しの免除). Such an exemption is valid, but it cannot infringe upon the iryūbun (legally secured shares) of other heirs. If it does, those heirs can still make an iryūbun claim.

III. Recognizing Contributions: The System of Kiyobun (寄与分) (Article 904-2, Civil Code)

Introduced by a 1980 amendment to the Civil Code, the kiyobun system allows for an adjustment of inheritance shares to recognize a co-heir who made extraordinary contributions to the maintenance or increase of the decedent's property.

A. Purpose of Kiyobun

This system addresses situations where one or more heirs have, through their special efforts, significantly benefited the decedent's estate, and where it would be unfair for them to receive only their standard statutory or designated share without recognition for this extra contribution.

B. Eligible Contributors and Types of Qualifying Contributions

  • Contributors: The right to claim kiyobun is limited to co-heirs. Contributions made by a non-heir (e.g., the spouse of an heir, though this might be considered as part of the heir's contribution if they acted in concert) do not directly give rise to a kiyobun claim for the non-heir, although they might have separate claims against the estate based on contract or unjust enrichment.
  • Qualifying Contributions (Article 904-2(1)):
    1. Providing labor or services for the decedent's business: For example, working unpaid or underpaid for many years in a family business or farm.
    2. Providing financial support or property: For instance, making significant financial contributions that helped the decedent acquire or maintain property, or paying off the decedent's debts.
    3. Providing nursing care and personal attendance for the decedent: This is a common basis for claims, especially if the heir provided extensive, long-term care that obviated the need for professional nursing services, thereby preserving the decedent's assets.
    4. "Other methods" that specially contributed to the maintenance or increase of the decedent's property.
  • "Special" Contribution: The contribution must be "special" or "extraordinary," meaning it goes beyond what would normally be expected as part of ordinary familial duties of support, cooperation, or affection. For example, routine spousal care or ordinary filial piety would not typically qualify unless it was exceptionally burdensome and resulted in demonstrable preservation or increase of assets.

C. Determination and Calculation of Kiyobun

  1. Agreement or Family Court Adjudication: The amount of kiyobun should first be determined by agreement among all co-heirs. If they cannot agree, a co-heir claiming kiyobun can petition the Family Court to determine the amount as part of the estate division proceedings (Article 904-2(2)). The court considers the timing, method, and extent of the contribution, the value of the estate, and all other circumstances.
  2. Calculation Method:
    • The value of the kiyobun as determined by agreement or by the court is first deducted from the value of the decedent's property at the time of inheritance commencement.
    • The remaining amount is then considered the estate to be divided according to statutory or designated shares (after also adding back any special benefits for the hotchpot calculation, if applicable).
    • The contributing heir receives their determined kiyobun amount in addition to their regular (adjusted) inheritance share calculated from the remaining estate.

Example: Estate is ¥20 million. Heir A has a recognized kiyobun of ¥5 million. There are two heirs, A and B, with equal statutory shares.

  1. Estate for share calculation: ¥20m - ¥5m (kiyobun) = ¥15 million.
  2. A's notional share: 1/2 of ¥15m = ¥7.5 million.
  3. B's notional share: 1/2 of ¥15m = ¥7.5 million.
  4. A's final entitlement: ¥7.5m (share) + ¥5m (kiyobun) = ¥12.5 million.
  5. B's final entitlement: ¥7.5 million.

D. Limitations

  • The total kiyobun awarded cannot exceed the value of the decedent's property at the time of inheritance commencement minus the value of any testamentary gifts (Article 904-2(3)). This means kiyobun cannot be claimed from property that has been specifically willed to others.
  • The interaction between kiyobun and iryūbun (legally secured shares) can be complex. While kiyobun is deducted before calculating shares, iryūbun is calculated based on a broader constructive estate that includes certain lifetime gifts and testamentary gifts but generally does not deduct kiyobun before calculating the iryūbun base. This can lead to situations where a large kiyobun award might impact the assets available to satisfy iryūbun claims.

IV. Calculating the Final "Concrete Shares" (具体的相続分 - Gutaiteki Sōzokubun)

After applying the initial statutory or designated share percentages, and then making adjustments for any special benefits (via hotchpot) and contributions (kiyobun), the resulting entitlement for each heir is their "concrete inheritance share." This concrete share, expressed either as a monetary amount or as a final proportion (gutaiteki sōzokubunritsu - 具体的相続分率), forms the basis for the actual division of the estate assets among the co-heirs during the estate division (isan bunkatsu) process.

V. Conclusion

Calculating inheritance shares in Japan is a sophisticated process designed to achieve both predictability through statutory rules and equity through adjustments for individual circumstances. While the Civil Code provides a clear framework for statutory shares and respects the decedent's wishes for designated shares, the mechanisms of accounting for special benefits (tokubetsu jueki) and recognizing extraordinary contributions (kiyobun) are vital for ensuring a fair and just distribution of the estate among co-heirs. These adjustments reflect a legal system that seeks to look beyond mere formal entitlements to consider the substantive history of financial interactions and support within the family, often under the guidance and supervision of the Family Court.