Japanese Inheritance Law Update: How Are Inherited Debts Handled, and What Are Creditors' Rights?

Japanese Attorney at Law - Bengoshi L.L.

03 Jun 2025 • 8 min read

When an individual passes away in Japan leaving behind debts, a critical question arises for both the heirs and the creditors: how are these liabilities apportioned, and what rights do creditors have to recover what is owed? Recent amendments to Japan's Civil Code, particularly the introduction of Article 902-2, have brought significant clarity to this area, especially when a will designates inheritance shares that differ from the default statutory shares.

Under Japanese law, when co-heirs inherit an estate, divisible monetary debts of the deceased are, as a general rule, automatically divided and succeeded to by each heir in proportion to their respective statutory inheritance shares (法定相続分 - hōtei sōzoku bun). This principle was firmly established by a Supreme Court decision on June 19, 1959 (Minshu 13-6-757). This means that upon the decedent's death, each heir becomes independently responsible for their legally prescribed portion of such debts. For instance, if a deceased person with two children (whose statutory shares are 1/2 each) leaves a ¥10 million debt, each child automatically inherits and is liable for ¥5 million of that debt. A creditor could then pursue each child individually for their respective ¥5 million portion.

The Complication: Wills Designating Specific Inheritance Shares

The situation becomes more nuanced when the deceased has left a will that specifies inheritance shares (指定相続分 - shitei sōzoku bun) different from the statutory ones. For example, a testator might leave 75% of their assets to Heir A and 25% to Heir B, while their statutory shares might have been 50% each. Does this testamentary designation of asset shares also dictate the proportion of debts each heir must bear vis-à-vis the creditors?

Before the recent codification, this area was governed by case law. A pivotal Supreme Court judgment on March 24, 2009 (Minshu 63-3-427) laid down the guiding principles:

A testator's designation of inheritance shares in a will does not, by itself, alter the proportion of debt that creditors can claim from each heir. Creditors retain the right to claim from each heir based on their statutory inheritance share of the debt.
However, among the co-heirs themselves (i.e., for internal allocation purposes), the inherited debts are indeed to be borne according to the designated inheritance shares outlined in the will. This implies a right of recourse for an heir who pays more to a creditor than their designated share against other heirs who paid less.
Crucially, this does not prevent creditors from voluntarily acknowledging or approving the allocation of debts according to the designated shares and choosing to pursue heirs based on those specific proportions.

Codification and Clarification: The New Civil Code Article 902-2

The recent amendments to the Civil Code have largely codified and clarified these principles through the introduction of Article 902-2. This article now provides a statutory basis for understanding how designated inheritance shares interact with creditors' rights concerning inherited debts.

A provisional translation of Article 902-2, reflecting its core intent, is as follows:

"Notwithstanding the provisions of Article 902 (Designation of Shares in Inheritance), if a will designates shares in inheritance, a creditor of the decedent may exercise their rights against each co-heir in proportion to their statutory share in inheritance; provided, however, that this shall not apply if the creditor has approved that each co-heir succeeds to the obligations in proportion to their designated share in inheritance."

Let's break down its components:

The main clause of Article 902-2 affirms the creditor's fundamental right: even if a will specifies inheritance shares for assets (e.g., Heir A gets 75%, Heir B gets 25%), a creditor of the deceased can still demand payment from each heir based on their statutory share of the debt.

Example: Suppose the decedent has two children, Heir A and Heir B. Their statutory inheritance shares are 1/2 each. The decedent leaves a will stating Heir A is to inherit 3/4 of the estate and Heir B is to inherit 1/4. If the decedent had a divisible debt of ¥20 million, a creditor can still claim ¥10 million (1/2 of the debt) from Heir B, even though Heir B is only designated to receive 1/4 of the assets. Similarly, the creditor can claim ¥10 million from Heir A.

This protects creditors from being adversely affected by private testamentary arrangements to which they were not party.

2. Internal Burden Among Heirs: Alignment with Designated Shares

While creditors can claim based on statutory shares, the internal allocation of the debt burden among the heirs themselves is generally expected to follow the proportions designated in the will (as per Article 902, which allows for designation of shares, and the spirit of the 2009 Supreme Court ruling).

Example (Continued): If Heir B pays ¥10 million (their statutory debt portion) to the creditor, but the will intended their overall share of the net estate (assets minus debts) to be 1/4, Heir B would typically have a right of recourse against Heir A. If Heir A was to receive 3/4 of the net estate, they should internally bear 3/4 of the ¥20 million debt (i.e., ¥15 million). Heir B, taking 1/4, should internally bear ¥5 million. Since Heir B paid ¥10 million to the creditor, they effectively "overpaid" by ¥5 million relative to their designated share and can seek this ¥5 million from Heir A, who "underpaid" by ¥5 million relative to their designated 3/4 debt burden.

Article 902-2 does not explicitly detail this internal recourse mechanism, but it is a logical consequence of the interplay between the creditor's rights and the testator's designated shares for the heirs.

3. The Creditor's Option to "Approve" Debt Allocation by Designated Shares (Proviso of Art. 902-2)

The proviso of Article 902-2 offers flexibility: creditors are not bound to claim based on statutory shares. They have the option to "approve" (承認 - shōnin) that the heirs succeed to the debts according to the designated shares specified in the will. If a creditor provides such approval, their claims against the heirs will then be based on these designated proportions.

Meaning of "Approval" (承認 - shōnin): The term "approval" is understood to be an acknowledgment or acceptance by the creditor of the debt allocation as per the designated shares. This is seen as a slightly less formal act than "consent" (承諾 - shōdaku), which might imply a more structured, bilateral agreement akin to a formal debt assumption (免責的債務引受 - mensekiteki saimu hikiuke). The choice of "approval" aligns with the wording used in the 2009 Supreme Court judgment. The exact manner of demonstrating or effecting this "approval" might vary, but it essentially signifies the creditor's election to follow the will's designated proportions for debt liability.
Effect of Approval for One Heir Extends to All Others: A crucial aspect of this approval mechanism is that if a creditor approves the assumption of debt according to the designated share for one co-heir, this approval is deemed to extend to all other co-heirs regarding that particular debt. The creditor cannot then selectively claim from some heirs based on designated shares and from others based on statutory shares for the same debt. This rule is intended to prevent the undue complication of legal relationships.
- Example: If, in our A (3/4 share) and B (1/4 share) example, the creditor approves claiming 3/4 of the ¥20 million debt (¥15 million) from Heir A, they can then only claim 1/4 of the debt (¥5 million) from Heir B, not Heir B's statutory 1/2 portion (¥10 million).
Irrevocability and Estoppel Considerations: Once a creditor has clearly chosen a basis for their claim (statutory vs. approved designated shares), can they switch? The principle of estoppel (kinhangen) may come into play.
- If a creditor, aware of the will's contents and the designated shares, explicitly informs the heirs that they will only proceed based on statutory shares, they would likely be estopped from later trying to claim based on designated shares.
- Conversely, if a creditor initially claims based on statutory shares (perhaps before fully assessing the will or the heirs' solvency under designated shares), they are not necessarily barred from later approving the designated share allocation, unless their prior actions created a clear reliance or representation to the contrary. However, if they approve the designated share regime, this choice is generally binding.
No Refund from Creditor for "Overpayment" by an Heir Relative to Designated Share: If an heir (say, Heir B, with a 1/4 designated share) pays a creditor based on their 1/2 statutory share (e.g., ¥10 million of a ¥20 million debt), and the creditor subsequently approves the designated share regime (under which Heir B should have only borne ¥5 million), Heir B cannot demand a ¥5 million refund from the creditor. Heir B's recourse for this "overpayment" is an internal claim against Heir A, who would have "underpaid" the creditor relative to their 3/4 designated debt burden. The payment made to the creditor validly discharged that portion of the debt.

Rationale and Legislative Intent of Article 902-2

The legislative journey of Article 902-2 reflects a careful balancing act. Initial proposals leaned towards a stricter view that a decedent could not unilaterally alter how their debts are apportioned for creditors; debts would always pass by statutory shares unless creditors formally agreed to a novation-like debt assumption by heirs in different proportions.

However, the final formulation of Article 902-2, influenced by the 2009 Supreme Court ruling, adopted a more nuanced stance. It acknowledges that the testator's designation of shares for assets implies a corresponding designation for the internal burden of debts among heirs. This testamentary intent regarding debt allocation is considered primary among the heirs. Yet, because creditors are third parties not privy to the will, this internal allocation cannot be asserted against them to their detriment. Creditors retain the right to proceed based on the more predictable statutory shares, unless they find it advantageous (e.g., if an heir with a larger designated share is more solvent) to approve the designated share allocation. This approach aims to respect the testator's intentions as much as possible while safeguarding the legitimate interests and expectations of creditors.

Practical Considerations for Creditors

For creditors dealing with a Japanese estate where a will designates inheritance shares, several practical points emerge:

Information Gathering: It is crucial to ascertain not only the statutory inheritance shares of the heirs but also the contents of any will that might designate different shares.
Strategic Decision on Claims: Creditors must strategically decide whether to:
- Proceed against each heir based on their statutory share of the debt.
- Investigate the implications of the designated shares and, if favorable (e.g., the heir(s) designated to take larger portions of assets and implicitly debts are more creditworthy), formally approve this allocation for their claim.
Awareness of Binding Effects: Remember that approving the designated share apportionment for one heir will generally dictate the approach towards all other heirs for that specific debt.
Underlying Debt Validity: The rules in Article 902-2 govern how an existing, valid debt of the deceased is apportioned among heirs. They do not affect the underlying validity or enforceability of the debt itself, nor its statute of limitations, which continues to run against the heirs as successors to the deceased's obligation.

Conclusion

Article 902-2 of the Japanese Civil Code provides valuable clarity on the complex interplay between testamentary freedom (in designating inheritance shares) and creditor protection in the context of inherited debts. By default, creditors can rely on the straightforward division of divisible debts according to heirs' statutory inheritance shares. However, the provision also allows creditors the flexibility to approve and claim based on designated inheritance shares if they deem it appropriate. This framework aims to achieve a fair balance, ensuring that while a testator's intentions for internal debt allocation among heirs are respected, the rights of external creditors to recover from the estate are not unduly compromised by such internal arrangements without their accord. Understanding these rules is essential for any party navigating claims involving a Japanese decedent's estate.

The General Principle for Divisible Debts: Succession by Statutory Share