u/upachimneydown

An ongoing project is to prepare for my survivors a small file or list that can be used as a guide for what to do, or what needs to be done, if I die. Yes, I've googled and read some of the innumerable lists available online, but I think that what follows are a few Japan-specific aspects.

A preview: what happens with future tax payments when someone dies--both local/residence tax, and national? Similarly, what happens with the regular health insurance payments when someone dies. These are the main questions.

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I'm 74, and have been trying to ready things for my death--where everything is, what bills are being paid by auto-deduct that will have to be shifted over to some different account, bank/investment accounts and logins, codes/logins to my laptop and phone, and some online accounts/subscriptions, and so on. Another aspect is taxes and healthcare payments after death, and I'm hoping for some feedback here on these.

So if I die tonight or midway thru some future year, I assume some survivor will have to (1) pay my remaining residence taxes. And as a retiree, there are the remaining payments this calendar year, and I think the final one (of four) at the end of next January. Is it correct that all these would need to be paid? Or does death somehow stop the clock on those?

But also, even tho I will have made some money this year before my death (dividends and some gains), (2) is it correct to assume that, since I'll be gone and will not be resident here (or anywhere) come January 1st, 2027, that there won't be any residence tax due for 2026? Even tho (3) my wife would have to file a final, post-death national tax return for me, which may entail some taxes for the earlier, pre-death 2026 dividends/gains? Also, (4) what happens with dividend payments that occur between the time of my death and the disbursement/settlement of the estate? Are those lumped in with everything overall, or, since I've read that inheritance happens at the time of death, would my inheritors then be responsible?

To illustrate, one inheritor might get shares of SPY, another might get shares of QQQ. Would each inheritor be responsible for the dividends paid after my death by each of those ETFs?

Further, would (5) health insurance payments for the year cease on death (or shortly after), or, since they are calculated on the previous year's income, would my estate owe the remaining payments that had been calculated as due during 2026? Or do those cease upon death of the insured?

Finally, I'm kind of rambling around on this. So if you have other suggestions about what to add to a list of Japan-specific things to cover for this final bit of end-of-life type of paperwork, please offer ideas. (And I have added a note that my pension providers need to be contacted to stop those payments.)

If you inherit something less than an amount that will trigger inheritance tax, let's say up to ¥30m for a statutory heir, or up to ¥160m for a spouse, then from my reading I gather that you would not have to file an inheritance tax return. ((And for my question here, I'd like to bracket out any discussion of tax rates and shares for heirs, etc., and focus on whether filing an inheritance tax return--even if no tax is due--would be a good thing.))

For example, when I die, my wife would inherit a good portion of my US-based assets. How much is not really relevant, but let's ballpark it for discussion at ¥80m. A considerable amount, but with the spousal deduction she would not owe inheritance taxes on that.

In all likelihood she would want to move this money to Japan (which I fully understand and have no issue with). However, when doing so, in the first instance the banks here would be asking about the source of funds. And second, even if they're satisfied and release the funds into her account, the bank(s) would almost certainly also notify the NTA, which would then contact her to ask the same. Of course in each case she could say 'inheritance', but then what proof would she need?

Which leads to my question: If a person inherits less than an amount that triggers taxation, would it ever be wise/prudent to file an inheritance tax return anyway? So as to be able to show that tax return to a bank in order to account for the source of funds on an inbound transfer? Or perhaps later, when the NTA calls and asks the same? (And there may be other uses for such a tax record other than for inbound international transfers.)

It's just my opinion/POV, but I'd think that, even if no taxes are due, creating this kind of paper trail might be useful and prudent. And besides using spouse in my illustration, it could also be one of our kids trying to transfer a smaller amount, but still enough to trigger those same questions.

Would the tax office be confused by someone who didn't owe tax wanting to file an inheritance tax return anyway? Or would they understand the idea/benefit of creating a paper trail? Is creating this kind of paper trail common, or would the tax office simply deny the request since no tax was due?