Question from a reader:
After marriage, if a parent passes away and the investment trust purchased with the inherited assets has unrealized gains, will it become joint property of the couple? In the case of divorce, will the profits gained from selling the investment trust need to be divided?

Considering Inherited Assets and the Treatment of Investment Trusts After Marriage

Hello, today
I would like to discuss a somewhat complex but closely related topic to real life: inheritance, marriage, and divorce. These are events that may be unavoidable in life. Nevertheless, it is very important to understand the legal aspects. Now, let’s think about the question from the reader regarding whether “the unrealized gains of the investment trust purchased with inherited assets after a parent’s death will become joint property of the couple.” This is a concern that many people may face. I personally believe that I needed to deepen my understanding on this matter as well.

The Difference Between Inherited Assets and Marital Property

First, it is important to understand the difference between inherited assets and marital property. Inherited assets refer to the property left by a deceased person, which is legally passed on to the heirs. On the other hand, marital property refers to the assets acquired by the couple during their marriage. For example, suppose your parent passes away, and you use the inherited funds to purchase an investment trust. In this case, the principal of that investment trust is your inherited asset and, of course, belongs to you. However, what we want to focus on here is the “unrealized gains” of the investment trust.

How Are Unrealized Gains Treated?

Unrealized gains of an investment trust refer to the increase in asset value from the time of purchase to the present. The key point here is whether the gains were acquired during the marriage. Generally, unrealized gains obtained after marriage are often considered joint property of the couple. What is important here is the condition under which inherited assets become marital property. If the investment trust was purchased during the marriage, the unrealized gains are likely to be considered joint property. This means that in the event of a divorce, the division of unrealized gains will be necessary.

Let’s Consider a Specific Example

Let’s provide a specific example. Suppose your parent passes away, and you inherit 3 million yen. You use that money to purchase an investment trust during your marriage. A few years later, that investment trust grows to 5 million yen. In this case, since the 3 million yen you inherited serves as the basis, the entire 5 million yen does not belong solely to you. Now, the breakdown of this 5 million yen consists of the 3 million yen you inherited as principal and the 2 million yen in unrealized gains acquired during the marriage. This 2 million yen is legally considered joint property, so it will need to be divided at the time of divorce.

Division at the Time of Divorce

Let’s also consider the profits gained from selling the investment trust at the time of divorce. Suppose you sell the investment trust for 5 million yen during the divorce. Based on the previous example, 3 million yen is your inherited asset, and 2 million yen is joint property. Ultimately, at the time of divorce, you will need to divide this 2 million yen with your spouse. It can be a bit complicated, can’t it? The fact that inherited assets directly affect marital property may not be something that is often considered. However, by consulting with a knowledgeable lawyer or expert, you can receive specific advice.

Considering the Emotional Aspects

In addition to these legal perspectives, the emotional aspects cannot be ignored during a divorce. For example, if the investment trust has been performing well, you might feel, “Why do I have to give half of this away?” This is a natural feeling. However, the law does not make judgments based on emotions, so it is necessary to think calmly. Making legally sound decisions is also important for maintaining your peace of mind.

Conclusion

The unrealized gains of an investment trust acquired with inherited assets after a parent’s death are likely to become joint property of the couple. At the time of divorce, it is necessary to consider the principal of the inherited assets separately from the joint unrealized gains. The law can be complex, but by knowing your rights, you can make better decisions. If you have any concerns, I recommend consulting with an expert. Knowledge and understanding will empower you when making important choices in your life. I will continue to strive to provide useful information in various aspects of life, so thank you for your continued support!