Question from a reader:
Please tell me about the division of shared property. Is it possible to leave part of it as shared? For example, when receiving a gift of shares, the gift tax can be high, so can I keep this share as shared and use it to receive a bequest at the time of inheritance?
Detailed Answer to the
Reader’s Question
The reader’s question pertains to the complex issues surrounding the division of shared property and the gifting of shares. This topic involves legal elements, so it must be handled with care. Therefore, below, I will provide a broad explanation, from the basic knowledge of dividing shared property to specific strategies regarding gift tax and inheritance.
What is the Division of Shared Property?
The division of shared property refers to the process of dividing property that has multiple owners according to their shares. This means that the jointly owned property is allocated to individual owners. The procedures for dividing shared property differ depending on whether the property is real estate or personal property, but generally, it is required to be divided fairly according to the shares.
The Relationship Between Gifting Shares and Gift Tax
When receiving a gift of shares, gift tax is incurred. In Japan, gift tax is levied based on the value of the gifted property, so when receiving high-value property, the burden can be significant. Therefore, it is important to consider strategies to avoid gift tax.
Is it Possible to Leave Part of it as Shared?
As your question suggests, it is possible to leave part of it as shared while dividing the other parts. By keeping it as a shared share, you can reduce the burden of gift tax. However, when using this method, it is important to pay attention to the following points: 1. Compliance with Legal Procedures: The division of shared property requires adherence to legal procedures. The agreement of all co-owners is necessary, and it is not possible to unilaterally change the shares. 2. Calculation of Gift Tax: When shares are gifted, the gift tax is calculated based on the value of those shares. Therefore, while leaving shares can potentially reduce gift tax, the effectiveness of this approach varies depending on the method of division and the setting of rights, so it is advisable to consult a professional. 3. Future Inheritance: When receiving a bequest at the time of inheritance, leaving the shares as shared may also affect the calculation of future inheritance tax. The calculation method for inheritance tax differs from that of gift tax, so it is important to conduct simulations.
Practical Case Study
For example, consider a couple who jointly owns real estate, and one of them is considering gifting their share. In this case, it is effective to leave part of the share as shared to avoid incurring gift tax. This allows for the liquidity of assets between the couple while providing favorable measures for the heirs during future inheritance. In this case, the couple can agree to fix the shares, and if inheritance occurs afterward, the person holding the shares can inherit them, ultimately optimizing both gift tax and inheritance tax.
Cultural Perspectives and Future Trends
In Japanese law, the concepts surrounding the division of shared property and gifting are deeply intertwined with cultural backgrounds. In Japanese society, the concept of “family” is very important, and in handling shared assets, the agreement and trust among family members are emphasized. As Japan continues to face a declining birthrate and an aging population, issues related to inheritance and gifting are expected to become increasingly complex. Particularly, as inheritance tax and gift tax are raised as social issues, more people will confront these problems. Therefore, it is essential to deepen understanding of laws and tax systems.
Practical Advice
1. Consult Professionals: It is important to consult experts such as tax accountants and lawyers regarding shared property and gifting. Especially since laws are constantly changing, obtaining the latest information is crucial. 2. Conduct Simulations: It is necessary to perform simulations to calculate gift tax and inheritance tax to determine which method imposes the least burden. 3. Family Communication: Open communication among family members regarding the division of property and gifting is essential. This helps avoid misunderstandings and disputes. 4. Gather Information: It is important to collect information about inheritance and gifting from books and websites to deepen your own understanding.
Conclusion
The division of shared property and the gifting of shares involve very complex and multifaceted elements, but actions based on correct understanding and planning are required. Particularly, understanding the unique cultural and legal backgrounds of Japan can lead to better outcomes. Finally, I would love for everyone to share their thoughts and experiences. What methods have been effective, or what challenges have you faced? I look forward to your comments.
