US Estate Tax System: Features, US-Japan Comparison, and Implications for the Future

In recent years, with the acceleration of globalization, interest in international inheritance has been increasing. In particular, inheritance tax systems vary greatly from country to country, and understanding these differences is essential for smooth inheritance procedures. This time, we will focus on the unique inheritance tax system in the United States, exploring the differences and problems compared to Japan, and the relationship with the social structure of the United States as a multi-ethnic nation, and will present suggestions for considering future inheritance systems.

Inheritance Tax System in the United States: Probate Led by the Judiciary

The United States adopts an "inheritance tax system," taxing the entire estate of the deceased. This is significantly different from Japan's "acquisition tax system" (taxing each heir for the inherited assets they receive) or the "statutory inheritance share tax system" (taxing based on the assumed acquisition of the statutory inheritance share).

Estate settlement in the United States is conducted through a judicial procedure called probate. If there is a will, an executor is appointed; otherwise, an administrator is appointed. Under the supervision of the court, the estate is settled, debts are paid, and distribution to heirs is carried out.

Probate has the following characteristics:

* Less heir involvement: Unlike Japan, heirs do not need to hold inheritance division consultations; the administrator handles the estate settlement.

* Court involvement: The entire process of estate settlement is under court supervision, ensuring transparency and fairness.

* Time-consuming: Because it goes through court procedures, estate settlement can take several years.

* Costly: Significant expenses may arise, such as attorney and administrator fees.

* Estate contents are disclosed: Since probate is a public procedure, the contents of the estate become known to the outside world.

US and Japanese Inheritance Tax Systems: Reflecting Cultural and Social Structural Differences

The differences between the US and Japanese inheritance tax systems reflect the cultures and social structures of each country.

* Family system: The United States has a culture that values individual independence, and there is a strong tendency to respect individual wishes in inheritance. On the other hand, in Japan, there are remnants of the family system, and there is a tendency to prioritize harmony within the family.

* Family law: In the United States, freedom of testamentary disposition is widely recognized, and the deceased can freely dispose of their assets. On the other hand, in Japan, there is a reserved share system, which guarantees a minimum inheritance share to certain heirs.

*Social structure: The United States is a multi-ethnic nation with many immigrants, making inheritance relationships tend to be complex. Therefore, it is considered necessary to ensure fairness through court involvement. On the other hand, Japan is a single-ethnic nation, and inheritance relationships are relatively simple.

Problems with Probate and Countermeasures

In addition to the characteristics mentioned above, several problems have been pointed out regarding probate.

* Time and cost: The time and high cost involved in estate settlement become a significant burden on heirs.

* Privacy: The disclosure of estate contents may infringe on the privacy of heirs.

* Handling of deceased's income: Income generated by the deceased during probate may belong to the estate, potentially excluding heirs.

To avoid these problems, the use of living trustsis being considered. Using a living trust can avoid probate and streamline estate settlement. It is also effective from the perspective of privacy protection.

Inheritance Taxation in Multi-Ethnic America and Future Prospects

According to JETRO's materials, in the United States, corporate taxes are levied at both the federal and state levels, and withholding tax is also imposed on remittances abroad. In the United States, a multi-ethnic nation, this can be considered a system for securing tax revenue and seeking fair tax burdens.

Also, according to "A Portrait of the United States," America is a multi-ethnic nation formed by immigrants, and diverse cultures and values coexist. In such a social structure, it is important to respect individual wishes and ensure fairness in inheritance.

In the future, it is expected that international inheritance will increase in Japan as well. It is necessary to build a more efficient and equitable inheritance system by referring to the US inheritance tax system and probate mechanisms. In particular, living trustsand willspromotion, simplification of inheritance procedures, and strengthening of support systems by specialistswill be important.

Conclusion

The US inheritance tax system is characterized by probate, a judiciary-led system significantly different from Japan's. This system reflects US culture, social structure, and its history as a multi-ethnic nation. While probate has drawbacks, they can be avoided through the use of living trusts and other methods.

In today's accelerating globalization, addressing international inheritance is increasingly crucial. Referencing the US example, Japan also needs to strive for a better inheritance system.