We are Murata Sogo Tax Accounting Office, specializing in inheritance and international taxation, with an office in Miyakojima-ku, Osaka City.
We often receive the following questions from our clients who request us to file inheritance tax returns.

(1) Is it acceptable to withdraw the decedent's deposits after inheritance?

(2) Before filing an inheritance tax return, is it acceptable to close the decedent's deposit and transfer it to an account in the name of the heir?

(3) Is it acceptable to register the inheritance of real estate before filing an inheritance tax return?

From the viewpoint of filing inheritance tax returns, none of the above issues is immediately problematic.
However, the following points should be noted

1. The Case of (1) and (2)

In preparing an inheritance tax return, the balance of the deposit at the time of inheritance is subject to taxation, so there is no problem for tax purposes as long as the balance at that time is appropriately stated on the return.
What should be of concern is that there are cases where disputes over the division of the estate (i.e., family disputes) may arise rather than taxation.
In the case of (2), deposits in the decedent's name cannot be cancelled without the consent of all heirs, so this is not likely to be a problem in many cases.
However, in the case of (1),

In cases where an heir who lived with the decedent withdrew the deposit without telling the other heirs.

There are quite a few cases in which an heir who lived with the decedent had been using the decedent's deposit for a long time.

There are quite a few cases in which heirs who lived together with the decedent have been spending the decedent's deposits for some time. In such cases, there are many cases where disputes arise with other heirs over the use of past deposits.

So, when asked, “Is there a problem?” I reply that there is no problem as long as there is agreement with other heirs and there is no dispute.

2. the case of (3)

In the case of (3), there is also no immediate problem for inheritance tax purposes.

However, if a special exception that allows for a reduction in the valuation of the land (i.e., “reduction in the valuation of small residential lots, etc.”) is available, the story will be different.
For example, in the case of a home where the decedent resided, the following persons are eligible for reduction of the valuation of small-scale building lots, etc,

Spouse
Relatives living together
Separated relatives without a home (neither spouse nor relatives living together)

Therefore, it is important to consider whether you are eligible for these special provisions when you inherit real estate through a name change.

If the title is changed once and then changed again, it is subject to gift taxation, so care must be taken.

3. Best Timing to Divide an Estate in Practice

In practice, division of the estate is generally done at the final stage, after the details of the division of the estate and the amount of inheritance tax have been determined.
In other words, after receiving the client's data and estimating the amount of inheritance tax based on several inheritance division patterns, and after the division of the estate has been finalized, it is better in practice to divide the estate concurrently with the preparation of the inheritance tax return to be submitted to the tax office.

In this issue, we have explained our views on frequently asked questions related to inheritance tax returns.
We believe that issues vary depending on various family circumstances, so if you have any doubts, please contact us through our contact form.