Conducting Family Meetings to Prevent Real Estate Inheritance Disputes

Real estate inheritance is an important topic that many families cannot avoid. However, there are not a few cases where a failure to prepare for such an inheritance can cause cracks in previously good family relationships.

In particular, when real estate is included in the inheritance, the difficulty of dividing it can easily lead to trouble. One of the most effective measures to prevent your precious family members from falling into a sad situation of "family disputes" is a "family meeting" where all family members have a chance to discuss the matter before death.

In this article, we, INA & Associates, Inc., as real estate experts, will explain in an easy-to-understand manner the importance of family meetings to prevent inheritance troubles, how to proceed specifically, and what should be discussed at the meeting.

Why Family Conferences are Important in Real Estate Inheritance

Why is the importance of family meetings being emphasized to such an extent? Behind this is a deep connection between the social situation surrounding inheritance and problems specific to real estate.

Real estate is difficult to divide and can easily cause trouble.

Of all inherited assets, real estate is particularly prone to causing trouble. Because it is physically impossible to divide fairly on a yen-by-yen basis, as is the case with cash and savings accounts, it is easy for disagreements to arise regarding who should inherit the property or whether it should be sold and divided in money (division by value).

Conflicts can also arise over how to evaluate the value of real estate. Since there are multiple valuation standards, such as inheritance tax roadside land value, property tax assessed value, and market value (actual market price), the interests of the heirs may clash over "which price to use as the standard. Furthermore, if there are heirs who lived with the decedent, emotional issues such as how to protect their right of residence become intertwined, making the issue even more complicated.

Prenatal discussions can prevent many problems.

Family meetings are an extremely effective means of resolving these complex issues. By directly informing children of their wishes regarding their property and how they would like it divided while their parents are still alive, they can share background and thoughts that cannot be conveyed in a will alone.

In addition, by bringing all family members together for discussion, it is possible to understand each person's position and thoughts, and to seek a point of agreement that is acceptable to all. If necessary, specialists such as judicial scriveners and tax accountants can be brought in at this stage to help find the best solution from both a legal and tax perspective. Prenatal discussions are the best "insurance policy" to prevent unnecessary disputes in the future and to protect family ties.

Characteristics of Families in Trouble over Inheritance

Over the years, we have observed several common characteristics of families that are prone to inheritance disputes. Please compare them with your own situation and see if any of them apply to you.

If even one of these characteristics applies, special attention should be paid. For example, there are a great many cases where "most of the inherited property is only home real estate," which tends to cause conflicts between heirs who do not want to sell the family home and heirs who want to receive their legal inheritance in cash. In addition, when "the burden of caring for a particular heir has been unevenly distributed," emotional friction is likely to arise over how the contribution (contribution) should be evaluated financially.

How to Conduct a Family Meeting

So how should a family meeting actually proceed? There are several important points to consider for a successful meeting, including timing, participants, and agenda setting.

Timing of the meeting

The most important key to a successful family meeting is to hold it while the parents are still in good health. The best timing is actually when it feels too early. If the parents do not have the capacity to make clear decisions and communicate their wishes clearly, fruitful discussions cannot be expected. If they suffer from dementia or a serious illness, it will be difficult to confirm their true intentions, which in turn may lead to suspicion and doubt among family members.

It is also a good idea to take advantage of opportunities for natural gatherings of family and relatives, such as New Year's, Obon, and Buddhist memorial services. However, if you find it difficult to initiate the discussion at such an occasion, it is recommended to set a new date for a formal "family meeting.

Selection of participating members

In principle, the participants in a family meeting should be all legal heirs. This includes the decedent's spouse and children, and in some cases, parents and siblings. If people other than the legal heirs, such as the spouse of the heir, participate in the meeting, they tend to start asserting their rights from their own standpoints, making it difficult to reach a consensus.

If discussions cannot be settled, or if professional legal or tax advice is needed, it is also effective to request the presence of experts such as judicial scriveners, tax accountants, and attorneys from the initial stage. The addition of a third-party expert will make it easier to proceed with calm and objective discussions.

Selecting the Location of the Meeting

The most appropriate place to hold the meeting is at the family home, where documents related to the property (title deeds, bank passbooks, insurance policies, etc.) are available and the discussion can be held calmly. However, if there is a possibility that the discussion may become emotional at the family home, or if the people involved live far away, a neutral location, such as a conference room in a hotel or a private room in a restaurant, may be a good choice.

Setting the Agenda

To ensure that the meeting proceeds smoothly, it is essential to organize the agenda in advance and share it with the participants. Rather than starting with a vague "talk about inheritance," clearly defining what exactly will be discussed will help participants feel prepared.

Discussion progression

Ideally, on the day of the meeting, the parents should be given the opportunity to speak independently about their thoughts and wishes. Children should first listen attentively to what their parents have to say, and then offer their own opinions and questions. It is extremely important that one person take the role of facilitator and keep a record of the discussion and decisions made in the minutes of the meeting. The minutes will prevent "said or not said" arguments at a later date and solidify the common understanding of all family members.

Specific details to be decided at the family meeting

At the family meeting, it is important not only to share vague concerns, but also to discuss specific topics in-depth and set a direction as a family. In particular, the following four topics are essential for an amicable inheritance.

Property distribution policy

The distribution of property is the most contentious issue in inheritance. In particular, the handling of real estate must be carefully considered from multiple perspectives.

• Handling of real estate: Determine specific policies such as "who will inherit the property," "whether the property will be sold and divided in cash (division by value)," "whether the property will be leased and the proceeds distributed," and so on. If a particular heir is to inherit the property, a "compensatory division" in which a compensatory payment (money paid to another heir in exchange for inheriting the property) is made in order to maintain fairness with other heirs is also an effective option.
• Distribution of cash and savings: Clarify how financial assets other than real estate will be distributed. It is a good idea to list who will inherit which assets.

Inheritance tax planning

Inheritance taxes can be greatly reduced through systematic measures. A family meeting is an excellent opportunity to take the first step.

Preparation of a will

The content discussed in the family meeting can be legally bound by a will, which guarantees its effectiveness. A will is the most powerful tool to realize the final will of the decedent and to prevent unnecessary disputes among heirs.

• Written wills and notarized wills: Written wills are easy to prepare, but there is a risk of invalidation due to incomplete formality, and probate procedures are required at the family court. On the other hand, a notarized will, which is notarized by a notary public, is more cost-effective, but it is more secure because there is no risk of incompleteness and probate is not required.
• Consideration for residuary property: Heirs other than siblings are legally guaranteed a minimum portion of inheritance, known as "residuary property. If a will is drawn up that concentrates property in the hands of a particular heir, the other heirs may later claim the remainder, which could lead to trouble.

Wishes regarding care and medical care

Inheritance is not only a matter of property. Discussing what kind of old age your parents will have and what kind of medical care they want is also an important part of the family meeting. By directly confirming the wishes of the deceased regarding such sensitive issues as whether he or she wishes to "stay at home" or "stay in a facility" in the event that nursing care becomes necessary in the future, or whether he or she wishes to receive life-prolonging treatment for terminal illness, the family can make choices that will protect the dignity of the deceased without hesitation in the event of an emergency. This will allow the family to make choices that will protect the dignity of the deceased and prevent confusion when the time comes.

Points for a Successful Family Meeting

There are several tips for a successful family meeting. By following these tips, you can expect a more constructive discussion.

Thoroughly prepare in advance.

Preparation is essential for the meeting to proceed smoothly. In particular, preparing an inventory of assets is essential. By listing all assets and liabilities, including real estate, savings, securities, life insurance, and loans, the overall picture of the estate becomes clear, allowing for concrete discussions. It is also important to obtain a copy of the decedent's family register from birth to death to determine who will be the heirs, and to prepare an heirship chart.

Utilize specialists.

Inheritance requires a wide range of expertise in areas such as law, taxation, and real estate. If you feel that there are limits to what can be discussed among family members alone, or if emotional conflicts are likely to arise, you should not hesitate to seek the help of an expert.

Real estate professionals like us at INA & Associates, Inc. work with these professionals to provide total support for your inheritance by assessing real estate, making effective use of it, and developing strategies to sell it.

Hold regular meetings.

Family meetings are not held once and are not the end of the process. Family situations and asset details change over time. Legal and tax changes may also occur. Therefore, it is important to have regular meetings, such as at least once a year, to review what was previously discussed. Ongoing communication will lead to better family understanding and an amicable inheritance.

Conclusion

This article has explained the importance of family meetings in real estate inheritance and the specific procedures to follow. Many inheritance problems occur due to a lack of communication in advance. Holding a family meeting while parents are still healthy and openly discussing the status of property and division policies is the most reliable and effective means of avoiding future "disputes.

Real estate, in particular, is an asset that can easily become the center of trouble due to its great value and the difficulty of dividing it. However, with well-planned preparation, real estate can remain a valuable asset to the family. The royal road to an amicable inheritance is to start with a family meeting and move on to specific measures such as the preparation of a will, living wills, and family trusts.

If you are not sure where to start and would like a professional opinion, please contact us, INA & Associates, Inc. As real estate professionals, we will help you create the best inheritance plan for your individual situation and help you connect your valuable assets and family ties to the future.

Frequently Asked Questions

Q1:When should a family meeting be held?

A1:The best time is when your parents are physically and mentally healthy and can clearly communicate their wishes. We recommend that you start at a time when you feel that it is too early. If you start after the onset of dementia, it may be difficult to have effective discussions.

Q2:Who should be invited to the family meeting?

A2:The first step is to discuss the matter with all legal heirs. If the heirs' spouses or others participate, the discussion may become more complicated, so it is wise to have the first meeting with only the parties involved. If necessary, it is also effective to ask a judicial scrivener, tax accountant, or other specialist to attend the meeting.

Q3:Should a will always be prepared?

A3:It is not necessarily a legal obligation, but if you want to ensure that inheritance problems are prevented, it is strongly recommended that you make one. In particular, it is essential if you want to give more of your property to certain people or divide it differently from the legal inheritance share.

Q4:How much is the minimum inheritance tax?

A4:The basic inheritance tax exemption amount is calculated as "30 million yen + 6 million yen x number of legal heirs. An inheritance tax return and tax payment are required when the total amount of the estate exceeds this amount. For example, if there are three heirs, a spouse and two children, the basic exemption amount is 48 million yen.

Q5:How is the assessed value of real estate determined?

A5:When filing inheritance tax returns, land is generally valued based on the "roadside land price" and buildings are valued based on the "assessed value for property tax purposes. However, in discussions on the division of property, it is important to determine a valuation that is acceptable to all heirs by referring to the "real estate appraisal value," which is closer to the actual value, or the "assessed value" by multiple real estate companies.