#3 Is the Family Holding Company Right for You?
A 5-question self-assessment for long-term foreign residents in Japan with significant assets. Takes five minutes. Ends with a clear answer.
Before you start
The structure we described in #02 is not a universal solution. It requires a specific set of conditions — and when those conditions aren't met, pursuing it wastes time, money, and goodwill with the banks and professionals you'll need later.
This checklist exists for one reason: to give you a clear, honest answer about whether the family holding company approach fits your situation — and what to do if it doesn't.
"The most expensive thing in estate planning is spending two years on the wrong strategy."
Answer each question honestly. Yes means the condition is clearly met. No means it isn't — or you're genuinely unsure. Uncertainty counts as No for now.
The 5 questions
Q1. Have you lived in Japan for 5 or more years, and do you intend to remain for at least 10 more?
Why it matters: Unlimited tax liability requires 5+ years of residency. The structure needs 10–20 years to deliver full benefit. A short remaining horizon changes the calculus entirely.
Q2. Do you hold assets in Japan — or plan to — worth ¥100 million or more in total?
Why it matters: Below this threshold, the cost and complexity of the structure often outweighs the tax savings. Above it, the savings compound significantly with time.
Q3. Do you have a child — in Japan or abroad — who could credibly serve as a company director?
Why it matters: The company must have operational substance. Your child doesn't need to be an executive, but they must be genuinely engaged, reachable, and capable of signing documents. A proxy or nominee director will not satisfy Japanese banks.
Q4. Would you be able to access regional bank financing in Japan — either directly or through an introducer?
Why it matters: The structure relies on the holding company borrowing to acquire real estate. Without a banking relationship — or someone who can build one — the structure stalls at Step 2.
Q5. Do you currently have no succession plan reviewed by a Japan-licensed tax specialist?
Why it matters: If you already have a plan in place, this assessment may confirm it's adequate — or reveal gaps. If you have no plan at all, every year of inaction has a measurable cost.
Answer the questions above to see your result.
What the checklist doesn't catch
Two situations score well on this checklist but carry additional complexity that requires specialist review before proceeding.
First: if your home country has its own estate or inheritance tax — the United States, the United Kingdom, and several others — you may face double exposure. Japan's rules and your home country's rules can interact in ways that change the optimal structure significantly. #04 covers this in full.
Second: age is a variable the checklist ignores. Someone who scores 5/5 at age 40 has a fundamentally different opportunity than someone who scores 5/5 at age 68. The structure works in both cases, but the design, timing, and urgency are different conversations.
"Five questions can tell you whether to run. They can't tell you exactly where to go."
Your move
Whatever your score, there is one thing worth doing this week: run the rough calculation from Issue 01.
Take your total global assets. Subtract the basic exemption (¥30M + ¥6M per legal heir). Apply Japan's published progressive rates to the remainder. Write down the number. That is approximately what your heir will owe within ten months of your death — under the current structure, with no planning in place.
That number is the baseline. Everything from here is about reducing it.
"If the number surprised you, that surprise is the most valuable thing this series can give you."
What comes next
#4 addresses the layer most assessments ignore: what happens when Japan isn't the only country that wants a share of your estate. For US, UK, Australian, and several other passport holders living in Japan, the interaction between two tax systems is the variable that determines whether the holding company structure works as designed — or requires modification.
This article is for informational purposes only and does not constitute tax, legal, or financial advice. Japan's inheritance tax rules depend heavily on individual circumstances, treaty positions, and residency history. Please consult a Japan-licensed tax professional before making any decisions.