Tag: same-sex couples
Apparently, the tax changes which were introduced in Japan in 2015 lowered the existing tax exemption threshold from ¥50 million to ¥30 million and reduced the existing deduction of ¥10 million for each heir to ¥6 million per heir.
As a result, the estates of a significantly wider segment of the population are now subject to inheritance taxes, and there appears to be a corresponding rise in the number of individuals seeking to reduce their tax burden through adoption.
According to the article, adoption for the sake of “financial adjustment” has always been a common practice in Japan. In fact, such adoptions, usually of adults who only need to be at least one day younger than the adopting parent, constitute the overwhelming majority of adoptions in Japan. In many cases, adults are adopted when a family does not have someone to take over a family business or a male heir who can carry on the family name. The article states that more recently, however, such adoptions appear to be motivated by the desire to reduce inheritance taxes.
The article refers to a recent case of the Supreme Court of Japan, in which the deceased had adopted his son’s son (his “grandson”), thus giving him four heirs instead of three — his son, his grandson (now second son) and two daughters. As a result, the son’s family stood to receive more of the father’s assets than either of the daughters. The daughters commenced proceedings seeking that the adoption be declared void as it had merely been intended as a tax-savings measure. However, the Supreme Court of Japan ruled that the intention to reduce the amount of taxes would not automatically annul the adoption itself and upheld the adoption, which many believe in effect, condones this practice.
This is not the first time adoption has been used in estate planning. Before same-sex marriage was legalized, adoption was used on occasion in Canada and the United States as a means of ensuring the transfer of an inheritance between same-sex couples. An article published in the New York Times in 2009, which outlines the use of adoption for such purposes can be accessed here.
Other Hull & Hull LLP Blogs & Podcasts that may be of interest to you:
- A novel argument by an adopted child in British Columbia
- Reducing probate fees
- The All Families are Equal Act Has Passed
Thank you for reading.
We do not have an automatic recognition of same-sex parents in Ontario, as the rules of parentage in section 1 of the Children’s Law Reform Act (“CLRA”) state that a person is the child of his or her “natural parents”. The exception to this is where an adoption order has been made, which is what one or both same-sex parents would need to obtain in order to have their parentage recognized.
On June 22, 2016, by way of a consent Order, the Court declared the CLRA to be in breach of s.1 of the Charter of Rights and Freedoms to the extent that “the legislation does not provide equal recognition and benefit and protection of the law to all children, without regard to their parents’ sexual orientation, gender identity, use of assisted reproduction or family composition, and to the extent that the legislation does not provide equal recognition and the equal benefit and protection of the law to all families.”
On September 29, 2016, the All Families Are Equal Act was introduced, and, if passed, is expected to take effect in the New Year. Among other things, this new legislation will reportedly ensure the following:
- where a child is conceived through assisted reproduction, the parents are the birth parent and the birth parent’s partner, if any, at the time of the child’s conception (no court order required);
- the intended parents of a child born to a surrogate would be recognized without a court order if (i) the surrogate and the intended parent(s) received independent legal advice and entered into a written pre-conception surrogacy agreement; and (ii) the surrogate provides written consent to give up her parental status before conception and seven days after the child’s birth; and
- a court can grant a declaration of parental status to a deceased person in relation to a child conceived after their death (the child can inherit and seek support from the deceased parent’s estate if born within three years of death).
I look forward to seeing how the legislation is interpreted, and whether the uncertainty that has long plagued this area of the law will be eliminated.
Thanks for reading,