Bonus Episode: Planning your estate when you live an international life

Full transcript follows.

Just when you thought Season One was finished and there would be no more Lawyer on Air until after the summer, we have a surprise bonus episode. Yuka Hongo and I spoke in Episode Seven about her area of the law which is Estate Planning. As more people live international lives, estate planning also needs to become international. Yuka gives us a window into what she sees in her work and we hope that it will help you on your way to finding out what you need in your own plans too. You can hear Yuka in more detail in Episode 7 of Lawyer on Air. 

In this episode you’ll hear:

• What happens when someone passes away without a will in the country assets are held

• How Yuka helps people to plan for this in advance or to deal with probate in the USA

• What it’s like to work in estate planning and some of the situations that arise

** Please note that the content of this recording is not legal advice but for educational and informational purposes. We hope these will be prompts to guide you as to the next steps you need to take. 

About Yuka

A graduate of Loyola Law School in Los Angeles, Yuka Hongo is a licensed attorney in Hawaii, California, New York and the District of Columbia. Born in Japan, she came to the United States as a young child and was raised in a bilingual setting. Professionally, she has extensive experience working in both languages, including complicated legal transactions.

Spending time in both Japan and the United States, Yuka saw what can happen when a loved one dies without an estate plan in place. Assets can be tied up in court for months. She guides families through the probate process in Hawaii and helps people create appropriate and effective estate plans to make sure their wishes are followed.

Yuka typically travels to Japan twice a year, where she meets with clients and gives seminars on effective estate planning. She uses her knowledge of estate law, her bilingual skills and her understanding of both cultures to help residents and non-residents of the U.S. plan ahead to avoid future problems.

Further reading on estate planning

https://www.linkedin.com/pulse/estate-planning-creating-japan-catherine-o-connell

Connect with Yuka

Website: http://www.hongolaw.com/ 

LinkedIn: https://www.linkedin.com/in/yuka-hongo-68ab58123/

Connect with Catherine 

Linked In https://www.linkedin.com/in/oconnellcatherine/

Instagram: https://www.instagram.com/lawyeronair

Facebook: https://www.facebook.com/catherine.oconnell.148

Twitter: https://twitter.com/oconnelllawyer 

Transcript

Catherine: Hi, everyone. Welcome to this bonus episode of Lawyer on Air. During the recording of Episode Seven, with my guest Yuka Hongo, we had a deeper conversation about her specialist area of estate law. That deep dive deserved a mini episode on its own. And so I wanted to bring this to you as a standalone bonus episode.

Yuka’s conversation with me is based on her qualification under various US state laws. And I believe that this commentary from her can provide useful prompts and information generally to people who are United States citizens living inside and outside of the US, or Japanese with investments in the US. Many of the listeners to Lawyer on Air are in those categories.

Estate law is a subset of property law. Estate law governs the way in which an individual's estate is handled. The term estate refers to all of an individual's personal belongings, their real property, such as the family home and investment properties, their bank accounts, shares, investments in Bitcoin, gold and other commodities.

And it also refers to intangible assets such as patents and copyrights. Any debt or taxes on the property may also be included as part of the estate. So Yuka talks to us about estate planning, which includes overseeing how a person's property is managed in both their lifetime, as well as after they are deceased or have become incapacitated.

Specifically, as an estates attorney, Yuka also helps clients organize their personal affairs and she helps her clients reach their goals in both the present and the future. 

A Japanese friend of mine who had property in New Zealand fell ill. And after a long time living and working in New Zealand, he returned to Tokyo to be with his family and died here. The problem was he never created a will to cover his New Zealand property.

So he died intestate. Intestate means when someone passes away having not made a valid will before death or the property can't be disposed of because the will is found to be invalid. Well, I found out that he had passed when a mutual Japanese friend in New Zealand reached out to me where I was in Tokyo to try and have me help the parents deal with the probate of their deceased son's property in New Zealand. 

Probate is the legal process of transferring a property upon a person's death, particularly in the absence of a will. There were multiple complications in my friend's case, which are not necessary to go into, but needless to say, by definition, international inheritance situations in Japan spanning other countries, add additional layers of complexity.

It took a long time to sort out his estate due to the details of the situation. And it was really painful for his parents. The point of sharing this example with you is that often having a will prepared as something we know we have to do, and yet we may never really get round to doing it. This is especially so if we are living in another country.

This is why I wanted to share this section of episode seven with you as a separate bonus episode, because what Yuka speaks about is important for all of us to consider. How it may apply to our specific situations and to try and deal with it when we have time. When we are in good health and when we can speak with loved ones about our wishes. When something happens like an accident or illness, it can be really problematic to do anything at a late stage.

So as with many things to do with the law, preparation is key. Naturally this episode is not intended to be legal advice and simply meant to be informational and educational. And you should also seek out legal advice from an estates attorney for any guidance you need around wills and estates. In this episode, you will truly understand the expertise that Yuka Hongo has and how she navigates the tricky area of estate law.

You can get a real understanding of how comfortable she is with this area of the law and why she is passionate. I found Yuka to be so comfortable in advising on estate law and that she really and truly found her niche in the law. You will also hear why Yuka finds her work rewarding, and how those simple magic words, thank you, can help lawyers and all of us feel real fulfillment in the work that we do. So with that, I hope you will enjoy listening in to this bonus episode of Lawyer on Air...

Catherine: And so what is it that you do for people? What is an estate plan? How do you help people in that way? 

Yuka: So in the United States there's trusts, they're called family trusts. So that's a good estate plan that you can prepare in the United States. It helps you to avoid probate, which is a long court process that you have to go through after somebody dies if you didn’t have a trust prepared during your lifetime. So trust is a good way to do it. Usually if you want to make a trust that a normal American person would make, the trustee, who is the person that you appoint within your trust that manages all the assets in your trust, and will distribute the assets that you put into the trust later to the heirs when you die.

That person has to be a US resident. Otherwise, if you designate a foreign person as a trustee, it might be considered a foreign trust, which might subject the trust to more taxes and such. So I don't really suggest it. So the trust is actually really difficult to make if you are a Japanese citizen or another foreign national who is not American, and you don't really have any family members who live in the United States that you could appoint as the trustee. So I suggest a transfer on death duties to my clients. It's sort of like a mini trust just for real estate. You designate the beneficiary when you die. The property passes to the beneficiary and that also helps to avoid probate as well.

I actually help a lot of clients who really didn't do any of their estate planning and their assets are subject to probate in Hawaii. I do help with that more often. 

Catherine:  I see, so maybe they didn't seek out the advice or didn't know that they had to do this at the beginning. And so they’re left then, after somebody’s passed away, the family need to apply for probate and you help with that. 

So what is probate? Probate is the application to the court to say these assets were owned by X person, X person has passed away, that person needed or wanted them to be passed through to other people, and then that happens through probate? Or what does probate itself do? Without getting too technical. Just an easy explanation if you can do that. 

Yuka: With probate, if you were a Japanese person, you probably had not prepared a will in the United States. So then Hawaii or any other state in the United States, they would have rules on intestate succession. So intestate means without a will.

So they already have an order of the heirs who will receive your assets, if you died without a will. I would just follow the intestate succession rules in Hawaii to determine who gets the assets of the deceased. So it's already predetermined by the Hawaii rules. 

Catherine: That sounds very much the same as New Zealand for this particular person.

I mentioned he passed away. He was an only son so that the rules said that it had to go to his parents and both were alive. And so I hear you on that, the intestate dying without a will, there are rules and laws in place in various countries. And you're saying that's the same in Hawaii. So you follow that.

And I suppose too, that means that in explaining to the heirs of the family, it's quite easy to show them what the laws or the rules say so they can understand it quite well. But it's still such a difficult process, isn't it? And so much more burden for the family. If only there was a will prepared earlier on and that's the key, isn't it, to try and have that estate planning done at the first point when people buy property or set up a bank account.

Yuka: Yes, definitely. That's very important. And especially for bank accounts and such too. In Hawaii, if you have more than $100,000 in a single title bank account, the money will go through probate. And a lot of people don't know that. If you had it in a joint account with your spouse, for example, then it will not go through probate.

But all of those things. And with real estate too. Real estate will always, and also timeshares will go through probate as well. So when you buy any of those, any kind of property in Hawaii, if you want to keep things for the long-term, you might want to see an attorney at some point before you get ill or something.

And just, you know, consult with them as to, you know, any estate plans that you can create. 

Catherine: Sure. And also we don't know when we're going to die, do we? So, you know, I remember back in New Zealand when we had clients do conveyancing, which is purchasing and selling properties, that we would always as a checklist item, I can say it might be a checklist item, but we would always say, how's your will and let's update it.

Let’s make sure it's completely saying what you want it to say. Is this correct? And we would do it as a matter of course, make sure that people had their wills updated or in fact, do you have a will if it's a new purchase of a property. So it seemed to be things that we did as proper and reasonable lawyers in our practice.

So are you saying to me that maybe that happens in Hawaii, but sometimes it doesn't happen that people purchase a property, but they may not also have a will created at the same time?

Yuka: Yes, I’ve met with some clients who really care about these things. So they'll come see me about it. Talk to me about it. And they're still pretty young and I can help them.

But there are people, because they live in Japan most of the time, they don't really care so much about the properties that they have in the United States. So they just kind of leave it alone. Or in Hawaii, if you go to the Hawaiian islands that's not Oahu where Honolulu is, but during the bubble period in Japan, I think that was maybe like the early nineties or so when Japan's economy was booming, Japanese people would go to places like California or Hawaii every day to buy investment property.

I worked with some clients who still own those types of investment properties in the middle of nowhere on the big island and they're growing cobwebs and such, I think. But they still have paid their property taxes on them. I can probate for those types of properties as well. I think it's just that maybe you had a parent who bought such a property during the bubble period in Japan and they just passed away.

And the children may have just continued to pay the property taxes on it, but the Hawaii state doesn't really do anything about it. So until you really do the probate, you cannot really have the next line of succession succeed to the property and then sell the property off. So I have those situations as well. So I think it's just like, if you don't live in the United States usually, I think people would just kind of care less about whatever they own outside of Japan.

Catherine: Yeah. It's not on their mind every day. Is it? It's really something they think about when they travel. And I guess with this last year, 15 months, we haven't been traveling and that's probably further away from people's minds. And I can also imagine that someone who may have bought a property in the bubble period may have even forgotten about the fact they had that property.

And so sometimes the family only learn about it on the death. They're advised perhaps by the Hawaiian authorities, you know, your parent has this property, what are you going to do about it? Maybe that comes up. Is that one of the commonly occurring, or maybe not so common, occurring problems that you see your clients face in this kind of area of the law?

Yuka: One of the cases I've seen recently... I don't know with the bank accounts, well and real estate agents in Hawaii, they cannot really advise you on whether to buy the property in joint tenancy or tenancy by the entirety, which is like a joint tenancy for married couples. When only one of the spouses might show up to buy a property in Hawaii, the realtor would just want to sell the property.

So he or she will just have the person who showed up sign the deed, and so the person will just buy it under his or her single title. So that's called tenancy by the severalty, if only one person owns it. So if you buy properties under joint tenancy, or tenancy by the entirety, and one of the joint tenants pass away, then the surviving person will just succeed to the property without the property going through probate. The real estate companies here, or the real estate agents, they're actually not allowed to advise on these things to their clients. So, when you own things under your name only, that goes for real estate or bank accounts, there's a chance that it will go through probate when you die.

Catherine: Sure. Yes. I can understand that. And I mean, obviously you've given a lot of really good examples about what can happen. And I know that what you are saying is not legal advice. It's just information and education for anyone who's listening here and that they would need to hire you to actually take what you've said as legal advice.

But I just mention that for our listeners, anyone who's out there thinking it's legal advice. it's not, of course. But of course, you can tell that Yuka is extremely well versed in this area. And I would imagine anyone in this situation is welcome to contact Yuka for some more information. Yuka, what do you love about your job the most? I want to know about that. 

Yuka: Well, actually I have clients who don't really appreciate the things that I do for them. But I do have other clients.

Japanese people are big savers, so they love to save money, I think. And so I'm very surprised that they have a lot of money in a bank account in Hawaii.

And it's more than a hundred thousand dollars. They might have something like 400 to $500,000 in the account here. And I'm just wondering, how they managed to save so much in a foreign account. But I think Japanese people are known for saving money. So it makes sense. 

But you know, when I wire those money after the probate process is over and the family needs some money to pay off their inheritance taxes in Japan. Because if they're wealthy, their inheritance taxes in Japan are going to be huge because Japan taxes a lot for the inheritance tax. So I mean, some clients are very grateful. Some of the heirs in Japan, they're very grateful to receive the money.

So those kinds of things are rewarding. I mean, a lot of the legal work, it's not really fancy. It's just like, you know, a lot of grunt work and, but some of the clients do appreciate my help. So that makes it rewarding I guess. 

Catherine: Yeah, it sounds like when you go through the process and you finish and you complete the job, even if some of it might be, as you said, grunt work when it's completed and someone just says, thank you.

Or I really appreciated that you did that, or thank you for being so nice as you helped us out here. It was really easy to work with you. And I saw some of the testimonials you have on your website. And they all say that about you, which is fabulous. So I can imagine that can make a difference to you if you just have the one person who at least says, thank you. You changed my life. You made me feel at ease. Thank you so much.

Catherine: Well, I hope you found that bonus episode interesting. And that it has prompted you to think about estate planning. In recent years, more and more people are choosing to become long-term residents of another country from their birth country. Many decide to settle down and spend the rest of their lives in that country.

With that decision comes the issue of how to prepare so that inheritance does not become a burden for our loved ones. We will try to delve into this as it relates to Japan more specifically in a future episode of the Lawyer on Air podcast. If you liked this episode, do go ahead and share this episode with someone who you think will enjoy listening to it and learn from it.

Please also subscribe to Lawyer on Air and do drop us a short review as that helps Lawyer on Air be seen and heard by more people. You can also jump on over to my web page and find this episode and leave me a voicemail. I do love hearing your actual voice telling me about the guest and the episode, and why you enjoyed our chat.

Well, that's all for now. See you on the next episode. Cheers, kampai, and bye for now.

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