Frequently Asked Questions
Family Trust, Holding Company or Will — Which Layer Solves It
We are often asked “should we set up a family trust?”. The question is back to front. What comes first is which layer the problem actually sits in; a trust is one instrument that works in one of those layers. Set one up against the wrong layer and you have paid for a structure while keeping the problem.
What does a family trust actually solve?
At its core: keeping management and disposal of assets running after the owner loses mental capacity. Neither a will nor a holding company substitutes well for that.
A will only takes effect on death, so it does nothing about declining capacity during life. Adult guardianship is oriented towards preserving assets, not actively deploying or restructuring them. A trust fills that gap — which also means that if the gap is not your problem, there is little reason it has to be a trust.
What are the real drawbacks?
Beyond cost, the practical issues are the continuing burden and the areas a trust simply does not reach.
- The trustee’s burden continues. Segregated management, books and records, and reporting to beneficiaries run for the life of the trust, not just at setup.
- Choosing the trustee is the hardest problem. A family member brings conflicts of interest and intra-family distrust; an external trustee brings continuity and cost issues.
- It does nothing for assets not in it. Assets acquired afterwards, or simply left out, are outside. “We set up a trust” and “the assets are in the trust” are different statements.
- Personal welfare is out of scope. Care, medical and facility arrangements are not a trust function; they belong to guardianship.
- Loss offsetting is restricted. Losses from trust real estate are subject to restrictions — check before putting income-producing property in.
- Forced heirship claims do not disappear. Using a trust does not structurally eliminate disputes over statutory reserved portions.
With a cross-border element there is a further layer: how the other country characterises the trust as an institution. A trust validly created in Japan will not necessarily be given the same effect elsewhere.
How does this compare with a holding company?
Roughly: use a company to consolidate voting rights and control of a business, a trust to bridge a break in capacity, and a will to fix who takes what on death.
| The problem | Layer that addresses it |
|---|---|
| Keep managing and disposing of assets after loss of capacity | Trust |
| Prevent share fragmentation and consolidate voting rights | Holding company |
| Separate business liability from personal assets | Corporate form |
| Decide who receives what on death | Will |
| Change which country’s law governs | Design of holding entity and asset location |
Real cases use several at once. The point is not “trust or company” but how problems are allocated across layers.
Can you tell me the going rate?
We do not set up trusts as a service and therefore do not hold market rates for it. We do not publish numbers we do not have.
Costs divide into statutory out-of-pocket items — notary fees, registration and licence tax — and professional fees. The statutory part follows the Notary Fee Order and the Registration and Licence Tax Act; professional fees vary by firm. If you are commissioning the work, take a quote directly from the judicial scrivener or lawyer who will actually do it. The point at which we are useful is upstream of that: whether a trust is the right layer for your problem at all.
What we do not do
We do not draft trust deeds, handle trust registration, arrange notarisation, or act as trustee. Those are the work of judicial scriveners, lawyers and trust companies. Inheritance and gift tax computation and filing fall under Article 2 of the Certified Tax Accountant Act and are handled by our partner licensed tax accountants. Our role is upstream — deciding which layer to solve in, and checking that the layers remain consistent once more than one is in play.
Relevant legislation
Related services and questions
- Succession Structuring
- Corporate Structuring
- Which country’s law governs a cross-border inheritance
- The inheritance tax “10-year rule”
Get in touch
Start not from “should we do a trust” but from “which layer does this problem belong to”. ceo@seisei.tokyo
SEISEI provides financial and management consulting. It does not constitute tax representation, preparation of tax documents, or tax consultation as defined in Article 2 of Japan’s Certified Tax Accountant Act. Filings and tax computations are handled by partner licensed tax accountants (zeirishi).