Refund of U.S. Bank Deposits

Notice from the U.S. Bank

After the death of a family member, you may receive a deposit slip from a U.S. bank and learn that the deceased had property abroad. When the bank statement is delivered from the foreign bank, first check how much money is in each account. Since international inheritances can involve a large amount of expense, the heirs should determine what procedures to take depending on the balance of the deposits.

Types of Deposits

The two most common types of deposits that Japanese people make at U.S. banks are Checking Accounts and Saving Accounts. Checking accounts are used as payroll accounts or debit accounts for paying rent or utility bills by check, and are used like a combination of checking and savings accounts in Japan. A saving account offers a higher interest rate than a checking account, and if you have no immediate financial transfers, you may wish to keep your savings in a saving account. Other accounts include a Certificate of Deposit, called a CD, and a Money Market Account, called an MMA.

Application for Cancellation of Deposit

The laws of the estate’s administrative territory, whether movable or immovable, govern the administration of inherited property. In the U.S., the laws of each state often require that court-initiated estate administration procedures, called probate or estate administration procedures, be taken if the amount of the estate exceeds a certain amount. The amount of a certain amount varies from state to state, but can be $50,000, $150,000, $300,000, and so on. On the other hand, if the amount of the deposit is less than the amount required by each state’s law, the deposit can be cancelled directly without having to go through probate or estate administration procedures. In this case, the refund of the deposit will be made upon proof of the account owner’s death through a death certificate, and proof that the applicant is the legitimate heir and has the authority to receive the refund through a will, family register, estate division agreement, or seal registration certificate. To determine whether a deposit can be reimbursed without going through probate or estate administration procedures, you will need to confirm which state’s financial institutions you have deposited with and how much of the deposit is required to go through probate or estate administration procedures under the laws of that state.

Minimum Documents Required for Refund of Deposit

The following documents (in Japanese and English) are required to obtain a refund of a deposit without going through the probate or estate administration procedures.

1. Death Certificate
2. Family register of the decedent (Residency Registry)
3. Agreement on Division of Estate
4. Translation certificate from an attorney
5. Legal opinion of the attorney
6. Copy of passport of the heir
7. A copy of the power of attorney to the attorney

These documents must be certified by a notary public and bear an apostille. In addition, for documents in Japanese, a translation certificate from the attorney must be attached, and the translation certificate itself must be certified by a notary public.

Requested Documents from U.S. Banks

The legal treatment is as described above, and lawyers in many countries have contacted U.S. financial institutions to request disbursement of any deposits. Our firm has also been able to obtain reimbursement for Japanese bank deposits in the above manner. However, especially in recent years, money laundering is being monitored more strictly, and financial institutions are becoming more strict in verifying the authority of foreign nationals. In addition, according to the U.S. law, if a financial institution or other institution accepts a refund request from a foreigner without having paid the federal estate tax, the financial institution itself is liable to pay the amount of estate tax to the IRS (Internal Revenue Service). As a result, fewer and fewer financial institutions, especially major financial institutions such as Citibank, are willing to accept voluntary refunds, and in order to accept refunds, they often require a letter of instruction from a court-appointed administrator of the estate. The following documents, for example, are required by U.S. banks.

1. Death Certificate (with certification or apostille at the U.S. Embassy or Consulate)
2. Foreign Letter of Administration
3. Opinion of an attorney
4. Application for closure of the account of the administrator of the estate appointed by the court (with certification by a notary public)
5. Federal tax certification from the Internal Revenue Service (IRS)

Possibility of Obtaining Demand Documents from the Bank

As for the death certificate, we believe that we can manage to obtain the apostille, but, a letter confirming the authority of the administrator of the estate, is difficult to obtain. This is because, unlike in the U.S., the Japanese legal system does not necessarily require the appointment of an administrator of inherited property. In Japan, an administrator of inherited property is appointed by the court to manage the inheritance in the event that there are no heirs or it is difficult for the heirs to manage the inheritance. However, since it is not intended to divide the estate, the system is different from that of the Administrator of Estate in the United States. The executor of a will also manages and distributes the inheritance, which is similar to the system of an administrator of the estate in the U.S. However, since the executor is not appointed by the court, the executor cannot obtain a written court decision of appointment required by U.S. financial institutions. A letter confirming the authority of the administrator of the estate is required to confirm that the person making the bank deposit withdrawals is indeed the authorized person, so it may be possible to substitute an estate division agreement and a written opinion of an attorney, but it is not usually allowed to substitute such a document. There is also the difficult issue of the IRS certificate. The bank will ask for a copy of your US Estate Tax return. This is a federal tax imposed on inherited property in the US. This includes both by will and in the case of a legal inheritance. If the said inheritance is exempt from US Estate Tax, it may be possible to substitute a tax attorney’s opinion certifying that the tax is exempt, but I believe that US financial institutions are less likely to approve this point as well. In the end, it is likely that you will have to go through the probate or estate administration process.

Petition for Probate and Appointment of Property Administrator

If there is difficulty in obtaining a voluntary refund of deposits by a U.S. financial institution, it is necessary to file a petition for probate or appointment of an administrator of the estate with the probate court (Surrogate’s Court) where the property (financial institution) is located in the U.S. This petition is called a Petition for Letter of Administration.

Appointment of Property Administrator

Once the necessary information has been provided to the Surrogate’s Court, the Surrogate’s Court will issue an order appointing an Administrator. This appointment decision is called a “letter of administrator” or “grant of administration. If the petitioner is an overseas heir, both the overseas heir (petitioner) and the attorney representing the petitioner may be appointed as the administrator of the estate.

Request for refund by administrator of estate

The court-appointed administrator of the estate has the authority to manage the property held by the decedent in the state, and will request reimbursement of deposits from financial institutions. Since the financial institution is requested by the court-appointed administrator of the estate, the financial institution will usually reimburse the deposit in response to the request. Deposits can be reimbursed by check or bank transfer. The administrator of the estate, under the court’s supervision, will pay all debts, including inheritance taxes, from the cash collected and send any remaining money to the heirs.

Application of the Inheritance Division Principle

Since the U.S. follows the divided system of inheritance , the laws of the locality apply to real property, and the laws of the decedent’s home country apply to personal property. As for the inheritance of the proceeds from the sale of real estate, the laws of the State of New York will apply, and the scope of heirs and the portion of inheritance will be determined based on the laws of the State of New York. For other property, including bank deposits, the laws of the decedent’s home country will apply, so the scope of heirs and the portion of inheritance will be determined by the laws of the decedent’s home country (or Japanese law in the case of Japanese nationals). Thus, if the inherited property is located in a country that adopts the-dividend system of inheritance, it is theoretically possible that the inheritance will be divided in a different proportion from the statutory inheritance in Japan. However, since the U.S. also allows heirs to dispose of property, it would be normal for the distribution to be based on the agreement on the partition of the estate in Japan. In a case we have handled, where a part of the heirs renounced inheritance based on a legacy division agreement in Japan, a translation of the legacy division agreement and a renunciation of inheritance form (in English) were submitted to the New York court and the distribution was made in accordance with the legacy division agreement (however, this case was different from the distribution of proceeds from the sale of real estate).