A property management mandate contract is a contract in which the mandator delegates to the mandatory of the mandator's cash and deposits, real estate income, and various payments etc.

The major difference between a property management mandate contract and a voluntary guardianship contract is the point in time at which it is available (the point at which the effects take effect).
A voluntary guardianship contract is entered into while the person has the capacity to make decisions, but it becomes effective only when the person's capacity to make decisions declines (For more details, please refer to the following section.
On the other hand, a property management mandate contract is entered into while the person has the capacity to make decisions, and it becomes effective at the same time.
Despite these differences, the two are similar in that they involve entrusting the management of the person's property to a third party.
For this reason, in some cases a mandator designates the same person as the designee of a property management mandate contract and the voluntary guardian, and to establish a consistent support system by using a property management mandate contract while the mandator has judgmental capacity and using the voluntary guardianship contract when the person's judgment decrease.

As mentioned above, although a property management mandate contract is not a “panacea”, it is a meaningful measure in terms of protecting one's own assets.
If you are considering the use of a property management mandate contract, I will provide you with advice based on whether or not a property management mandate contract is appropriate for your situation.

Adult guardianship systems have been designed to protect individuals with impaired judgment. The two types of guardianship available in Japan are legal guardianship and voluntary guardianship.
Importantly, legal guardianship has the following drawbacks:
・It does not function as an advance preparation for future incapacity.
・You cannot appoint the guardian of your choice.
・You cannot determine the scope of the guardian's authority freely.
・Once it begins, you cannot end it.

In contrast, voluntary guardianship has the following advantages.
➢Optimal preventative measure.
・You can make a voluntary guardianship contract and prepare for future incapacity while you are in sound mind.
➢You can appoint the guardian of your choice.
・Based on the principle of freedom of contract, you can appoint your most trusted person to manage your property, the care and / or well-being.
➢You can determine the scope of the guardian's authority.
・Similarly, you can decide authority to entrust to the guardian and retain the remaining authority.
➢You can terminate the voluntary guardianship contract at any time before it becomes effective.
*After the commencement of the voluntary guardianship supervisor, it can be terminated with justifiable reasons.

Voluntary guardianship is a secure and optimal preventative measure to adequately manage your assets during your lifetime after the capacity to make decisions decline. We see growing number of people taking advantage of it to reduce future burden on their families.
If you are interested, please contact us.

While the importance of preparing a will has been generally recognized, the significance of making it early is often overlooked.
In this section, after reiterating the importance of preparing a will, we take an example to introduce problems that may arise when a foreign national living in Japan prepares a will. Among several types of wills in Japan, we focus on "notarized will", which is considered least likely to be challenged later as to its validity.

A. Example consultation What should a foreign national living in Japan do to make a will in order to avoid the above problems? What are some points to keep in mind? Next, we discuss these points by examining a hypothetical consultation.

Hypothetical Inquiry

B. General advice to the hypothetical inquiry
・Have a New York attorney prepare a will in accordance with the laws of the State of New York, covering all of your assets.
・At the same time, have a Japanese attorney prepare a notarized will in accordance with the laws of Japan. It should be separate from the New York will, include the same contents as the New York will, and cover all properties located in Japan.
・Appoint an attorney as the executor of the Japanese notarized will.

In Japan, a notion of "Shukatsu/終活", or (preparatory) activities toward the end of life, has become a trend since around 2010, supposedly due to a rise of demand to reflect one's wishes in postmortem affairs (e.g., having a funeral in a manner the person desires). Although it sounds less familiar compared to wills, contract of mandate for postmortem affairs is a useful device that allows you to handle such affairs in line with your wishes.
Without a contract of mandate for postmortem affairs, surviving family and relatives are responsible for handling postmortem affairs of a deceased. To minimize such burden, the need is increasing to have a reliable person handle such affairs. Particularly in recent years, there is a growing awareness of the necessity to inform a specific person (such as an attorney) of passwords for cell phones, computers, etc., to deal with "digital belongings". A contract of mandate for postmortem affairs is the answer to these demands.

The following are the examples of postmortem affairs a person may delegate to an attorney:
➢Payment of expenses incurred during life (e.g., hospital expenses)
➢Receipt of hospitalization deposits
➢Notice of death to authorities and relatives
➢Funeral and treatment of ashes
➢Pet care
➢Removal digital device password, data disposal

Business owners and managers may be concerned about the impact of their impaired judgment to the business and / or the company. We discuss what to be considered in order to resolve such concerns, focusing on business succession.

Generally, if a (representative) director of a company is determined to be an adult ward or a "person under conservatorship" due to impaired judgment or other reasons, the person is required to resign as a director. If there are other directors, new (representative) director will be appointed from among those directors.
The problem arises when the director is the only director and is also the sole shareholder (100% owner) of the company. Similarly, the director must step down. A new director must be appointed by shareholders at a shareholders' meeting. The trouble is that because the (sole) shareholder lacks capacity to vote, there is no way to appoint a new director.
A possible solution is that the family of the former director-shareholder petition for an appointment of a legal guardian, and the appointed guardian exercises the voting rights to appoint a new director on behalf of the ward (former director-shareholder). However, it is highly doubtful whether the legal guardian has managerial knowledge to select a suitable successor as a director.
Without appropriate measures, management of a company will be exposed to serious risks. To mitigate such risks, owners and directors should be prepared for a business succession well ahead of time.

A business succession is carried out on a case-by-case basis, but common issues are the following.
1. Selection and training of a successor
2. When and how to transfer shares to a potential successor
3. Whether to maintain control of the company (e.g., by issuing golden shares)
4. Whether to receive preferred dividends
5. Whether to sell the shares to a third party (M&A)
In regard to 2. "when", options are immediate transfer, transfer in calendar-year method, and transfer by inheritance in a will, etc.
In terms of 2. "How", sale, gift, and transfer as compensation are the choices. As taxation is a major issue in transfer of shares, a succession plan should be developed in cooperation with a tax accountant.
As to 3. and 4., the shares must be designed so that the wishes of the owner and directors are realized.
5. "M&A" is an alternative considered under situations like lack of successors. Since it requires calculations of corporate value (valuation), M&A also should be carried out with assistance of accountants and tax accountants.
We work in cooperation with English-speaking tax accountants to effectively plan and execute business successions. If you are interested, please contact us.