Property management and inheritance amid the increasing number of single-person households

When a person with no relatives dies, who inherits their property? With the rise in single-person households in modern society, issues surrounding property management and inheritance are becoming increasingly pressing.

“In principle, Article 959 of the Civil Code stipulates that, in cases where no heirs exist, the estate is first distributed to persons who had a special connection with the decedent and then transferred to the national treasury. In fiscal 2022, the amount that reverted to the state reached a record high of about 76.9 billion yen,” explains Oda. Some may see assets returning to the public purse as positive, but Oda cautions: “Transfer to the national treasury involves legal procedures. It isn’t as simple as it might sound.”

Rising real estate prices may partly explain this surge, but the increase in persons living alone is also a major factor. “According to the 2020 national census, one in four men and one in six women in Japan remain unmarried throughout their life. The proportion of people who never have children is also climbing. Today, single-person households account for the largest share of households, and the continuing rise in the percentage of elderly people in single-person households is a matter of particular concern. This trend is expected to accelerate further as the second baby boom generation enters old age,” says Oda.

As people age, financial vulnerabilities mount—ranging from dementia-related risks to the increase in fraud targeting seniors. The issue of property management and inheritance for those living alone is not only something anyone may one day face personally, but it is also a pressing social issue that the looming “solo society” must confront head-on.

The advantages and disadvantages of trusts

Oda belongs to the Research Center for Legal and Political Infrastructure, Ritsumeikan University, and is actively engaged in joint research with companies and other institutions in the emerging field of financial gerontology. Her current focus is on what kinds of options might be available, even for those living alone, to make property management and inheritance systems more accessible in later life.

One approach she highlights is the civil trust system, which she explains as follows: “For example, suppose A, who lives alone, wants their niece B to manage their property during their lifetime, and, after their death, to inherit their main property such as real estate. In that case, a trust agreement could be used in which A serves as the principal and beneficiary, B as the trustee, the trust property consists of A’s retirement funds and real estate, the trust terminates upon A’s death, and the residual property is transferred to B.”

Next, Oda notes the major advantages of this system: “First, property management can be carried out with a high degree of flexibility that reflects the wishes of the principals (the individuals in question) in the contract. Second, it also serves as a will. The individuals can decide who will inherit their property and how it will be passed on after their death. In other words, they can manage their property while they are alive and ensure it is inherited by someone after they pass away. Third, this kind of arrangement ensures that property does not lie dormant. The principals can also designate only certain assets as trust property, such as real estate, which would be difficult to manage in the event of dementia, or the money that will be needed for nursing or medical care.”

There are also disadvantages, however. The first of these is weak supervision. Oda explains: “There are cases where problems arise, such as misappropriation by the trustee entrusted with management. Issues like these can be resolved if someone is named a trust supervisor, but challenges remain regarding who would assume that role and the associated costs.” The second issue that Oda points out is when bank deposits are used to manage trust property funds. Some banks not only restrict the trustee to within the third degree of kinship, but also require the designation of a successor trustee in case the original trustee becomes unable to fulfill their contractual duties. “For elderly individuals with few relatives, securing two reliable trustees is no easy task,” notes Oda before mentioning the third issue.

“The Trust Act presupposes that ownership of property is transferred from the principal to the trustee. In the case of real estate trusts, this means that registration must be changed from the principal to the trustee, but many people feel uncomfortable with the idea of their property deeds being transferred out of their own name.”

The adult guardianship system currently under discussion for revision

Oda is also looking at the voluntary guardianship as another system relevant to property management. “Because a trustee in a civil trust cannot provide personal care and supervision, there are cases where the voluntary guardianship system must be used in combination with a trust. However, like civil trusts, voluntary guardianship is ultimately contractual in nature, so if the individual’s decision-making capacity declines to the point where they cannot enter into a contract, the system can no longer be used. Moreover, regarding the possibility of future revisions, the ‘Interim Draft Proposal on Amendments to the Civil Code (Concerning Adult Guardianship, etc.)’ by the Civil Code Subcommittee of the Legislative Council in June 2025 presents two proposals concerning the feasibility of coexisting voluntary and legal guardianship systems. It also examines the requirements for initiating the use of the legal guardianship system in the case where a voluntary guardianship contract is in place, categorizing them into three scenarios, and concludes that maintaining the current legal framework would be appropriate for the time being,” says Oda. It will be important to keep a close watch on future developments.

“For single individuals, the primary purpose of holding financial assets is to secure funds for living in old age. It is all the more important for ordinary people—not just the wealthy who can access professional support—to think earnestly about property management.”