How to Set Up a Special Needs Trust in Japan

If you are a parent of a child with a disability, you have probably thought about what happens to their finances when you are no longer here to manage them. Who will make sure the money is safe? Who will pay for living expenses and medical care? How do you leave assets to a person who may not be able to manage them independently? I had these questions too, and after counselling with a Japanese lawyer, research, and my husband having multiple conversation with various banks, I gathered the information for this article.

This is not a comprehensive guide, nor should it be considered legal or financial advice. Every family’s circumstances are different. My hope is simply to share what I learned with other parents who are wondering how to leave funds to their disabled child while ensuring those assets remain protected and available to support them long after we are gone.

What Is the Special Needs Trust/ Tokutei Zouyo Shintaku 特定贈与信託?

Japan has a trust specifically designed to answer these questions. The tokutei zouyo shintaku (特定贈与信託), sometimes translated as “specified gift trust” or “special needs trust,” allows a family member to place money and certain assets into a trust managed by a professional trust bank, with the person with a disability as the beneficiary. The trust bank handles everything: investing the assets, managing the account, and making regular payments to the beneficiary for living expenses and medical care for the rest of their life.

The system was first created in 1975 and has been gradually expanded since then. In 2013, the eligibility was broadened to include people with milder intellectual disabilities and people with mental health conditions, making it accessible to far more families.

Why Families Use This Trust

The tokutei zouyo shintaku addresses several concerns at once:

• Professional management: The trust bank manages the assets, removing the burden from family members and eliminating the risk of mismanagement. You do not need a financially savvy relative to handle your child’s money.
• Lifetime payments: The trust bank makes regular payments for the beneficiary’s living expenses and medical care for their entire life, not as a lump sum. This means the money is distributed responsibly over decades.
• Asset protection: The assets are held by the trust bank, not by the beneficiary directly. This protects them from scams, exploitation, and impulsive spending.
• Significant tax advantage: The gift tax exemption means you can transfer a substantial amount without incurring gift tax, which would otherwise apply to any gift above the annual exemption.
• Independence from guardianship: The trust operates independently. Even if no guardian is appointed, the trust bank continues to manage the assets and make payments. This can be especially important for families who have concerns about the guardianship system. See our article “Adult Guardianship in Japan” for more on that topic.

Who Can Use This Trust?

The Beneficiary (Juekisha / 受益者)

The person who receives the trust benefits must be a tokutei shougaisha (特定障害者), or specified person with a disability, who lives in Japan. There are two levels, each with a different tax-free limit:

Category	Who Qualifies	Tax-Free Limit
Tokubetsu Shougaisha (特別障害者)	Severe disability: physical disability handbook grade 1 or 2, intellectual disability handbook grade A (or equivalent), mental health handbook grade 1, and others	¥60,000,000
Tokutei Shougaisha (特定障害者)	Other specified disabilities: intellectual disability handbook holders (including lighter grades), mental health handbook grade 2 or 3, and others	¥30,000,000

The detailed eligibility criteria are set by tax law. For the current full list: NTA: Gift Tax Exemptions (No.4405) (no.7)

The Donor (Itakusha / 委託者)

The Trust Association of Japan describes the donor as “goshinzoku tou” (ご親族等), meaning relatives and others. The trust bank will confirm the specific eligibility requirements for donors when you begin the process, including whether multiple donors can contribute to the same trust and any residency requirements. For details: Trust Association of Japan: Tokutei Zouyo Shintaku

The Trustee (Jutakusha / 受託者)

This is a critical point: the trust must be managed by a licensed trust bank or trust company (shintaku ginkou / 信託銀行). You cannot set up a tokutei zouyo shintaku (特定贈与信託) as a private family arrangement. It must go through a professional trust institution.

The major trust banks that offer this product include Mitsubishi UFJ Shintaku Ginkou, Mizuho Shintaku Ginkou, and Sumitomo Mitsui Shintaku Ginkou. Several regional trust banks also offer it. The Trust Association of Japan (Shintaku Kyoukai / 信託協会) maintains a list of participating banks.

Find participating trust banks: Trust Association of Japan: Tokutei Zouyo Shintaku

How to Set It Up: Step by Step

Step 1: Contact a Trust Bank

Start by contacting a trust bank that offers the tokutei zouyo shintaku (特定贈与信託). Most have dedicated departments for disability-related trusts and will walk you through the process. You can contact multiple banks to compare their services and fees.

Step 2: Prepare the Required Documents

The trust bank will tell you exactly what is needed, but typical documents include:

• The beneficiary’s disability certificate (techou)
• Identification documents for the donor and the beneficiary
• The beneficiary’s residence certificate (juuminhyou / 住民票)
• The beneficiary’s family register (koseki touhon / 戸籍謄本)
• A medical certificate or proof of disability status
• Documentation of the assets to be placed in trust

Step 3: Sign the Trust Contract

The donor enters into a tokutei shougaisha fuyou shintaku keiyaku (特定障害者扶養信託契約), a specified disability support trust contract, with the trust bank. This contract specifies the terms of the trust: the assets being trusted, the payment schedule, the payment amounts, and what happens to any remaining assets when the beneficiary passes away.

Step 4: Transfer the Assets

The donor transfers money or eligible assets to the trust bank.

Step 5: File the Tax-Exempt Declaration

A shougaisha hikazei shintaku shinkoku sho (障害者非課税信託申告書), a tax-exempt trust declaration form, is filed through the trust bank to the local tax office. This is what formally claims the gift tax exemption. The trust bank handles this filing process for you.

Step 6: The Trust Begins

The trust bank begins managing and investing the assets. From this point forward, the trust bank makes regular periodic payments to the beneficiary for living expenses and medical care. Payments are typically made once or twice a year, in amounts determined based on the beneficiary’s actual needs.

What Assets Can Be Placed in the Trust?

The NTA describes the trusted property as “kinsen tou no zaisan” (金銭等の財産), meaning cash and similar assets. The Trust Association of Japan specifies that eligible assets include cash (kinsen / 金銭) and securities such as stocks and bonds (yuuka shouken / 有価証券). The specific types of eligible assets are defined by the Inheritance Tax Act enforcement orders.

Confirm the full list of eligible asset types with the trust bank when you begin the process. For general information: Trust Association Detailed Guide (PDF)

The Gift Tax Exemption

The primary tax benefit is substantial:

• Up to ¥60,000,000 is exempt from gift tax for tokubetsu shougaisha (特別障害者), those with severe disabilities.
• Up to ¥30,000,000 is exempt for other tokutei shougaisha (特定障害者).

These limits are per beneficiary, not per donor. If multiple donors contribute to the same trust, the total exemption remains unchanged.

What About Inheritance Tax?

If the donor passes away after setting up the trust, the trusted assets are not added back into the donor’s estate for inheritance tax purposes. This is an important advantage over ordinary gifts, which are typically included in the inheritance tax calculation if made within a certain period before death.

However, if the gift to the trust is large enough to affect the iryuubun (遺留分), the legally reserved share that other heirs are entitled to, it could create a dispute. If you have other children, consider this carefully and discuss it with a legal professional. See our article “Inheritance for People with Disabilities in Japan“ for more on this topic.

Income Tax on Trust Earnings

Income generated by the trust assets (such as interest or dividends) is considered the beneficiary’s income and is subject to income tax. The trust bank handles the reporting.

Trust Fees

Trust banks charge fees for managing the trust. These typically include a setup fee when the trust is established, ongoing management fees, and fees for processing payments to the beneficiary. The fee structure varies between trust banks, so it is important to compare offers from multiple institutions before committing.

Fees are paid from the trust assets, not out of the family’s pocket separately. Over the life of a trust that could span decades, fees make a real difference to the total amount available for the beneficiary. Ask each trust bank for a clear breakdown of all fees before you sign.

Contact trust banks directly for current fee schedules. The Trust Association of Japan can help connect you with participating banks.

What Happens When the Beneficiary Passes Away?

When the beneficiary dies, the trust ends. Any remaining assets in the trust are distributed according to what was specified in the trust contract. There are two options:

• Distribution to heirs: The remaining assets go to the beneficiary’s legal heirs (such as siblings, nieces, nephews, or other family members).
• Donation to a designated organization: The trust contract can specify that remaining assets be donated to a disability welfare organization, a social welfare corporation, a volunteer organization, or another designated recipient. This option is meaningful for families who want the remaining funds to continue helping people with disabilities.

The choice is made when the trust is set up and written into the trust contract. Think carefully about this decision.

Important Points to Know

• The trust lasts for the beneficiary’s entire lifetime. It cannot be terminated early by the donor or the beneficiary. Once you place assets in the trust, they stay there until the beneficiary passes away. The terms of the trust (payment amounts, schedule, and designated remainderman) also cannot be changed once the contract is signed.
• Payments are for living expenses and medical care only. The trust bank distributes money periodically based on the beneficiary’s actual needs. This is not a free-access savings account. The structure is intentional: it ensures the money lasts and is used for the beneficiary’s well-being.
• This trust must be set up through a Japanese trust bank. It cannot be created privately between family members, and it cannot be established from overseas without going through a Japanese trust institution. Both the donor and the beneficiary must be residents of Japan. This is a Japanese product governed by Japanese tax law.
• Additional contributions may be possible. Ask the trust bank whether you can add money to an existing trust over time. The tax-free limit per beneficiary remains the same regardless of how many contributions are made.
• The trust works independently of guardianship. Even if no guardian is in place, the trust bank continues to manage the assets and make payments. However, if a guardian is appointed, the guardian may coordinate with the trust bank regarding the beneficiary’s needs and payment schedules.

How This Trust Connects to Your Overall Plan

The tokutei zouyo shintaku (特定贈与信託)is one piece of a larger puzzle. It works alongside other planning tools:

• The disability basic pension provides a basic income. The trust supplements this with additional payments. Together, they create a more complete financial picture. See the article “Financial Support for People With Disabilities”
• Adult guardianship (if used) provides a legal framework for daily financial decisions that the trust does not cover. The trust handles the large assets; the guardian handles everyday matters. See the article “Adult Guardianship in Japan.“
• A group home provides housing and daily care. The trust provides the financial resources to support the person’s life. See the article “Group Homes in Japan.“
• Inheritance planning determines what happens to assets you hold at death. The trust is for assets you transfer during your lifetime. Both are needed. See the article “Inheritance for People with Disabilities in Japan.”
• The oyanaki ato plan brings all these pieces together into a comprehensive strategy. See the article “Planning for Life After You’re Gone.”

Practical Tips

• Start by contacting a trust bank, not a lawyer. The trust banks have dedicated teams for this product and will explain the process clearly. You can always consult a lawyer or tax professional afterward if you have specific legal or tax questions.
• Compare fees across trust banks before committing. Setup fees and ongoing charges vary and make a meaningful difference over the life of the trust.
• The Trust Association of Japan provides an overview of the product, an explanatory leaflet, and a list of participating trust banks. The site is in Japanese, but browser translation tools can help.
• Think carefully about the payment schedule and amounts. The trust bank will work with you to set up a plan that matches the beneficiary’s expected living costs. If the person lives in a group home, the costs are relatively predictable.
• Think carefully about what happens to remaining assets. The decision about whether remaining funds go to heirs or to a designated organization is made at setup and cannot be changed later.
• If you are a foreign resident in Japan with a family member with a disability, be aware that this trust must be established through the Japanese trust banking system. It is a Japanese product governed by Japanese tax law.
• Consider the timing. You can set up this trust at any age. Some families set it up while their child is young and add to it over time. Others set it up later in life. The earlier you start, the longer the trust has to work.
• The trust does not replace a will. Assets you place in the trust during your lifetime are separate from your estate. But you may also want to leave additional assets through your will, possibly into a testamentary trust. These are different tools for different purposes.

Key Terms

Japanese Term	English
Tokutei zouyo shintaku / 特定贈与信託	Specified gift trust (special needs trust)
Tokubetsu shougaisha / 特別障害者	Person with severe disability
Tokutei shougaisha / 特定障害者	Specified person with disability
Shintaku ginkou / 信託銀行	Trust bank
Itakusha / 委託者	Donor / settlor
Juekisha / 受益者	Beneficiary
Jutakusha / 受託者	Trustee
Tokutei shougaisha fuyou shintaku keiyaku / 特定障害者扶養 信託契約	Disability support trust contract
Shougaisha hikazei shintaku shinkoku sho / 障害者非課税 信託申告書	Tax-exempt trust declaration form
Zouyo zei / 贈与税	Gift tax
Hikazei / 非課税	Tax-exempt
Iryuubun / 遺留分	Legally reserved share (inheritance)
Shintaku Kyoukai / 信託協会	Trust Association of Japan

Useful Resources

NTA: Gift Tax Exemptions for Persons with Disabilities (No.4405, 贈与税がかからない場合): https://www.nta.go.jp/taxes/shiraberu/taxanswer/zoyo/4405.htm

Trust Association of Japan: Tokutei Zouyo Shintaku Overview (特定贈与信託): https://www.shintaku-

kyokai.or.jp/products/public_interest/public_interest/specific_gift.html

Trust Association of Japan: Explanatory Leaflet (特定贈与信託リーフレット, PDF): https://www.shintaku-

kyokai.or.jp/archives/045/data04_01leaftokuzou.pdf

Trust Association of Japan: How It Is Used (どのように使われているの？): https://www.shintaku-

kyokai.or.jp/special/how/specific_gift.html

Trust Association of Japan: FAQ (よくあるご相談): https://www.shintaku-kyokai.or.jp/consultation/qanda.html

Trust Association of Japan: Detailed Product Guide (特定贈与信託詳細, PDF): https://www.shintaku-

kyokai.or.jp/archives/045/data04_01-6.pdf

Mitsubishi UFJ Trust Bank: Tokutei Zouyo Shintaku: https://www.tr.mufg.jp/tokuteizouyo/tokuteizouyo.html

Mizuho Trust Bank: Tokutei Zouyo Shintaku: https://www.mizuho-tb.co.jp/other_trusts/tokutei_zouyo/index.html