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How to Properly Document Gifts to Avoid Being Suspected of Nominal Deposits

2026年7月24日 06:04

Bank accounts in a child's name may be returned to the inheritance estate

"I have been saving up little by little for my child." "It's fine because I've been transferring 1.1 million yen to my grandchild's account every year."

Such "well-intentioned savings" can become an unexpected pitfall during inheritance. This is known as a nominal deposit.

A nominal deposit is a deposit where, even though the account is in the name of a child or grandchild, it is judged to be effectively the property of the deceased (the decedent). If it is recognized as a nominal deposit, the entire balance of that account is added to the inheritance estate and becomes subject to inheritance tax.

"I thought I had made a gift during my lifetime, but it wasn't recognized as a gift." In this article, we will organize the "correct way to leave gifts" to avoid this situation.

Why are nominal deposits a "staple" of tax audits?

Nominal deposits are one of the items most easily pointed out during inheritance tax audits.

The reason is clear: from the perspective of the tax office, they are "easy to discover and involve large amounts." The tax office can check the deposit and withdrawal history of not only the deceased person but also the accounts of family members, going back into the past. Therefore, if there is a large balance in the account of a child or grandchild with no income, it is naturally suspected: "Whose money is the source of this?"

And if you cannot explain that the gift was legally established, it will be incorporated into the inheritance estate as a nominal deposit.

The dividing line is "whether the gift was established"

The judgment of whether it is a nominal deposit is made based on substance, not form. The key point is whether a legal gift was established.

A gift is a contract established by the agreement of the giver saying "I will give" and the receiver saying "I will receive." In other words—

If the receiver does not know about the fact of the gift, the gift has not been established.

The case of "saving money in an account under the child's name without the child knowing" is exactly this. As long as the child does not know, there is no agreement, and the gift is not established. It is judged that the money in the account remains the parent's property.

The tax office looks here: Typical patterns suspected of being nominal deposits

In practice, the following cases are easily recognized as nominal deposits.

Points of suspicion: Details: The person does not know: The account holder (child/grandchild) does not know of the account's existence; Passbook/seal kept by the parent: The account holder is in a state where they cannot use it freely; Seal is the same as the parent's: Using the same registered seal as the parent's account; No trace of use: Only deposits, and the account holder has never made a withdrawal; Source cannot be explained: There is a balance that cannot be explained by the account holder's income.

What they have in common is the point that "the account holder does not manage or control that money as their own." Even if you only change the name, if the reality does not follow, it will not be recognized as a gift.

The correct way to leave gifts: 5 practical points

So, how can you show that you "properly gifted" it? There are 5 practical points.

1. Create a gift agreement

For every gift, create a simple gift agreement and have both parties sign it. Documenting "when, who, to whom, and how much was gifted" serves as the best evidence for the future.

2. Use bank transfers instead of handing over cash

Gifts should be made via bank transfer to leave a record. Handing over cash leaves no record, no matter how much is given, and cannot be proven. The transfer history itself becomes a "trail of the gift."

3. The recipient must manage their own passbook, cash card, and seal

The recipient (child or grandchild) should keep the passbook and seal themselves and be able to use them freely. The registered seal should also be the recipient's own, separate from the parent's. The core of a valid gift is that "management and control have shifted to the recipient."

4. The recipient must actually use the funds

If an account remains "deposit-only," its reality will be questioned. Evidence of the account holder using the funds for living expenses or shopping of their own volition is the best proof that they are "treating it as their own property."

5. File a gift tax return if necessary

One method is to intentionally file and pay a small amount of gift tax for gifts exceeding 1.1 million yen per year. This is because the copy of the tax return remains as an official record that "a gift took place." However, filing a return does not eliminate the need for the actual substance of the gift. Consider this a reinforcing measure that only works when the realities described in 1 through 4 are in place.

Focus on creating substance rather than worrying about "consecutive annual gifts"

I often hear concerns such as, "If I continue giving 1.1 million yen every year for 10 years, will it be considered as having intended to gift 11 million yen from the start (consecutive annual gifts)?"

There is no need to be overly afraid. If there is a reality where the gift is agreed upon each year, each one is an independent gift. As long as you create a contract every year, do not make the amount or timing too mechanically fixed, and execute it as a gift for that specific year, there is basically no problem.

What is scary is creating a form that looks like "a promise to give the total amount over 10 years" (for example, a contract that sets the total amount at the beginning). Just be careful about this, and you will be fine.

Turning "intended to give" into "the fact of giving"

The irony of the nominal deposit issue is that it is most likely to occur with well-intentioned, family-oriented savings. To ensure your efforts are not denied by the tax office, you must focus on the substance.

A gift is only valid when there is an agreement to "give" and "receive"
Leave a record with a contract + bank transfer
Passbook and seal must be managed and used by the recipient
Transfers in name only are the primary target of tax audits

If you have any "accounts saved in your child's name," do not leave them as they are; there are ways to organize them even now. Let's work together to confirm your current situation and restructure them into the correct format.

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