Social Security survivor benefits for spouse of expat - some questions

[maikeru]

Here's what I'm trying to do and what I found out, but would like to confirm.

I'm a U.S. citizen and permanent resident of Japan, having lived here 40 years. I live with my same sex partner of more than 20 years. While I'm eligible for U.S. social security benefits (I'm 67 now) I have not started taking retirement benefits yet. Since I'm still working, I thought I would try to wait until I turned 70 for maximum benefits. I'm lucky that even though I've been here so long I've managed to accumulate enough credits so I can get benefits which would be helpful. Also, even though I have national health insurance in Japan, I signed up for Medicare Parts A and B when I turned 65, in case I should ever need treatment in the U.S. - like on a visit.

What I'm trying to do is this: I would  like to ensure that my partner receives social security survivor benefits when I eventually pass away. He has never been to the U.S. And we cannot marry in Japan. My benefits would be of great assistance to him after he retires and if I'm gone. He's 10 years younger than me, and is still working.

After checking all over the place, including reading social security info, it seems that this is possible:

1. I can remotely marry my partner in (believe it or not!) the state of Utah which has become very open about allowing this over the last few years (see https://www.nytimes.com/2021/09/17/style/utah-county-weddings-virtual.html and https://www.courtly.com/resources/how-to-get-married-online-in-utah-step-by-step-guide).

2. While most foreign spouses of U.S. citizen must have resided in the U.S. for 5 years to become eligible for survivor benefits, there are a handful of exceptions, including Japan (see https://secure.ssa.gov/poms.nsf/lnx/0302610010).

"The dependent/survivor does not have to meet the 5-year residency requirement because they are a citizen and resident of a treaty country which meets the alien exception code."

3. Because of treaties, Japan also seems to be an exception to the discontinuation of survivor benefits to non-citizens after 6 months outside the U.S. rule (see https://www.ssa.gov/pubs/EN-05-10137.pdf and https://secure.ssa.gov/poms.nsf/lnx/0302610025#:~:text=Section%20202(t)(11,parent%20of%20the%20NH%2C....

"Since you are a resident of one of the countries with which the United States has a Social Security (Totalization) Agreement, your payments will continue as long as you are a resident of an International Social Security (Totalization) Agreement Country."

So from my checking, I think I can go through a remote marriage in Utah and as long as we are married at least 9 months my partner will be eligible for full survivor benefits when I eventually pass on.

In addition, it also seems that when we've been married for 10 years that my partner, who is not otherwise eligible for his own social security benefits, can receive spousal benefits. At that point he will be at least 68 years old, so his own benefits would match my own, and if I were to pass away his benefits would switch to spousal survivor benefits

Is all this correct? Any way to confirm for sure?

I did try the social security screening tool, and it seemed to confirm this as well, except it was a little unclear if I already have to be receiving benefits already when a survivor claim is made.

Also it was unclear what level of benefits my partner would be eligible for depending on his age and so on.

I did try calling Social Security. After listening to several minutes of recordings about this and that it said, "Your wait time is approximately 54 minutes." I gave up and hung up. If it's that hard to get through by phone I felt unsure about receiving concrete info from a rushed/busy operator that could be used later on about this.

Any info would be helpful.

I'm also thinking the best thing, if reasonably priced, would be to get confirmation one way or another from a lawyer who specializes in this sort of thing. And maybe even making a will that clarifies my intentions, or at least establishes an executor to help my partner deal with social security when the time comes.

Thanks.

[RR155419]

Hello @maikeru 

I just found your post. I hope this catches your attention.

Your partner may have tax problems if he starts receiving SS survivor benefits in Japan.

In the U.S., SS survivor benefits are subject to income tax.

In Japan, survivor benefits from overseas are treated as inherited property and are subject to inheritance tax, not income tax. The following English article discusses two such cases: one from the Switzerland national program and one from the US SS program.

https://www.asahi.com/ajw/articles/14844606

The Japanese online version of the above articles may have more info, but you need a subscription.

https://www.asahi.com/articles/ASR1C77LTR16ULFA01J.html

https://www.asahi.com/articles/ASQDM5SK1QDMULFA00N.html

I want to know how these cases from the March 2023 article ended. But I cannot find it.

Here is the different article, 2024-03-21. This does not mention a solution….

http://www.kushima.org/?p=76183

Japan calculates the survivor benefit as an inheritance asset like this:

the annual amount you would receive from the survivor benefit ✕ the years you have till average life expectancy in JAPAN

The article implies that she was calculated until age 87, but the info I found—see the link below—is that tax-wise life expectancy is higher. If you are 90, you are expected to live 2 more years. If you are 91 or older, you are expected to live 1 more year. So, if you are 106 years old, you still live 1 more year.  

https://www.nta.go.jp/information/attention/data/h22/sozoku_zoyo/pdf/01_beppyo.pdf

See the Tax credit for spouses below.

Tax credit for spouses: The amount equivalent to the spouse's statutory share of inheritance or 160 million yen, whichever is larger, is deducted from the tax amount.

Your partner may not be able to claim this credit because same-sex marriages are not recognized in Japan. In that case, he will be subject to the huge inheritance tax.

I first thought that remaining on the spouse's benefit and giving up the monetary increase into the survivor benefit could be a solution. But this does not seem to be an option. The upgrade appears to be done automatically by the funeral home's report. 

Not only about the Tax credit, there is an extra tax levied on inheritance other than close family. Extra 20%.

I could not find this info in English.  Here is one of the Japanese sources—the government webpage.

https://www.nta.go.jp/taxes/shiraberu/taxanswer/sozoku/4157.htm

I hope they make survivor benefits from overseas subject to annual income tax. A lot simpler.

Exchange rates fluctuate widely during the age of survival. 1USD1 = 80～160 JPY. If you have to pay inheritance tax when the yen is extremely weak, the tax amount will be enormous. And what if you move to the US some years later? Now, do you annually have to pay US income tax on the survivor benefit that you already took care of the tax obligation back in Japan?

Please let me know if you guys find any cases, information, or solutions.

Thanks

[maikeru]

I discussed this with a tax professional here I know who does the taxes for a Japanese friend of mine who receives trust benefits from his long-term American partner who passed away 4 years ago (at age 100). She assured me that the U.S. social security survivor benefits (and spousal benefits before that when I retire) will just be considered income and he will pay taxes on the income. Unless of course Japan recognizes same sex marriage before then, in which case there will be more consideration and tax benefits. 

[fffred]

@maikeru   Hello!  Thank you for your update on your situation. I assume you have since gotten married and wish to say *** Congratulations!! ***

Aside from being a Social Security fanboy I'm also interested in the issues for expats and foreign spouses. My wife only obtained US citizenship after we got married and she had moved from Canada. She is a Filipina and we have been to the Philippines a number of times and I would always see these US guys with younger Filipina wives, I would wonder how this would play out with SS once the guy died. There was actually a Filipina from the Phils who posted in this AARP forum a couple years ago. Her US husband had died and she was investigating potential SS benefits for her and their children. The situation didn't look positive for her as the Phils does not have a relevant treaty for SS. Very sad. 

[maikeru]

Thanks for your post. All I can say is ... confusing. I could never figure it out by myself. I know that a same sex partner Japanese partner of an old U.S. friend who passed away a few years ago at age 100 is receiving trust fund benefits. He pays taxes on the amount each year, but it's just based on what he actually receives - not on the projected amount over his lifespan. That seems an inherently impossible way to afford the tax payment. How can someone pay a percentage on something they have yet to receive? 

The latter part of your post about moving to the US in the future won't apply. He has never been to the US, and I won't be moving back there.

At the end of the day, we'll just have to consult a tax professional and ask.

Thanks.

[fffred · Accepted solution]

Hello @maikeru 

My hat is off to you for the outstanding research you've done. I accept everything that you have reported. I even learned something new about the Alien Nonpayment Provisions and the exceptions... the possibility of an exception is very important and I was not aware of this at all. It really is exciting to learn of these, thank you.

Some comments:

You do not need to have been collecting benefits for the spouse to then receive survivor's benefits.

You said "so his own benefits would match my own," Normally spousal benefits are 50% of your full retirement age (FRA) benefit. Spousal benefit will be reduced as well as your own should you take an early retirement (which it sounds like you won't). Spousal benefit will also be reduced should they take this benefit earlier than their own FRA. I'm thinking that "match my own" means that the benefits are the same, which they won't be, based on these points.

And "if I were to pass away his benefits would switch to spousal survivor benefits". This is correct, with some points to add: (i) Note that spousal retirement benefit does not gain an increase due to any "delayed retirement credits" (DRCs) that you will likely have (for not taking SS until after your full retirement age). But if you predecease him his spousal survivor benefit will include those DRCs. (ii) Probably immaterial for your situation, spouses who have their own SS earnings record can postpone either their own benefit or their survivor benefit until a later age (with the likelihood of getting larger benefits) but spouses who do not have their own earnings record and are collecting spousal benefit when their spouse passes are automatically converted from spousal to survivor, without the option to postpone the survivor benefit (this scenario is relevant to my own spouse).

I have a heavy reference tome written for lawyers about Social Security but even that does not have anything to say about alien (foreign) survivors. So this is really niche ground you are getting into.

I second the idea of possibly discussing with a law firm experienced with Social Security retirement issues. You might ask questions at some other forums that see more traffic about SS issues; I'd suggest Reddit r/socialsecurity and the Bogleheads forum. And possibly any number of expat forums.

I also suggest researching at Professor Larry Kotlikoff's site "Ask Larry" for any relevant "Q & A's". The site is https://maximizemysocialsecurity.com/ask-larry-questions-and-answers. I used a site-specific Google search to search for all discussions including the word "foreign" just as a for-instance and got a lot of hits. There may be some useful information in there.

Oh, and let me add. I was just reading last night about Canadian citizens/residents being hit with the WEP rules due to their receiving both a Canadian public pension and Social Security. This might impact you as well if you will receive a Japan-based pension.

Good luck with this. Should you come to any further resolution on this please let us know here. It's interesting!

[maikeru]

Hello, fffred. Thanks very much for your detailed reply.

Good to confirm about not having to already be collecting benefits in order for my spouse to collect survivor benefits. 

It's also good to confirm about the amount of spousal (not survivor) benefits. Actually, I was surprised to read that those existed at all. It sounds like a generous "bonus" benefit. At any rate, it sounds like he would not qualify for those until 10 years after marriage, at which time he will be 68 years old already, which would be FRA.

As far as getting in touch with a law firm, I'm actively looking for one. At the minimum, in addition to confirming things, it would seem a good idea to designate an executor who can help my partner apply for benefits when the time comes. 

I'll do more research at the other places you mentioned as well. I'd like to get this done quickly. Those Utah remote weddings seem legit. At least according to the NY Times. It's very interesting how that worked out. 

Regarding dual pensions, as things worked out I actually don't qualify for a Japan-based pension. For various reasons, including being paid by a U.S. employer over these years, I was never fully in the Japan pension system. That actually turned out to be a good thing because I've just recently found out how very low the pension benefits here are. And they tend to go down over time because instead of being based on cost of living, the government here takes into account the decreasing population and increasing aging population and to avoid an extra burden on the younger working population reduces pensions as time goes by. It's a problem. Unfair to people who contributed into the national pension system. So I was interested in helping protect my partner in that regard.

Thanks very much!

[fffred]

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Regarding dual pensions, as things worked out I actually don't qualify for a Japan-based pension. For various reasons, including being paid by a U.S. employer over these years, I was never fully in the Japan pension system. That actually turned out to be a good thing because I've just recently found out how very low the pension benefits here are. And they tend to go down over time because instead of being based on cost of living, the government here takes into account the decreasing population and increasing aging population and to avoid an extra burden on the younger working population reduces pensions as time goes by. It's a problem. Unfair to people who contributed into the national pension system. So I was interested in helping protect my partner in that regard.

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That is interesting how the Japanese pension operates. I'll have to mull that over. Though I can see the point about not adding extra burden on the younger working population ...as you likely know, SS here has funding issues coming up. And there are more and more retirees being supported by a lower proportion of workers.

[fffred]

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@maikeru wrote:

It's also good to confirm about the amount of spousal (not survivor) benefits. Actually, I was surprised to read that those existed at all. It sounds like a generous "bonus" benefit. At any rate, it sounds like he would not qualify for those until 10 years after marriage, at which time he will be 68 years old already, which would be FRA.

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Hello!

Spousal benefits can be obtained after only one year of marriage. See this AARP article https://www.aarp.org/retirement/social-security/questions-answers/spouse-social-security.html.

There is a 10 year rule that applies to surviving divorced spouses. (page 2 in this SSA booklet https://www.ssa.gov/pubs/EN-05-10084.pdf). 

I recall a rule that the marriage must be at least for 9 months for a survivor to obtain benefits. Oddly, I find this rule using Google but it's not listed in that SSA pdf booklet. This AARP page does mention this rule and speaks to same-sex couples, this may be useful https://www.aarp.org/retirement/social-security/questions-answers/same-sex-couples-social-security/

Sounds like you have a good plan and are ready to execute.

Ciao!

[maikeru]

Thanks for clarifying about the requirement for spousal benefits being just after 1 year - as long as the spouse is at least 60. 

I guess I should mention all this to my partner sometime soon. 🙂