Will Japan tax my child’s UTMA when they take over active management at 18 years?

Hi All –

I am a US citizen living with my family in Japan. My wife is a Japanese citizen and my children are dual Japanese / US citizens.

We moved to Japan from the US in 2019. Prior to moving to Japan, I created UTMA accounts for each of my children. I have made periodic contributions to the UTMAs while both while living in the US and after moving back to Japan. The contributions were always made in USD from money sourced in the US and deposited in a US bank. (not money which I earned in Japan and remitted back to the US). The amount of the contribution was always below the US gift limit (e.g., 19,000 USD in 2025).

The US regards my children as the owners of assets in their UTMA accounts.

Given my tax-home state in the US, my children will assume active management of the UTMA when they turn 18.

When my children take active management of their UTMAs in the US, will Japan recognize that they always were the owners of the assets in the UTMAs? Or will they regard the event of them taking active management as a huge "gift" from me to my children (i.e., because previously I retained "control" of the assets) and hence try to tax my children on the full value of the UTMA at the time they turn 18?

Obviously, my children will be subject to capital gains tax on increases in value going forward from the time they are 18, but will Japan attempt to tax the entire value of the UTMA itself when my children assume control at 18?

Thanks!