1/09/2015

Inheritance/Renouncement of Estate under Korean Law: Korean Estate/Probate Law

We, recently, handled a matter concerning an estate of a Korean national with non-Korean family abroad.  The estate included assets in Korea, the U.K., the U.S. and Hong Kong.  The deceased, additionally, held shares in a number of closed-corporations outside of Korea.  The Korean-based family of the deceased requested the non-Korean-based family to sign a power of attorney granting Korean-based family control over the estate. 

The heirs to the estate included foreign national children living abroad, Korean national children living in Korea and a Korean wife. The deceased died without a will.

Since, the husband was a national of Korea, the matter was governed under Korea's inheritance/probate law.  If the deceased was a non-Korean national, in most cases, the matter would have been handled under the law of the jurisdiction where the deceased was a resident.  Thus, the nationality of the children (hiers) has no bearing on the matter.  The nationality of the deceased prevails, typically, in all conflict of law issues related estate matters in Korea. 

Tax and other considerations made it a best option for one of the non-Korean-based heirs to renounce the estate, thus, transferring that portion of the estate to the remainder of the heirs in equal shares.

Renouncing an Inheritance in Korea
In order to renounce an inheritance in Korea, in most cases, the heir is required to make a “declaration of renunciation to the family court” (Korean Civil Act, Art. 1041) in Korea within three (3) months of notification of the inheritance to the heir.  Thus, it is essential to act quickly. 

Often, not renouncing an estate can lead to the assumption of the debt of the estate - a debt that is enforceable outside of Korea.  Yes, a debt, in Korea, can be enforced in the States, Europe and most anywhere in the world.  Courts, nearly universally, recognize judgments of Korean courts. 

After termination of this period (3months), an estate, in Korea, is presumed accepted without condition.

However, the co-inheritor in Korea of a particular asset may divide the inheritance based on contract under Article 1013 of the Civil Act or gift the asset to the remaining heirs. The inability to renounce an asset, however, may create an additional taxable event.

If you believe you are the victim of an unscrupulous relative (I see this far too often), contact an attorney immediately. You often have options at the Korean courts if you act quickly and smartly.

Additionally, don't sign an agreement that you don't understand or you may find yourself in a debt that you wished you could avoid.  Yes, again, Korean creditors can attach assets globally.
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SeanHayes@ipglegal.com

Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty.

 Sean is ranked, for Korea, as one of only two non-Korean lawyers as a Top Attorney by AsiaLaw.