Korean Inheritance Law: Questions & Answers

Korean Family & Inheritance issues, often, concern legal and tax issues of varying jurisdictions. In many cases, the nationality of the decedent (person who passes leaving an estate), residence of the decedent, location of the inherited property, and the nationality and residence of those inheriting the property shall dictate the law and the applicable taxes applied. In most cases, an experienced estate lawyer and tax professional are necessary to assist in avoiding inheritance and family disputes, lessen tax burdens, and navigate the transfer and disposition of inherited assets.

Korean Inheritance matters have gone global, over 7 million Koreans live abroad with nearly 3 million residing in North America. Many have assets around the globe and many have no estate plan.

The following is a list of the major questions asked of IPG Legal by clients.

Korean Inheritance Law Questions and Answers.

Question & Answers on Korean Inheritance Law and Inheritance Tax Law

1. The Law of What Country/U.S. State governs Wills and Inheritance for Property Located in Korea

Non-Korean National: If the decedent is not a Korean national in most cases the law of the country (U.S. State) the decedent is a national of shall govern the inheritance law to be applied even if the decedent’s assets are in Korea. However, exceptions exist with taxation. If the decedent’s permanent residence is in Korea, the worldwide assets of the decedent may be subject to taxation in Korea. For non-residents of Korea, the assets, only, in Korea shall be taxable by the Korean National Tax Services. Under Korean Law, an expat residing in Korea, may designate the governing law for inheritance as the law of the Republic of Korea.

Korean National Residing in Korea: If the decedent is a Korean National residing in Korea, the governing law on inheritance is Korean Law even if the decedent specified another country in a will.

Korean National Residing Abroad: If the Korean National decedent is residing abroad and passes without a will, Korea shall consider the governing law as Korean Law. However, if the Korean National resides abroad and has a will, Korea shall in most cases consider the governing law as the law of the residence of the decedent.

We advise all Korean Nationals and Non-Korean nationals to have a will and devise an estate plan. We never know when we are going to pass and early planning goes a long way in making your family inherit your assets in the most cost-effective and efficient manner.

2. Can a Decedent Disinherit an Heir such as a Wife or Child of an Inheritance governed by Korean Law?

Answer: No.

Korean imposes on all decedents’ estates governed by Korean Law a mandatory share of inheritance/legal reserve of inheritance (유류분/遺留分). Thus, even if the will notes that a certain estranged child or spouse shall not receive any of the inheritance, Korean Law imposes a mandatory share of the estate for heirs if the decedent is a Korean National or chooses Korean Law to govern their will. Therefore, the deceased is forced by Korean Law to provide a certain percentage of the estate to all legal heirs under Korea’s Inheritance Reserve Law.

The calculation of Korea’s legal reserve of inheritance is governed, primarily, by the Korean Civil Act.

Article 1112 of the Korean Civil Code (Persons with Right to Legal Reserve of Inheritance and Legal Reserve of Inheritance)
Legal reserve of inheritance for an inheritor shall be calculated according to the following subparagraphs:
1. For lineal descendants (직계비속) of an inheritee, one half of the inheritance stipulated by law;
2. For the spouse (배우자) of an inheritee, one half of the inheritance stipulated by law;
3. For lineal ascendants (직계존속) of an inheritee, one third of the inheritance stipulated by law;
4. For brothers and sisters (형제자매) of an inheritee, one third of the inheritance stipulated by law.

Korean Civil Act, Article 1112

Thus, a legal reserve is not available for all heirs. The law, only, protects – lineal descendants, the spouse, lineal ascendants, and brothers and sisters of the decedent.

4. If a Decedent’s Estate is Governed by Korea Law and the Decedent Passes without a Will Which Family Members Inherit the Estate?

Korea’s Intestate Succession Law dictates who shall receive what when one dies without a will. The majority of jurisdictions have an Intestate Succession Law. Intestate means, in short, dying without a will.

The following are the priorities under Korean Intestate Succession Law.

  • First Priority: Direct descendants (children and grandchildren);
  • Second Priority: Direct ascendants (parents and grandparents);
  • Third Priority: Siblings (brothers and sisters); and
  • Fourth Priority: Relatives within the 4th Degree (Uncles, Aunts, Nephews, Nieces).

    If a spouse survives the decedent and descendants survive within the First or Second Priority, the spouse shall co-inherit the estate, however, the spouse shall receive a 50% greater share of the estate than the other inheritors. If no descendants survive the decedent within the First and Second Priority, the surviving spouse shall receive the entire estate under Korea’s Intestate Succession Law.

    If multiple descendants within the same degree of relationship survives the decedent, the descendants shall inherit the estate in equal shares. Any descendants within the same priority shall inherit equally unless one descendant is within a closer degree of relationship than the other descendants.

    The Caveat: The Legal Reserve Share
    Even if a will exists, descendants must receive under Korean Law 50% of the share of the estate that the descendant would have received if the decedent passed without a will. Please, additionally, see the Legal Reserve Section Above.

    5. Does Korea Recognize Holographic Wills?

    Yes. Korean Courts enforce holographic wills. Korea recognizes five different types of valid wills. We shall have a more detailed post, in the near future, on the formalities for executing a Notarized Will. We have seen issues with this that have caused delays in the transfer of assets, because of the carelessness of notarial offices and even lawyers. Strict formalities must be met or the will shall be deemed invalid.

    The following wills are recognized as valid enforceable wills in Korea.

    1. Notarial Will
    2. Holographic Will
    3. Secret/Sealed Documents Will
    4. Recorded Will
    5. Dictated Will

    6. Can you Inherit the Debt of your Deceased Parent?

    Yes. Often, not renouncing an estate that has more liabilities than assets 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 the judgments of Korean courts.

    7. Can an Inheritor Refuse the Inheritance of a Korean Estate?

    Yes. You may choose to renounce an estate. 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. Debt, in Korea, can be enforced in the United States, Canada, Europe, and most anywhere in the world.  Courts, nearly universally, recognize the judgments of Korean courts.

    After termination of this period (3 months), an estate, in Korea, is presumed accepted without condition. Exceptions exist and IPG Legal has successfully applied for these exceptions for many estates.

    8. Does Korea Impose an Inheritance Tax on Estates in Korea and Abroad?

    It Depends. Korea taxes “Residents” differently than non-residents. Korea considers a resident, for inheritance tax purposes, as anyone that resided in Korea for more than 183 days from the commencement of the inheritance or has a residential address in Korea. Please note this is an over-simplification and the Korean law on tax residence has a long and complex body of case law that considers objective facts in determining residence for tax purposes.

    Residents of Korea: All inherited property of the decedent in Korea and abroad is subject to taxation in Korea.

    Non-Resident of Korea: All inherited property of the decedent in Korea (only Korea) is subject to tax.

    The following is, only, meant as a brief guide. This is a complicated area of law that changes often and requires the use of an accountant.

    Korea Inheritance Tax Deductions/Exemptions (2022)

    Deduction ClassificationAmount of Deduction/Exemption (KRW)
    Deceased Resident Deduction (Deceased Residents Only)500 million
    Basic Deduction (Deceased Resident or Nonresident)200 million
    Minor Child Deduction10 million times the number of years until the age of 19
    Senior Citizen (65+) Deduction50 million per senior
    Disabled Person Deduction10 million times the expected life remaining
    Child Deduction50 million per child
    Spousal Deduction500 million or more: amount inherited
    Less than 500 Million: 500 million
    Financial Property Deduction20 million or less: amount inherited
    20 million to 100 million: 20 million
    100 million to 1 Billion: NET x 20%
    More than 1 Billion: 200 million. (3 Billion Limit)
    Korean Inheritance Tax Deduction Table

    Korean Inheritance Tax Rates (2022)

    Tax base
    (KRW)
    Rate
    (%)
    Deduction
    (KRW)
    Less than KRW 100 million10% 
    More than KRW 100 million to less than KRW 500 million20%10 million
    More than KRW 500 million to less than KRW 1 billion30%60 million
    More than KRW 1 billion to less than KRW 3 billion40%160 million
    More than KRW 3 billion50%460 million
    Korean Inheritance Tax Table

    Korean Inheritance Tax is calculated by multiplying the tax rate by the tax base. This is only a quick teaser. The calculation method has many exclusions based on the specific case situation and requires an accountant. Thus, we always consult with an accountant we have in-house for all matters concerning the expected calculation of inheritance. Please note, that many cases are complicated by the choice of law and residency rules.

    Please check out our other articles on Korean Inheritance Law listed below and please feel free to contact us with any questions.

    If you would like to consult with an estate law attorney, please schedule a call with an attorney here.

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