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Jul 18, 2011

Inheritance/Renouncement of Estate under Korean Law

We recently handled a matter concerning a large estate of a Korean national. 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 heirs to the estate included foreign national children and a Korean wife. The deceased died without a will. Since, the husband was a national of Korea, the matter was governed under the Korean inheritance/probate law. The nationality of the children has no bearing on the matter.

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

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 months of notification of the inheritance to the heir. Act quick.

After termination of this period, the property is presumed accepted without condition.

However, the co-inheritor 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 may create an additional taxable event.

If you intend to renouce an inheritance, the renoucement should, in most cases, be done through the Korean family court within three months of death of the owner of the estate.