Updated February. 12, 2014 07:04
The special subcommittee for revision of the Civil Code (Inheritance Chapter) at the Justice Ministry drafted a bill that calls for a deceased person to preferentially inherit half of his or her wealth to the spouse irrespective of the will. The measure that increases the portion of wealth preferentially taken by the spouse of the dead persons wealth is an important decision that values the spouses right in the aging society, in that it broadly recognizes the degree of the spouses contribution to formation of wealth, while easing the spouses economic burden. It is also meaningful that the bill respects womens right, because womens average age is higher than mens.
Key element of controversy in the revision bill was what portion of a spouses contribution to wealth creation is recognized out of the portion favorably taken by the spouse, and whether the provision on the portion of wealth preferentially taken by the spouse violates a dying persons freedom to leave a will. The degree at which a spouses contribution to the couples wealth creation is recognized is limited to the portion of wealth that increased during the couples marriage period. If the wife made no contribution to wealth creation, she has no wealth to inherit. In contrast, it is true that the provision requiring the deceased person to preferentially inherit half of the wealth has some potential to violate the dying persons freedom to leave a will. The special subcommittee created a provision that suggests The portion of inherited wealth can be reduced by taking into consideration the process of wealth creation, but this should be better refined in the course of parliamentary review.
How people feel about the revision bill would be different between the rich and the working class. With a hike in the portion of wealth preferentially taken by the spouse, the probability for children to block a parent from remarrying or for the family to engage in dispute has increased. But it will likely have little effect on the working class, because even if a widowed woman inherits a significant portion of inherited wealth, it will be eventually inherited to children. However, as for inheritance of wealth that determines ones managerial control of a company, there is possibility for dispute. As a spouse who only served as homemaker inherits wealth from her husband, she could threaten a sons managerial control of her husbands company. In order to prevent such a situation from happening, preparations are required in advance. A majority stakeholder could transfer his stake in the company while alive.
Law related with inheritance is a matter that entails changing practice that has continued for decades, and there is no accurate answer because situations faced by each individual differ. If the new revision bill is not to end up being discarded as was the case for the 2006 revision bill that provided The portion of wealth inherited to the spouse shall be half of the entire wealth inherited, the new bill should generate public consensus. Death without any preparation for allocation of inherited wealth is apt to generate dispute between bereaved family members. In order for a person at advanced age to keep good relationship with the spouse or children and to avoid leaving a tax bomb on the inheriting person, the person can also transfer wealth while alive. For instance, wealth worth 600 million won (469,000 U.S. dollars) or less transferred to the spouse over a 10-year period is exempt from the transfer tax. Hence, the sooner one starts preparing for inheritance, the more he or she can save tax. The sooner one starts preparation, the better it will be in this era when peoples life expectancy is approaching 100 years.