Legal reserve system
Significance of the legal reserve system
- The legal reserve of inheritance refers to a certain portion in the inherited property that must be left as it is under the statutes for a certain inheritor without being handled by the person who has inherited (source: Standard Korean Language Dictionary, National Institute of Korean Language).
- Since the “Civil Act” recognizes the freedom of disposing the property through testamentary will, if an inheritee bequeaths his/her property to non-family members or some of the inheritors, the inherited property may not be transferred to the inheritors.
· However, if the freedom of disposing the inherited property is recognized without any limitation, the stability of family life will be undermined and the life security of the inheritor after the death of the inheritee will be violated.
· To prevent such unfair outcomes and guarantee the life of the inheritors, the “Civil Act” recognizes the legal reserve system.
Legal reserve of inheritance of the persons with the right to legal reserve of inheritance
Persons with the right to legal reserve of inheritance
- The persons with the right to legal reserve of inheritance are the lineal descendants, lineal ascendants siblings, and spouse of the inheritee (Article 1112 of the “Civil Act”).
- A unborn child and an inheritor by representation also holds the right to legal reserve of inheritance (Articles 1000 (3) and 1118 of the “Civil Act”).
※ However, a person who has renounced his/her inheritance will not be entitled to request the return of the legal reserve since he/she is no longer an inheritor.
Legal reserves of the persons with the right to legal reserve of inheritance (Article 1112 of the “Civil Act”)
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Order
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Persons with the right to legal reserve of inheritance
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Ratio of the legal reserve of inheritance
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1
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Lineal descendants of the inheritee
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1/2 of the inheritance stipulated by law
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2
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Lineal ascendants of the inheritee
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1/3 of the inheritance stipulated by law
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3
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Siblings of the inheritee
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1/3 of the inheritance stipulated by law
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※ If the inheritee has a surviving spouse, he/she will hold the right to legal reserve of inheritance together with the persons with the right to legal reserve of inheritance in the first or second priority, and his/her ratio of legal reserve of inheritance will be one-half of the statutory share of inheritance.
Calculation of the legal reserve of inheritance
Calculation of the legal reserve of inheritance
- A legal reserve of inheritance shall be calculated as the sum of the values of the inherited properties and the given properties at the commencement of inheritance minus the total amount of debts of the inheritee (Article 1113 (1) of the “Civil Act”).
Calculation of the amount of the legal reserve of inheritance
- (Positive property subject to inheritance + testamentary gift - inherited liability) × (Ratio of legal reserve of inheritance of each inheritor) - Special profits
Claim for the return of the legal reserve of inheritance
Claim for the return of the legal reserve of inheritance
- If there are any shortages in the legal reserve of inheritance due to a gift or testamentary gift granted by the inheritee, persons with the right to legal reserve of inheritance may claim the return of the property to the extent of shortfall (Article 1115 (1) of the “Civil Act”).
· At this time, the testamentary gift granted by the inheritee must have been made within one year prior to the commencement of inheritance in principle, but any testamentary gift made while being aware of the violation of the testamentary gift for the inheritor or legal reserve of inheritance will be applicable without any restriction on the its duration (Article 1114 of the “Civil Act” and
Supreme Court Decision 95Da17885 Decided September 25, 1996).
Counterpart of the return
- The person who violates the legal reserve of inheritance of the claimant and receives a gift or testamentary gift will be the other party to the claim for the legal reserve of inheritance.
How to make the claim
- The claim for return may be made either in court or outside the court and if the claim is filed in court, the proceedings will be subject to the civil procedure.
Sequence of the return
- Gifts cannot be demanded to be returned until testamentary gifts have been returned (Article 1116 of the “Civil Act”).
How to return
- In the claim for the return of the legal reserve of inheritance, if two or more persons have received the gifts or testamentary gifts, they must return the same proportions as their shares of the testamentary gifts (Article 1115 (2) of the “Civil Act”).
Prescription of the claim for the return
- The claim for the return will expire if not filed within one year from the date on which the person with the right to legal reserve become aware of the commencement of inheritance and the gift or testamentary gift to be returned.The claim will also lapse if ten years have passed from the commencement of inheritance (Article 1117 of the “Civil Act”).
Other matters
Claim to return the legal reserve of inheritance of the inheritor by representation
- If a lineal descendant or a sibling who would become an inheritor (Article 1000 (1) 1 and 3 of the “Civil Act”) has died or has become disqualified prior to the commencement of inheritance, any of his or her lineal descendants will become an inheritor in the order in which the deceased or disqualified person would have become, and any inheritor by representation will also be entitled to claim the return of the legal reserve of inheritance (Articles 1118 and 1001 of the “Civil Act”).
· A spouse is also entitled to claim the return of the legal reserve of inheritance if he/she is a legal reserve of inheritance (Articles 10118 and 1010 (2) of the “Civil Act”).
- The legal reserve of inheritance of the inheritor by representation who becomes an inheritor in lieu of the deceased or disqualified person will match the portion the deceased or the disqualified person has been entitled to (Articles 1118 and 1010 (1) of the “Civil Act”).
· If there are multiple lineal descendants who have died or become disqualified (Article 1010 (1) of the “Civil Act”), the legal reserve of inheritance will be determined within the limits of the share of inheritance of the deceased or disqualified person has been entitled to (Articles 1118 and 1010 (2) of the “Civil Act”).
Claim for the return of the legal reserve of inheritance of special beneficiaries
- If any one of the co-inheritors has previously received a gift or testamentary gift of the property from the inheritee, and such property received is of less value than his/her share of the inheritance, he/she will be entitled to a share of inheritance and legal reserve of inheritance within the limit of the difference between the gifts and his/her legal share of inheritance (Article 1118 and 1008 of the “Civil Act”).