To break the bond of debt, one of the children gets limited approval and the rest of the brothers give up their inheritance. To do this, family dialogue is necessary. Photo photoAC.
A letter of urgency came to my 9-year-old Moo-kun to pay off a debt of 600 million won from a financial company. It was a debt left by my grandfather who died a few years ago. When it was confirmed that Lee’s father and his father’s brothers had both abandoned the inheritance, the creditor filed a lawsuit against his grandson, Lee, claiming the loan. This is an example of Lee’s father, who did not know that debts were inherited to his grandsons, in a court dispute with creditors in 2015.
[가족간 다툼없이 상속하는 법]
If you give up the first priority,
Application within three months of commencement of inheritance with limited approval
When inheriting a house’half-and-half’
House share, number of houses included 2
Conflict-free inheritance is also a technique. To celebrate the Lunar New Year, we looked at how to inherit wisely without quarrels between family and relatives.
Inheritance of property also includes debts. At this time, if you give up the status of the heir, you may not inherit your assets as well as your debts. However, as in Mr. Lee’s case, the debts of parents can be passed on to grandchildren even if the children give up all inheritance. Grandchildren are also the number one heirs. Here is not the end. If the first-priority heir (direct descendant/children, grandchildren) gives up the inheritance, the second priority (immediate continuation/grandparents), the third priority (siblings of the heirs), and the fourth priority (a relative within 4 villages) are in turn.
Spouse limited approval has no effect
The most amicable solution chosen by experts is to discuss with the family, one of the children heirs receives limited approval, and the other siblings give up the inheritance. Limited approval means that the parents’ debt will be settled only within the limit of the inherited property. Heirs are not obligated to repay their property.
If the heir’s spouse grants limited approval, the debt loop does not break. This is because the spouse of the heir is bound by the first and second heirs and joint heirs. For example, even if Lee’s grandmother grants limited approval, the debt is passed on to his grandson.
Abandonment of inheritance, application within 3 months of commencement of inheritance
There are many things to be aware of when giving up inheritance and granting limited approval. The renunciation of inheritance must be filed with the competent court within three months from the date the heir has become an heir (initiation of inheritance). The limited approval must also inform the creditor of the fact that the limited approval was received by a newspaper announcement after filing an application within this deadline. After that, the debt is paid to the creditor according to the amount of the debt.
Bang Hyo-seok attorney Wooil of Law Firm said, “In particular, if the inheritor’s property is arbitrarily disposed of or omitted by the heir, the effect of limited approval should disappear,” he said. For example, let’s say your child destroyed an old car in the name of his father who died in the process of organizing his property. If a creditor who knows this fact raises an objection to the court, the limited approval may be revoked.
There is an easy way for an heir to check the heir’s property or debt. Through the Financial Supervisory Service’s “inheritor financial transaction inquiry service,” you can check deposits and loans, securities accounts, insurance contracts, credit cards, and pension subscription information in the financial sector at once.
Heir Financial Transaction Inquiry
Half-and-half inheritance of’house’ should be taxed
When you inherit a house, you have to carefully weigh your taxes. In particular, it is possible to receive tax bombs such as comprehensive real estate tax after splitting the shares of the siblings’ house and inheriting’half and half’. This is because the share of houses is also included in the number of houses under the tax law.
Moreover, if two or more houses, including inheritance houses (including shares), are owned in areas subject to adjustment, such as Seoul, the burden of taxation tax increases. This is because last year’s July 10 countermeasures resulted in the highest tax rate for the final tax jump from 3.2% to 6%. However, cases where the percentage of ownership of inherited houses is less than 20% and the published price of shares is less than 300 million won are excluded from the number of houses.
A simulation of the comprehensive real estate tax for each virtual scenario of Mr. Kim, who inherited the house. Graphic = Kim Hyun-seo [email protected]
For example, let’s assume that Mr. Kim has recently inherited a joint inheritance (50% stake) with his younger brother in a third apartment in Gunyeong (84㎡) in Junggye-dong, Seoul as the first house owned by Hillstate in Mok-dong, Sinjeong-dong, Seoul. The final tax that Kim has to pay this year is 4.65 million won, 19 times higher than last year (240,000 won). This is the result of a simulated calculation (simulation) by Yang Gyeong-seop, an Onse Group tax accountant, applying a tax rate increase and a 300% maximum tax burden.
The reason Kim’s taxation has increased significantly is because the inherited house shares were added to the number of houses, and the tax was levied by two houses. In addition, both of them are in Seoul, so the tax rate for the tax on the census has increased. The tax rate levied on the official price of two apartments (970.5 million won) was 1.6%, more than three times higher than the previous (0.5%).
As a result, Mr. Kim is obliged to pay the ending tax at a rate of millions of won each year in addition to the inheritance tax (5674 million won) while inheriting a 50% stake. If you are burdened with tax, you can also discuss with your brothers and dispose of the house.
When selling, exclude from inheritance housing and number of houses
The transfer tax has special rules that exclude inherited housing from the number of houses. Central photo.
Will the equity be included in the number of houses when selling a house? Unlike the jong-bu tax, capital gains tax has special rules for inherited housing. It is an exception that even if a house owner inherits a house and becomes a second house, the inherited house is excluded from the number of houses. In order for Kim to take advantage of the non-taxation of the transfer tax for one house owner, he has to sell the existing house first. Conversely, if an inherited house is disposed of within 5 years after inheritance, the general transfer tax rate (6~45%) is applied.
Yang Gyeong-seop, a tax attorney, said, “After the actual tax rate increased, consultation on inheritance housing increased. The wisest method is to hand over the housing to the homeless children and distribute the financial assets to the rest of the brothers.” If the total inherited property is a single house, the next best thing is to split the house share to 20% or less and lower the official share price to 300 million won or less. Since inheritance shares are not included in the number of houses, the tax burden can be reduced.
Reporter Yeom Ji-hyun [email protected]