Agreement Reached on Division of Shin Kyuk-ho's 1 Trillion Won Inheritance... Inheritance Tax Alone to Exceed 450 Billion Won

Opposition from Chairman Shin Dong-ju's Side
Causes Failure of 'Shin Gyeok-ho Foundation' Social Contribution Plan

Late Shin Kyuk-ho, Honorary Chairman of Lotte Group Photo by Yonhap News

[Asia Economy Reporter Cha Min-young] The four heirs of the late Shin Kyuk-ho, Honorary Chairman of Lotte Group, have agreed to divide the stock and real estate inheritance spanning South Korea and Japan, estimated to be worth around 1 trillion won. The initial plan proposed by Shin Dong-bin, Chairman of Lotte Group, to establish the 'Shin Kyuk-ho Foundation' to return the inheritance to society was reportedly scrapped due to opposition from his older brother Shin Dong-joo, Chairman of SDJ Corporation.

According to the business community on the 30th, the heirs of the late Chairman Shin, including Shin Dong-bin, Chairman of Lotte Group, Shin Dong-joo, Chairman of SDJ Corporation, Shin Young-ja, former Chairwoman of the Lotte Scholarship Foundation, and Shin Yu-mi, former advisor of Hotel Lotte, recently agreed on the method of inheritance settlement and drafted a related agreement. Under civil law, it is common to inherit 25% each, but the specific inheritance ratio has not been disclosed.

Current inheritance law stipulates that "inheritance tax must be reported by the end of the sixth month following the month of the decedent's death." Since Chairman Shin passed away in January, the heirs must file the inheritance tax by the 31st of this month. The heirs have continued discussions with legal counsel until the final stages. It is reported that Hatsuko Shigemitsu, the late Chairman Shin’s wife, is not registered as a spouse in Korea, and Mi-kyung Seo, mother of Shin Yu-mi, is in a de facto marriage but not legally recognized as a spouse, thus they were excluded from this property division.

Among the late Chairman Shin’s inheritance, Lotte Group affiliate shares in Korea include Lotte Holdings (common stock 3.10%, preferred stock 14.2%), Lotte Shopping (0.93%), Lotte Confectionery (4.48%), Lotte Chilsung Beverage (common stock 1.30%, preferred stock 14.15%), and the unlisted company Lotte Property & Development (6.87%). In Japan, shares include Lotte Holdings (0.45%), Kwang Yoon Sa (0.83%), LSI (1.71%), Lotte Green Service (9.26%), Family (10.0%), and Krispy Kreme Doughnuts Japan (20.0%). The shares of Lotte Property & Development have already been settled. Real estate in Moksang-dong, Gyeyang-gu, Incheon, valued at approximately 400 billion won, is also subject to division. Under this agreement, the heirs will have to pay around 450 billion won in inheritance tax to both Korea and Japan out of the approximately 1 trillion won worth of stocks and real estate left by Chairman Shin. However, the inheritance tax may vary depending on the property valuation of the Incheon Gyeyang-gu real estate.

The plan to return the inheritance to society, proposed by Chairman Shin Dong-bin in early February, was ultimately canceled due to opposition from Chairman Shin Dong-joo. Since the management succession has been completed and there is little need to inherit the late Chairman Shin’s shares, transferring the inheritance to a public interest foundation would have exempted the family from paying separate inheritance or gift taxes, thereby strengthening the owner family's control, making it a seriously considered option. During his lifetime, Chairman Shin established the Lotte Scholarship Foundation, which provides scholarships to students from financially disadvantaged families, and the Lotte Samdong Welfare Foundation for the development of Samdong-myeon, Ulju-gun, his hometown in Ulsan. Additionally, he personally funded various social contribution activities, including 24 billion won for the construction of the Ulsan Science Museum, 110 billion won for the restoration of Yeongdo Bridge, and 100 billion won for the Busan Opera House, honoring the late Chairman’s philanthropic spirit.

Some in the business community analyze that Chairman Shin Dong-joo demanded divided inheritance to secure funds to continue the management rights dispute with Chairman Shin Dong-bin. However, last month, Shin Dong-joo’s proposal to dismiss Shin Dong-bin as a director at the Japanese Lotte Holdings shareholders’ meeting was rejected, and the lawsuit filed by Shin Dong-joo at the Tokyo District Court on the 22nd to remove Shin Dong-bin from the Lotte Holdings board is also unlikely to succeed, limiting the possibility of reigniting the management rights dispute.

This content was produced with the assistance of AI translation services.