Gifted Property Before Introduction of Reserved Portion... Supreme Court: "Not Subject to Inheritance"

[Asia Economy Reporter Baek Kyunghwan] The Supreme Court has ruled that assets gifted before the establishment of the reserved portion system cannot be claimed under inheritance rights.

On the 3rd, the Supreme Court's 2nd Division (Presiding Justice Min Yusuk) overturned the lower court's ruling partially in favor of the plaintiffs in the reserved portion return claim appeal filed by four daughters of Mr. A against two sons and four grandchildren, and remanded the case to the Suwon High Court.

Mr. A and others filed a lawsuit claiming that a shortage of about 1 billion KRW in the reserved portion occurred due to the father’s death in 2016 and the gifting or bequeathing of real estate and other assets to three sons including the eldest son and their children. They argued that the defendants are obligated to return the shortage of the reserved portion to the plaintiffs according to each defendant’s excess reserved portion ratio.

The Civil Act guarantees a certain proportion of the statutory inheritance share to all children of the deceased to prevent a specific child from monopolizing the inheritance; this is called the reserved portion.

The issue was that the father had gifted real estate to the eldest son in 1962, and the ownership transfer registration procedure was completed before the reserved portion system was established. The question was whether this gifted property could be included in the base assets for calculating the reserved portion.

The first and second trials partially ruled in favor of the plaintiffs. The courts held that the real estate in question should be included in the base assets for calculating the reserved portion, and the obligation and scope of return of the reserved portion should be determined based on the value of the base assets calculated including this property.

However, the Supreme Court’s judgment was different. Since the reserved portion system was established in 1977, the obligation to return the reserved portion for the real estate whose ownership registration was completed in 1962 cannot be applied retroactively. The court stated, "When the decedent gifted property to heirs and ownership was transferred before the reserved portion system was established, even if the decedent died after the enforcement of the revised Civil Act in 1977 and inheritance commenced, the gifted property cannot retroactively become subject to a return claim under the reserved portion system."

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