"How Do U.S. Citizens Inherit Property in Korea?"... Customized Asset Succession Guide for Korean Americans

Published 06 Dec.2023 18:40(KST)

'Asset Succession' Specialist Law Firm Trinity
Inheritance and Gift Explanation Seminar Tailored for Korean Residents

"It has been 17 years since I immigrated from Korea to the United States. My son works in Korea, and if I pass on assets located in both the U.S. and Korea, will U.S. tax rates apply?"

"If your son intends to become a permanent resident, Korean gift tax rates may also apply to U.S. assets."

[Photo by Beopryul Newspaper]

Trinity, a law firm specializing in 'asset succession,' held a 'customized inheritance and gift tax explanation' seminar for Korean immigrants in San Jose, California.

Law Firm Trinity (Lead Attorney Kim Sang-hoon) and the Northern California Korean Certified Public Accountants Association (President Lee Dong-jun) hosted the 'Korea-U.S. Inheritance and Gift Tax, Successful Retirement, and Global Asset Management Seminar' on the 1st (local time) at the annex of Sanjang Restaurant in San Jose, California.

This seminar was organized to listen to the concerns of Korean immigrants regarding cross-border asset allocation, gifting, inheritance, and asset management, and to provide solutions.

About 50 Korean immigrants from the 2nd to 4th generations gathered at the seminar. Questions such as "When the father is Korean and the child is a U.S. citizen, which country’s inheritance and gift tax should be paid?" and "Does obtaining citizenship or permanent residency affect inheritance tax payments?" were asked repeatedly.

The entire session was moderated by Lee Dong-jun, president of the Northern California Korean Certified Public Accountants Association. Kim Sang-hoon (49, Judicial Research and Training Institute Class 33), lead attorney at Trinity, presented on "Inheritance and Gift Tax for Residents and Non-residents You Must Know" and "Korea’s Reserved Portion System Examined Through Actual Cases." Attorney Lee Seon-gi (42, Class 37) of Trinity spoke on "Foreign Exchange Transaction Regulations to Watch Out for to Avoid Suspension of Transactions."

Lead attorney Kim explained, "In Korea, inheritance tax can be as high as 60% including the major shareholder surcharge. Some consider obtaining citizenship or permanent residency to avoid high taxes, but residency status is more important than nationality."

He added, "The distinction between residents and non-residents is not based solely on the '183-day residence' criterion. Factors such as where one works and earns income, and even where one renews their driver’s license, are considered, so consulting with experts is advisable."

He emphasized, "Although Korea’s tax rates are high, being a resident does not necessarily mean a disadvantage in taxation. There are deduction systems available for residents, so it is important to carefully check assets and taxable items between Korea and the U.S. to weigh the pros and cons."

Current inheritance and gift tax laws define residents as "persons who have an address in Korea or have stayed for 183 days or more," and non-residents as "persons who are not residents."

Attorney Lee Seon-gi explained, "Foreign exchange transaction regulations apply to foreign exchange transactions conducted domestically and transactions in domestic currency by individuals with addresses or residences abroad. This includes won transactions between Korean residents and non-residents, between non-residents, and foreign currency transactions among residents and between residents and non-residents."

He continued, "Foreign exchange transaction reporting requires prior notification before contract conclusion. Companies often consult with relevant authorities on the report before proceeding with contracts."

He warned, "If prior notification is not made and money is exchanged, foreign exchange banks may refuse remittance, which could disrupt business contracts or investment plans such as real estate."

A Korean-American certified public accountant said, "Among Korean clients, there are cases where inheritance tax must be paid in Korea, and I was always curious about Korean tax law. Today’s seminar was very helpful."

Korean immigrant Kang Yo-seop said, "I still have real estate to gift in both Korea and the U.S. The tax laws have changed a lot, and I had no one to ask in the U.S., so I was glad to attend this seminar."