[Senior Trend] Money Talk② Various Aspects of Yusan and Sangsok

At the end of last year, the world-renowned value investor Charlie Munger (1924?2023) passed away just over a month before his 100th birthday. Alongside American billionaire investor Warren Buffett, he built the company Berkshire Hathaway for over 50 years. From 2006, when he turned 82, he prepared a succession plan and smoothly transferred his duties, but people were highly interested in his legacy. Known as a wise investor, he left behind about 3.4 trillion won. Rather than donating, most of it is said to be inherited by his eight children. In Korea, inheritance issues often become a hot topic as well. In 2021, the nephew of unmarried comedian Park Suhong angered many singles by claiming, "My uncle's inheritance is mine." This led to widespread notarization of wills amid resentment and accusations of "wishing someone to die quickly." Recently, various issues regarding "wills" and claims for inheritance recovery have also been noteworthy in the LG family’s succession. Usually, when civil inheritance property disputes arise, rights are asserted through lawsuits for the return of statutory shares or petitions for division of inherited property.

Recently, I have also been asked to introduce a "tax accountant I know." These are acquaintances who want to consult about gifts or inheritance. Their ages range from their 40s to 70s. They seek expert advice to minimize inheritance tax and prevent family conflicts. Singles, those with complicated calculations due to divorce and remarriage, and very elderly seniors worried about dementia are actively seeking help. Rarely, some seniors establish foundations to donate to society. Inheritance plans vary depending on the size of the estate, ranging from children who expect to receive a certain amount from their parents to parents who move to smaller homes to maximize the money passed on to their children. Regardless of the size of the estate, it is not uncommon for disputes among siblings to arise, leading them to seek lawyers. Trends related to inheritance inevitably differ according to each family’s and individual’s circumstances and goals. Although inheritance was not a topic easily discussed in the past, the situation is changing.

First, the scale of inheritance in Korea is growing rapidly. According to the National Tax Service, the total value of inheritance and gift property in Korea in 2022 was 188.4214 trillion won. This has grown rapidly compared to 12 trillion won in 2003 and 90.4496 trillion won in 2017. Accordingly, people consider who should receive what portion and at what ratio after calculating inheritance tax. The types of inheritance include real estate, financial assets, insurance money, vehicles, jewelry, and artworks. Since these are evaluated at "market value," timing is also important besides the item itself. Furthermore, with the growth of the online world, issues related to digital assets such as digital content revenue and online accounts have emerged. For celebrities with millions of followers or social media accounts for pets, these themselves are sources of income. Cryptocurrency assets like Bitcoin are also subject to taxation starting in 2025 due to price surges, with capital gains classified as other income and subject to gift tax.

There is also movement among seniors due to concerns about pets and dementia. Contrary to "pet loss syndrome," some seniors include their pets as heirs, worrying that they might pass away first. A representative example is the shepherd dog "Gunseo III," who inherited about 420 billion won from a German countess. It is listed in the Guinness Book as the world's richest dog. Through a trust, the estate is passed down to descendant dogs, and "Gunseo VI" currently holds about 590 billion won. Karl Lagerfeld, the famous designer of Chanel, left his entire estate of about 224.7 billion won to his pet cat "Choupette" when he died at age 85. In Korea, actress Um Aengran is known to have publicly declared on a broadcast that she would leave her entire estate to her dog. Meanwhile, with the increase in dementia, seniors themselves choose trust products in advance to prepare by managing retirement funds or inheritance assets for children with monthly payments. At this time, it is important to consider caregiving relationships and family conflict factors such as between daughters and sons.

Meanwhile, it is not only the scale of inheritance that has changed. As Korea’s average life expectancy increases and the country enters an aging society, "old-to-old (노노, Nono) inheritance" is emerging, where elderly children inherit assets after their parents in their 80s or 90s pass away. According to the National Tax Service, cases where the deceased inheritors were aged 80 or older and paid inheritance tax numbered about 5,800 in 2020 and about 6,400 in 2021, increasing annually. Assets inherited at an advanced age tend to be locked away safely rather than invigorating the economy through investment or consumption, leading to so-called "asset locking." Also, situations occur where inheritance skips a generation because children die before their parents in their 90s. There is even a saying that if you are lucky enough to inherit, it might be around age 100.

In fact, inheritance (遺産) has two meanings. One is the property left by a deceased person, and the other is objects or culture passed down from previous generations. In this era of longevity, what kind of inheritance can the senior generation pass on to their children or the younger generation? Money is important, but let us carefully consider what we will inherit and have sufficient conversations. Perhaps, beyond money, we may discover unexpectedly precious things such as love, self-esteem, and attitude.

Lee Boram, CEO of Third Age

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