[Invest&Law] Trials Delayed and Lawsuits Postponed, but Statutory Reserved Share Reform Stalls as National Assembly Sleeps

Statutory Reserved Share System Ensures Inheritance for Family Members
Constitutional Court Orders Revision to Specify Grounds for Loss
Less Than Four Months Left Until Amendment Deadline
No Progress in Legislative Discussions Despite Proposed Bills
Calls for Comprehensive Reform to Reflect Societal Changes

With less than four months remaining until the deadline to revise Civil Act provisions that do not specify reasons for the loss of statutory reserved share (yuriyubun), confusion is mounting in the field. The statutory reserved share is a system that guarantees a certain portion of inheritance to family members, even if the deceased did not leave any assets to them in a will.

In most cases directly affected by the provisions requiring revision, the courts are currently designating the status as "pending (to be determined later)," and some parties are postponing the filing of lawsuits. If the Civil Act amendment bill, which is currently pending in the National Assembly, is not passed swiftly, the lack of legislation will make it difficult to process these cases, inevitably causing harm to the public. There are also calls to use this opportunity to comprehensively overhaul the statutory reserved share system to reflect societal changes.

Mr. A, who had a property dispute with his child, visited a major law firm. He said, "My child, who received property for business purposes, committed an immoral act after refusing to give me more money. Nevertheless, it seems likely that they will still claim the statutory reserved share. What should I do?" After hearing a lawyer explain, "The Constitutional Court ordered the Civil Act to be revised to specify reasons for loss, but did not provide a concrete format. Until the National Assembly sets specific standards, it is difficult to prepare clearly," Mr. A had no choice but to leave. The case of Mr. B's claim for the return of the statutory reserved share entered a "pending" status after the Constitutional Court's decision in April last year. Since then, there has been no sign of progress. When Mr. B inquired with his legal representative about the status, the answer was, "We have no choice but to wait until the law is amended."

A presiding judge at a district court in Seoul stated, "After the Constitutional Court's decision, we checked the intentions of the parties involved in cases directly related to the relevant provisions and converted some cases to a pending status. If either party does not wish for the case to be pending, we continue the proceedings, but a significant number have opted for the pending status." Choi Hosik (age 62, Judicial Research and Training Institute class 27), managing attorney at Wooseung Law Firm and former chief judge of the Seoul Family Court, also said, "Most cases that were already in progress have come to a complete halt as they await the Civil Act revision following the Constitutional Court's decision. New cases are being filed with the courts, but it is difficult to proceed." A lawyer at a major law firm added, "Statutory reserved share cases already tend to be prolonged, and once they are pending, there is no way to know when they will conclude. If the legislative gap continues, parties and clients will become increasingly frustrated."

Currently, several amendment bills related to the statutory reserved share are pending in the National Assembly, but discussions are making little progress. Experts point out that not only is swift passage of the amendment necessary, but also a fundamental reform of the statutory reserved share system itself. Hyun So-hye (age 51, class 35), professor at Sungkyunkwan University Law School, argued in a recently published paper, "Heirs who have contributed to the estate have not been properly compensated due to the uniform system and the separation between contribution shares and statutory reserved shares. There needs to be an institutional 'support' for parties who have been treated unfairly."

There are also calls for the introduction of a system allowing advance waiver of the statutory reserved share. A family law specialist attorney said, "Currently, the statutory reserved share can only be waived through legal procedures after the decedent's death. Introducing a system for advance waiver would reduce posthumous disputes."

Some argue that jurisdiction, which is currently divided by case type, should be unified. Contribution share cases are handled as non-contentious matters exclusively by the family court, while statutory reserved share cases are handled by the civil court, making procedures complicated. Kwon Yanghee (age 55, class 30), attorney at Law Firm Sejong, stated, "In cases where a claim for the return of the statutory reserved share must be filed after the contribution share is determined, parties have to go from the family court to another court. There is a need to organize the jurisdiction for family cases related to the statutory reserved share." There are also calls for legislative improvement regarding issues such as the continuation of inheritance rights when one party dies during divorce proceedings, and whether donations to public interest organizations or for business succession should be included in the calculation of the statutory reserved share.

There are also arguments that the method of returning the statutory reserved share should be expanded to focus on monetary compensation. Yang Sora (age 45, class 37), attorney at Law Firm HwaWoo, said, "As the proportion of unlisted stocks and real estate increases, heirs may have to pay taxes even if they cannot immediately utilize unlisted stocks, and must file a lawsuit to receive a share of real estate. The scope of monetary compensation should be broadened."

Legal Times reporters Han Sooyeon and Seo Hayan

※This article is based on content supplied by Law Times.

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