[PB Notebook] Will-Substitute Trust: The Choice for Well-Dying Without Inheritance Disputes

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In an aging society, the question of "how to finish one's life" is just as important as "how to live." As interest shifts from "well-being" to "well-dying," more people are proactively preparing for the final moments of their lives. Consequently, there is a growing focus not only on advance medical directives and funeral planning, but also on the distribution of assets after death.

Traditionally, a will has been the primary legal tool for posthumous asset distribution. However, changes in family structure, a rise in inheritance disputes, and situations involving diminished decision-making capacity such as dementia have made wills alone insufficient in many cases. According to a domestic survey, 82% of people who experienced inheritance did so without any special preparation, and a significant portion of them reported experiencing family conflicts or legal disputes. As the need for advance preparation for inheritance issues becomes more apparent, the "living trust as a substitute for a will" is gaining attention as a more practical and systematic alternative.

A will-substitute trust is a system that allows individuals to determine in advance the procedures for asset distribution and execution after death through a trust contract established during their lifetime. Unlike a will, it covers not only asset management and operation during life but also posthumous execution. It enables asset protection against unexpected events such as dementia, illness, or accidents, and allows for multi-generational asset distribution, more faithfully reflecting the individual's wishes. Furthermore, because the contracted financial institution promptly and accurately executes the trust after death, it is highly effective in preventing misunderstandings or disputes among heirs in advance.

Until recently, will-substitute trusts were considered the preserve of high-net-worth individuals, but they have now become a rational and practical inheritance planning tool that anyone can consider, regardless of asset size. In particular, those in the following situations should actively consider a will-substitute trust:

▲Those living alone after the death of a spouse and without children ▲Those whose children reside overseas, making inheritance execution complicated ▲Those wishing to prevent disputes among children after their own death ▲Those who have remarried and want to clearly designate heirs for each asset in advance ▲Those wishing to leave assets to trusted siblings or nephews/nieces ▲Business owners who need succession planning.

There are actual cases where concerns about conflicts among children were preemptively addressed through a will-substitute trust. Mr. Kim, a man in his 70s living in Seoul, wanted to divide his lifelong savings?an apartment and bank deposits?equally between his two children. However, differences in their financial situations and lifestyles meant that a simple will could lead to disputes. After consulting with a bank PB center, Mr. Kim entered into a will-substitute trust agreement, specifying the timing and method of real estate disposal, the order and purpose of inheritance, and thus was able to preemptively eliminate the potential for inheritance conflict.

Even for single individuals who do not anticipate inheritance disputes, a will-substitute trust can be useful for ensuring their wishes are carried out. This was the case for Mr. Park, a single man in his 60s. Mr. Park wanted to express his gratitude to a nephew and a friend with whom he had been close all his life, but was concerned that, under the legal order of inheritance, his assets would go to distant relatives. Through a will-substitute trust, he arranged for his apartment to go to his nephew and his bank deposits to his friend, and even included funeral expenses and pet care in the trust, ensuring his wishes would be respected to the very end.

As customer inquiries about will-substitute trusts at bank branches have surged, major banks' PB centers are holding monthly seminars to enhance customer understanding. In particular, services offering one-on-one customized consulting by specialized teams?comprising PBs, trust experts, tax accountants, and lawyers?are steadily expanding, providing trust contracts optimized for each client's situation.

A will-substitute trust is not merely a way to divide assets. It is an important means of preserving the value of one's life until the very end. It enables you to distribute your assets to whom and how you wish, precisely reflecting your intentions, and is a great help in preventing complex inheritance disputes in advance. Such a trust holds deep meaning not only for oneself but also for one's loved ones. Rather than worrying alone, I suggest considering your life's final chapter and finding solutions together with an inheritance planning expert.

Han Youngsook, Head of Gold PB, Hana Bank Olympic Athletes' Village PB Center

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