[E-Daily Reporter Kim Mi-Young ] Three years ago, on Chuseok, a man in his 40s, identified only as Mr. A, attacked his father with a weapon in Gimcheon, North Gyeongsang Province, following a dispute over property. He also brandished the weapon at his mother and wife, who tried to intervene, injuring them.

Although the holiday is a joyful time when families gather together after a long absence, paradoxically, this period often sees a significant number of emotional confrontations and legal disputes over property matters. Arguments over inheritance or gifts can escalate into loud outbursts and violence, or—as in the case of Mr. A’s family—escalate into tragic acts of violence.

Experts advise that to prevent unnecessary tragedies, families should familiarize themselves with the legal principles governing inheritance and gifts, as well as tax laws, and communicate openly in advance. This is because inheritance disputes are already occurring on a significant scale, with nearly 5,000 cases filed annually in court—including proceedings for the division of inherited assets and lawsuits seeking the return of the statutory share of an inheritance.

First, inheritance—which begins upon the death of the decedent—proceeds according to the statutory shares of inheritance under the Civil Code unless there is a separate will. It is important to remember that, in addition to tangible assets such as real estate and bank deposits, “deemed inherited assets”—including life insurance proceeds, trust assets, and retirement benefits—are also subject to taxation. Ignoring this and dividing assets arbitrarily may result in additional tax assessments following a tax audit by the tax authorities.

To minimize family disputes over the distribution of assets, it is safest for the decedent to draft a legally valid will during their lifetime or to utilize a “substitute will trust” offered by financial institutions to carefully plan the timing and method of asset transfer after death. Under the Civil Code, a will must strictly comply with five specific formats and requirements—such as a holographic will or a notarized will—to be legally valid.

However, when drafting a will or establishing a trust, it is essential to consider the “statutory share” system, which guarantees a minimum share to statutory heirs. Although a Constitutional Court ruling abolished the statutory share rights of siblings and restricted those of family members who have committed grave moral offenses, the statutory shares of spouses and lineal ascendants and descendants remain in effect. Accurately understanding the legal and tax criteria in advance and ensuring the minimum statutory share is preserved is key to preventing family disputes.

With regard to gifts, financial assistance exchanged between parents and children during the parents’ lifetime is also subject to strict tax laws. Regardless of the name or form of the transaction, any transfer of property to another person—whether direct or indirect—is subject to gift tax. This includes not only cash and real estate but also the forgiveness of debt or the transfer of property at a price significantly below market value.

In particular, it is not easy to have financial transactions between parents and children recognized as “borrowed money (loans).” This is because simply drawing up a formal promissory note is not enough. The National Tax Service monitors the details of promissory notes and tracks whether interest and principal are being repaid. If there is no objective evidence—such as records of actual interest payments or principal repayments—the transaction will be treated as a cash gift and subject to back taxes, even if a promissory note exists. Furthermore, if a parent dies unexpectedly before the repayment period ends, the remaining debt is included in the estate, which can increase the tax burden.

Even if a loan is taken out in the child’s name, if the parents provide collateral or pay the interest or principal on the child’s behalf, this is also considered a cash gift to the child. If the child is unable to pay the gift tax, the parents must pay the tax on the child’s behalf under the joint and several liability provision.