Gifts As Compensation For Support Of Korean Parents Excluded From Legal Reserve Of Inheritance In Korea

The Korean Supreme Court has reaffirmed that property gifted as compensation for long-term support or caregiving of a deceased parent may be excluded from special benefits subject to the calculation of the Korean legal reserve of inheritance, to the extent corresponding to such contribution. The ruling is based on the reasoning that since the retroactive effect of a Korean Constitutional Court ruling of unconstitutionality applies to cases pending in court at the time, even if the parties did not file a request for a constitutional review, the amended Civil Code of Korea, which excludes compensatory gifts for special support or contribution from special benefits, must be applied.

The Korean Supreme Court overturned the part of the lower court’s ruling that found a Caregiver liable for the return of the legal reserve of inheritance filed by a Heir and four others against their brother Caregiver (2024da222922).

Facts

1. The Decedent passed in November 2020. The Decedent had four daughters and two sons.
2. The daughters filed a lawsuit in 2020 demanding the return of real estate shares, claiming that their legal reserve of inheritance was infringed upon by property gifted or bequeathed by the deceased to the two sons. The daughters argued that the two apartments transferred to the name of Caregiver Son should also be included in the basic assets for calculating the legal reserve of inheritance, as they were effectively property gifted by the deceased during his lifetime.
3. The Caregiver Son claimed that the two apartments were not received as a gift from the deceased, and if they were, they should be excluded from “special benefits” as they were compensation for providing special support to the deceased, such as living with him for a long period and bearing the costs of medical and nursing care.

Lower Korean Courts

The court of first instance accepted the daughters’ claim and ordered the transfer of real estate shares corresponding to the shortfall in the legal reserve. The appellate court affirmed the decision.

Korean Supreme Court

The Supreme Court of Korea held that the amended Civil Act of Korea should apply, as the trial was ongoing at the time of the Constitutional Court’s decision. On April 25, 2024, the Constitutional Court of Korea issued a decision of constitutional nonconformity regarding Article 1118 of the Korean Civil Act prior to the amendment, which did not apply Article 1008-2 of the Korean Civil Act concerning contribution to the legal reserve of inheritance. The reason was that it would result in an “unreasonable” outcome where an heir who has supported the deceased for a long time or contributed to the formation of the inherited property would have to return even the property received as consideration to other heirs.

Subsequently, Article 1008 of the Korean Civil Act, amended in March 2026, stipulated that if a co-heir receives a gift or bequest as compensation for having specially supported the deceased for a considerable period of time through methods such as cohabitation or nursing, or for having made a special contribution to the maintenance or increase of the deceased’s property, such gift or bequest shall be excluded from special benefits to the extent corresponding to such contribution.

The Court noted:

The reason the Constitutional Court confirmed the unconstitutionality of the pre-amendment provisions of the Civil Code yet allowed them to continue to be applied until a certain deadline was the need to maintain the minimum legal basis for implementing the legal reserve system.

This cannot be interpreted as an intention to continue maintaining the state in which the contribution share and the legal reserve share are severed, thereby infringing upon the legitimate interests of the contributing heir, until the implementation of corrective legislation.

Therefore, the part of Article 1118 of the Civil Code prior to amendment that did not apply Article 1008-2 concerning the contribution to the legal reserve of inheritance must be considered to be in a state of suspension of application following the decision of constitutional incompatibility.

In principle, the determination of whether and to what extent remedial legislation applies retroactively falls within the discretion of the legislature. However, considering the intent of a decision of constitutional incompatibility and the effectiveness of concrete normative control, the retroactive effect extends not only to the specific case at hand but also to cases pending in court at the time of the decision where the provisions of the old law served as a prerequisite for the trial.

Even if these cases are not included within the scope of application of the transitional measures in the supplementary provisions of the amended Civil Act, the old law cannot be applied as is, and the provisions of the new law, from which unconstitutionality has been removed, must be deemed to apply.

Since this case was pending in court at the time of the decision of constitutional nonconformity, the retroactive effect of the decision of constitutional nonconformity applies even if Mr. B did not separately file an application for a constitutional challenge.

However, since the lower court considered the two apartments as special gains of Mr. B and included them in the basic assets for calculating the legal reserve of inheritance based on the premise that the old law applies, this can no longer be maintained.

For additional articles on Korean Inheritance Law, please see: IPG Legal’s Estate & Inheritance Law Archive. To schedule a call with Seaen Hayes please schedule a call at: Schedule a Call with Sean Hayes.

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