Inheriting Assets in Korea: Why It’s Not Always Good News for Overseas Heirs
For heirs living abroad, inheriting substantial assets in Korea is not always entirely good news. In South Korea, inheritance tax (상속세) must typically be paid within six months of the commencement of the inheritance. While this deadline can be extended to nine months if at least one heir resides overseas, the obligation to pay within the prescribed period remains the same. Missing the deadline results in penalties for late filing and delayed payment. If you lack immediate liquidity, you may ultimately need to remit funds from abroad just to cover the tax bill.
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The Challenge: Compensation in Bonds, Not Cash
That was precisely the situation faced by one of our clients. They inherited land from their mother that had already been acquired by LH, the Korea Land and Housing Corporation (한국토지주택공사), a state-owned entity that purchases private land for housing and urban development projects. LH purchases land through negotiations with landowners and pays compensation in return. However, LH’s internal regulations mandate that absentee landowners, who those not residing on or personally farming the land, receive compensation exceeding KRW 100 million in the form of bonds rather than cash. As a U.S. resident, our client fell squarely into this category. They were left holding certificates that could not be converted into cash immediately, while the tax payment deadline remained fixed.
Beyond Standard Legal Service: The SLG Difference
At many other law firms, the matter might have ended there. They likely would have accepted the bonds in accordance with LH’s standard policy and advised the client to transfer the necessary funds from the United States to cover the taxes. From a legal standpoint, this would have been entirely proper, and the law firm would still have fully performed its responsibilities.
However, Seoul Law Group took a different approach. We understood the difficulty of having to raise and remit a substantial sum from overseas, and proactively engaged in multiple rounds of negotiations with LH representatives. We prepared a detailed breakdown of the projected inheritance tax (상속세), capital gains tax (양도소득세), and acquisition tax (취득세) liabilities, and requested that at least the amount necessary to satisfy those taxes be paid in cash. The process required navigating internal approvals within LH, and we were not able to secure the full amount in a single attempt.
The Result: Zero Out-of-Pocket Cost for the Client
Our persistence paid off. We secured enough cash to cover the entire tax obligation. Our client did not have to send a single dollar from the United States to Korea. After all taxes were settled, the remaining bonds were converted into cash and the full proceeds were remitted to the client’s U.S. account.
Your Choice of Counsel Matters
Inheritance procedures in Korea are complicated even for those living there. Most law firms focus on completing the legal tasks requested by the client in a compliant manner, and in most cases, that is considered sufficient. No one specifically asked us to negotiate with LH. Legally and procedurally, it was not something we were required to do. But if there was a way to prevent our client from having to raise a substantial sum from overseas, we believed it was something we should do. The law firm you choose can make a difference — both in the process you go through and in the amount you ultimately receive. If you are facing a similar situation, we encourage you to contact us for a consultation.