SOUTH KOREA Law and Practice Contributed by: Woong-kyu Cho, Ji-eun Kim and Hyun-kyung Kim, Barun Law LLC
Although parties to a de facto marriage or cohabita - tion may enter into agreements concerning person - al care, property ownership or other matters, such agreements are ordinary private contracts effective only between the parties. They do not constitute a marital property agreement under the Civil Act and generally cannot be asserted against third parties. Nevertheless, property may be voluntarily transferred to a de facto spouse during lifetime, and a person may leave all or part of their estate to a de facto spouse by will. Where a person dies intestate without any statutory heirs, the surviving de facto spouse may claim all or part of the estate by establishing a special relationship with the deceased, such as having shared a livelihood or provided long-term care, under Article 1057-2 of the Civil Act. Korea encourages charitable giving through tax incen - tives and the public interest corporation system. The principal legislation includes the Income Tax Act, the Corporate Tax Act, the Inheritance Tax and Gift Tax Act, and the Act on the Establishment and Opera - tion of Public Interest Corporations. Where statutory requirements are satisfied, donated property is exclud - ed from the inheritance or gift tax base. Depending on the status of the recipient organisation, donors may also receive income tax credits or deductions. These benefits are available only where donations are made to state-recognised public interest organi - sations established for purposes such as education, charity, culture or healthcare, and the applicable post- donation compliance requirements are satisfied. 10. Charitable Planning 10.1 Charitable Giving
Accordingly, Korea’s charitable giving regime seeks to encourage philanthropy through tax incentives while safeguarding the public interest through ongo - ing compliance and disclosure obligations. Although charitable giving has traditionally played a limited role in inheritance planning, it is increasingly used to com - bine philanthropic objectives with long-term wealth succession. 10.2 Common Charitable Structures In Korea, the principal vehicles for charitable inher - itance planning are public interest corporations (typically non-profit foundations) and public inter - est trusts. A public interest corporation establishes an independent legal entity funded by contributed assets, providing long-term continuity. However, it is subject to significant regulatory requirements, includ - ing establishment authorisation from the competent governmental authority, ongoing approvals, public disclosure, and audits. In addition, donations of vot - ing shares exceeding 5% are generally excluded from the available tax exemption. Public interest trusts have become increasingly popu - lar in recent years. They do not require the creation of a separate legal entity and need only be established through a trust authorised by the Ministry of Justice, so they involve simpler procedures and lower operat - ing costs, apart from trustee fees. However, they are limited to the trust term, provide the settlor with lim - ited involvement in the management of the donated assets, and, because trustees are typically financial institutions, may lack expertise in operating special - ised charitable assets.
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