[Updated: August 7, 2020]
- 1 Who Shall Have a Right of Property Division in Korea?
- 2 How to Divide Marital Assets in Korea
- 3 When Can I Ask for Property Division under Korean Law?
- 4 How To Secure and Collect Your Right of Property Division
- 5 Property Division and Korean Taxes
- 6 Protection by Prenuptial Agreement in Korea
Who Shall Have a Right of Property Division in Korea?
Korean divorce law allows a claim for the division of property. It is a statutory right of any party divorcing under Korean divorce law. It means even a spouse who is responsible for the marriage breakdown has the right, too. Some people think a spouse at fault is not awarded this right, but that is not true. There was a court case where even a spouse who cheated on the wife can claim for property division.
The division of property shall be determined by the parties’ agreement first. If no agreement is made or if it is impossible to reach an agreement, the Family court shall, upon the petition by the party, determine the amount and method of division.
How to Divide Marital Assets in Korea
What is the Subject of Property Division in Korea?
The subject of division is any and every marital asset. Marital asset means a property acquired during the marriage by the contributions from both parties. There is an exception that a premarital asset is subject to property division. We will explain this later in this article.
The name of the title doesn’t matter here. For example, a house that is registered under the wife’s name still becomes the subject. That is very common in Korea where a foreign spouse, usually a foreign husband, chooses to register the ownership of the real property under his Korean wife’s name. The same applies to the savings account. Even assets such as stocks put into a 3rd party’s trust account can be distributed when the beneficiary divorces.
Pension and Severance Pay
The pension and severance pay shall become the subject of property division.
The debts are also divided.
What Is Excluded from the Property Division in Korea?
In principle, assets acquired before the marriage and assets acquired during the marriage without any contribution from the other spouse (“non-marital assets”) are not split by the property division. For example, an inheritance or gifts from the parents, lottery winnings are typical non-marital assets in Korea.
The Supreme Court of Korea, however, acknowledges one exception to this. If the value of the non-marital assets was maintained or increased by the active and substantial efforts by the other, the other spouse can take some portion out of the non-marital assets corresponding to his/her contribution.
Please note that, unlike a distribution of marital assets, it requires “active and substantial contribution”. Just doing housework, for example, is not enough to assert the contribution share to the non-marital assets.
The duration of the marriage is important. The Korean court has a strong tendency to deny the property division claim to the non-marital assets when the duration is short. For example, there was a court case that a wife who had married for only 3 years cannot claim the distribution of the real property which the husband had inherited from his parent.
How to Divide the Marital Assets in Korea: Equitable Distribution
Then the next issue is how the marital assets are divided under Korean law. Korea follows the equitable distribution approach. Unlike a community property regime where the marital assets are divided equally between the spouses, in Korea, the party can only get an equitable share according to his/her contribution.
For example, if the parties have the same contribution and the same degrees of earning, then the equitable shares of each party shall be 50:50.
In this regard, the court takes into account a variety of factors such as the parties’ ages, occupations, duration of the marriage, the reason why they came to a divorce, financial contribution to the property.
As for the equitable share of a full-time housewife, doing housework itself is treated as a contribution. But when the duration of the marriage is short and the value of the assets is high, the Korean court has a tendency to limit the wife’s share at a very low level.
The court may order the whole or partial transfer of the marital assets according to the equitable shares or order the other party to pay money in lieu of the ownership transfer.
When Can I Ask for Property Division under Korean Law?
The claims for a division of property under Korean law shall be extinguished at the expiration of 2 years from the date of divorce.
How To Secure and Collect Your Right of Property Division
Basically a right of property division granted by the court is a monetary claim in Korea. Therefore, the general process of debt collection can be applied when the other spouse doesn’t honor the property division judgment.
It is a good practice to put a preliminary attachment on any martial assets before you file a property division lawsuit.
Property Division and Korean Taxes
By a property division, a transfer of ownership takes place. However, the Korean tax law doesn’t treat property division as taxable transfer, gift nor income. So there is no Korean tax liability. However, when a spouse receives an ownership transfer of real property, the party should pay an acquisition tax.
Protection by Prenuptial Agreement in Korea
Some may consider entering into a prenuptial agreement in order to fully protect their premarital assets. However, this has some limitations under Korean law.
Read Further: Prenuptial Agreement under Korean Law
If you have any questions about the property division issue in Korea, please contact us. Our Korean divorce lawyers will be able to help you competently.
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Because of the generality of this update, the information provided herein, which may or may not reflect the most current legal development, may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.