Supreme Court: Giving Up Inheritance to Avoid Debt Is Unjustified

The Supreme Court ruled yesterday that if a debtor renounces his or her inheritance in order to avoid debt payment, the debtor’s behavior amounts to inflicting harm.

A female known only by her surname Oh, borrowed 64 million won from her friend, Lee, 53, in December 1997. She paid back 30 million won but failed to pay back the rest of the borrowed money.

Oh was supposed to receive a real estate inheritance following her husband’s death in July 2001, but she handed down her inheritance, a third of the real estate, to her daughter, Kim, 23, to avoid paying off the debt. The creditor filed a lawsuit against Kim after Kim sold her inherited property in July 2005.

The high court decided yesterday, “If the renouncement of inheritance rights by a debtor induces the loss of property a creditor can secure, it would amount to incurring property damage to the creditor. Thus, the debtor has to compensate the creditor for the loss of his property because the property sold can not be returned to the creditor.”

Out of the 125 million won Kim gained from her property sales, Kim has to repay debts of 10 million won, a third of the 30 million won she owes.

will71@donga.com