Regarding the meaning, procedure and effect of the “Limited Approval” for a Foreign heirs
Limited approval (Limited Recognition, Qualified approval) means an expression of intent by an heir who approves inheritance on the condition that he/she repays the debts and testamentary gift of the ancestor within the limit of the property to be acquired by inheritance procedure. In general, it is a measure that an heir can take when it is expected that the inherited debt of the ancestor is greater than the inherited property or when the size of the inherited debt is not well known. If even one of the co-heirs gives qualified approval and the other co-heirs give up inheritance, the subordinate will not become the heir. So, in some cases, limited approval is given with these legal effects to the subordinates. Such limited approval can be made within three months from the date of knowing that there is an inheritance, similar to the renunciation of inheritance (Article 1019 Paragraph 1 of the Civil Code). However, in the case of simple approval without knowing within the above period without gross negligence that the inherited liability exceeds the inherited property, limited acceptance may be granted within three months from the date of knowing the fact. (Civil Law Article 1019 Paragraph 3, Special Approval).
Limited approval is made by the heir attaching a property list and reporting it to the family court having jurisdiction over the last domicile of the ancestor (deceased). The Family Court accepts the report of limited approval unless it is illegal. In other words, the Family Court can examine only the legitimacy of the report of limited acceptance and not the validity of its contents. Therefore, the acceptance of the report of qualified acceptance by the family court is only a kind of notarial act proving that there was a report of qualified acceptance of inheritance and that it was accepted. Acceptance of a report of limited approval by the Family Court shall be in the form of a written judgment. In other words, when a report of limited approval is filed, the court issues a written judgment on the acceptance of a report of limited approval. However, the judgment on the acceptance of the report of limited approval as above only means that it is recognized that the requirements for limited approval are satisfied, but it does not confirm its effect. The final determination as to the validity of the limited acceptance is a matter to be determined in the civil proceedings of the dispute in accordance with the substantive law.
An heir who has given limited acceptance (hereinafter referred to as a 'limited acceptor') has the duty to liquidate inheritance claims, etc. with the inherited property while managing the inherited property with the same care as for the original property. As for the procedure, first of all, within 5 days from the date of limited acceptance, the fact of limited acceptance to general inheritance creditors and legatees and the declaration of the claim or bequest within a certain period of two months or longer is to be published at least once in a newspaper selected by the family court and for each creditor known to the qualified approver, he shall give notice of the claim. For this reason, it may cost a newspaper advertising fee and a content certification postage fee to urge the report of bonds. However, if there is nothing to repay to inherited creditors, etc., because there is no inherited property in the first place, the newspaper announcement may not be made.
Unlike the bankruptcy system, there is no bankruptcy trustee, no limited approval is disclosed, and no creditor meeting is held, so the role of distributing inherited property equally for inheritance creditors is left to the actions of the limited approver. In other words, the Civil Act only stipulates the method of repayment to be made by the qualified acceptor from Articles 1033 to 1036, and the Family Court does not directly participate in the repayment of inheritance creditors. Therefore, even if the payment by the qualified acceptor violates the payment method prescribed by the Civil Act, the effect of the payment is not affected. However, the qualified acceptor shall be liable for damages in the case of unreasonable repayment, and the obligee or legatee who has not received repayment may exercise the right of indemnity against the person who has received the repayment after knowing such circumstances.
On the other hand, if it is found that the inherited property is unable to fully satisfy the debt to the inherited creditor and the person who received the legacy, the qualified acceptor may file an application for bankruptcy of the inherited property with the rehabilitation court. In this case, the bankruptcy trustee selected by the rehabilitation court appropriately converts the inherited property into cash and fairly repays the inheritance creditors, etc., so that the limited acceptor can also relieve the burden and responsibility of liquidation work. If there are many stakeholders, such as inheritance creditors, it would be clearer and more reasonable to file for bankruptcy of inherited property.
In conclusion, in the limited approval system, the court only accepts reports, but does not do the work of liquidating inherited claims with inherited property. The above work should be performed by the limited approver. Inheritance creditors and limited acceptors should keep this in mind. Whether the above procedure is illegal or unlawful will have to be resolved through a separate civil lawsuit.