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Understanding Gifts Effective Upon Death in Korea: Death-Bed Gift Agreement 사인증여

A "gift effective upon death," or 사인증여 (sainjeungyeo), refers to a special type of gift contract that only takes effect once the donor has passed away. This legal concept can be useful when planning how to transfer assets without going through the more formal process of creating a will. Here’s what you need to know about this type of gift:

1. Definition of a Gift Effective Upon Death

This type of gift is made through a contract while the donor is still alive, but its effects are postponed until after the donor’s death. It is similar to a bequest in a will but involves the formal consent of the recipient at the time of the contract signing [1].

2. Legal Status and Requirements

According to Korean Civil Law, Article 562, gifts that take effect upon the donor's death are treated similarly to bequests (유증). This means that certain rules applying to bequests also apply to these gifts "mutatis mutandis," which means “with the necessary changes being made” [5].

3. Comparison to Other Transfers

  • Gifts in Life (증여): These are immediate and irrevocable transfers. Once the property is handed over, it belongs to the recipient, unless specific conditions are breached.

  • Bequests (유증): These are part of a will, and no agreement is required from the recipient before the death of the donor, but need a legal process like a witnesses, notary and other legal signatures.

  • Gifts Effective Upon Death (사인증여): Unlike a typical bequest, these require agreement from both parties, thus forming a contract that will only have effect after the donor passes away.

4. Revocation of a Gift Effective Upon Death

These contracts can be revoked before the donor's death, similar to how a will can be changed or canceled. Under Korean law, it is possible to cancel such a gift if conditions change, making this form of asset transfer more flexible compared to an irrevocable lifetime gift [4].

5. Practical Use

Although not as common as creating a will, using a "gift effective upon death" is a way for individuals to provide certainty to a particular recipient while retaining control over their assets during their lifetime. This method is often used to provide financial security to close family members or charitable organizations, ensuring that these gifts cannot be contested easily after the donor's death.


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Korean Tax Blog

Joseph SY Zoh

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