"Renouncing Child Inheritance Aimed to Prevent Debt Succession"
Significant Ruling by Supreme Court Plenary Session
Parliament Passes 'Minor Debt Inheritance Prevention Act'
The protagonist Lee Ji-an (played by IU) in the drama "My Mister" inherited private loan debt at the tender age of just six. Ji-an struggles to repay the inherited debt, working various part-time jobs from a young age to make ends meet.
In her small, unlit single room, Ji-an eats food she brought from the restaurant where she works part-time, and to soothe her hunger and exhaustion, she drinks two or three coffee mixes at once. Many viewers felt heartbroken watching Ji-an struggle to repay her debt but still fall short.
A recent precedent has emerged that can minimize the suffering of those like Ji-an, who inherit massive debts against their will. On the 23rd, the Supreme Court plenary session ruled that if the parents renounced the inheritance of their deceased parents' debts, the grandchildren do not have to repay them instead.
In Ji-an’s case, since she inherited her parents’ private loan debt, it is not exactly the same as the precedent. However, this ruling is significant in that it can prevent the harmful cycle of debt inheritance.
In April 2015, Mr. A passed away without being able to repay his debts. Mr. A’s spouse chose limited approval, repaying debts only within the inherited estate, while Mr. A’s children chose to renounce the inheritance.
The problem was that due to the children’s renunciation, the debt passed on to their children, i.e., Mr. A’s grandchildren. Four grandchildren who were minors at the time of Mr. A’s death did not file renunciation of inheritance.
Under the previous system, the grandchildren would have to repay the debt together with Mr. A’s spouse. This is based on a 2015 Supreme Court ruling that if all children renounce inheritance, the spouse and grandchildren or direct ascendants become joint heirs.
However, the Supreme Court recently overturned the ruling from eight years ago, recognizing that Mr. A’s children renounced inheritance to prevent the debt from being passed on to their own children. It is also highly likely that Mr. A’s spouse chose limited approval to prevent the debt from being inherited and to bear the debt alone.
The Supreme Court stated, "It is natural to view that the children who renounced inheritance did so to fundamentally prevent the debt of their parents from being inherited not only by themselves but also by their children. Nevertheless, considering the grandchildren as joint heirs contradicts the expectations and intentions of the parties involved and the general legal sentiment of society."
The Supreme Court judged that "even looking at the practice after the previous ruling that considered grandchildren as joint heirs, the precedent should be changed." Many cases were found where, even if the spouse and grandchildren became joint heirs, the grandchildren subsequently renounced inheritance through proper procedures, resulting in the spouse becoming the sole heir. The Supreme Court said, "This is a futile procedure that wastes time and costs, so it is necessary to clarify the legal relationship by changing the precedent."
Similarly, the National Assembly passed the "Minor Debt Inheritance Prevention Act" at the end of last year to help cases where minors inherited parental debts due to lack of legal knowledge or ability to respond. If a legal representative missed the opportunity for limited approval, the minor child can apply for limited approval within a certain period after reaching adulthood.
In Ji-an’s case, she can receive help under this law. Ji-an was six years old and a minor when she inherited the debt, and although she could have chosen limited approval or renunciation of inheritance, she had no adults around to help her and had to bear the debt alone. By choosing limited approval through this law, she would only have to repay the debt within the limits of the inherited estate.
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