Will-Substitute Trust Estate Planning

Will-Substitute Trust Estate Planning helps estimate Korea-related inheritance acceptance, will dispute, pet trust, estate management, and succession assumptions in English.

Legal scenario inputs

Enter Korea-related court, traffic, debt, family, civil, medical-dispute, criminal, or real-estate dispute assumptions. Results are simplified planning estimates.

Divisible estate base

₩250,000,000

Claimed share estimate

₩62,500,000

Per-person reference

₩15,625,000

4 heirs or shares

Excluded or disputed share

₩187,500,000

This English page is a simplified Korea-related legal, administrative, digital, consumer, intellectual property, criminal, real-estate, platform, or civil dispute planning estimate. It is not legal advice and does not replace lawyer review, court decisions, police or agency notices, settlement negotiations, official fee tables, or case-specific evidence review.

Related calculators

What is the Will-Substitute Trust Estate Planning Calculator?

This calculator estimates the three things that matter when you design a Korean will-substitute trust (유언대용신탁, Trust Act Article 59): the trust fees you will pay, the inheritance tax that still applies, and the forced-heirship (유류분) infringement risk your beneficiary structure creates. It then compares the trust with an ordinary notarized will so you can decide which route fits your situation.

In a will-substitute trust, the settlor (the asset owner) signs a trust contract with a bank or securities firm (the trustee). While the settlor is alive, the settlor is the beneficiary; after death, the assets pass to pre-named after-death beneficiaries. Unlike a will, the trust takes effect immediately, so it can manage assets during dementia or incapacity, transfer property automatically without heir cooperation at death, and even name second- and third-generation beneficiaries (successive-beneficiary trust, Article 60).

Korea-based estimate (2026 rules). This tool models Korean Trust Act, Inheritance & Gift Tax Act, and Civil Code rules. It is a planning estimate, not legal or tax advice, and does not replace a lawyer, tax accountant, or the trust institution’s own contract terms.

Core structure of a will-substitute trust

Settlor, trustee, and beneficiaries

  • • Settlor: the owner who places assets in trust and generally keeps the right to change the after-death beneficiary (Trust Act Article 59).
  • • Trustee: the bank or securities firm that manages, invests, and transfers the assets.
  • • Lifetime beneficiary: usually the settlor, who receives the trust benefit while alive.
  • • After-death beneficiary: the person who receives the trust property after the settlor dies, similar to a will beneficiary.

Successive-beneficiary trust: designate second-generation heirs

Trust Act Article 60 allows a successive-beneficiary trust, where a beneficiary’s right ends at death and a new person acquires it. For example, “to my spouse first, then to my grandchild.” An ordinary will cannot chain succession across generations, which is one of the trust’s biggest advantages.

How trust fees are structured

  • • Setup (contract) fee: a one-time fee, a percentage of the trust assets, with a floor around KRW 1–3 million.
  • • Management fee: an annual charge that accumulates over the trust period, so a longer trust costs more.
  • • Execution fee: charged when the assets are transferred and settled to after-death beneficiaries.

Korean banks such as Shinhan use a three-part contract/management/execution structure with a minimum of about KRW 3 million; competition has recently produced management-fee-waived products. The calculator offers standard, low-fee, and active-management presets.

Inheritance tax and forced heirship

A trust does not reduce inheritance tax

Inheritance & Gift Tax Act Article 9 treats property the deceased placed in trust as part of the inherited estate. So the trust property an after-death beneficiary receives is still subject to inheritance tax. Under 2026 rules, the tax uses a KRW 500 million lump-sum deduction, a spouse deduction of at least KRW 500 million (up to KRW 3 billion), a financial-asset deduction (20% of net financial assets, capped at KRW 200 million), and progressive rates of 10–50%.

The 2024 reform bill (top rate 50%→40%, child deduction KRW 50 million→500 million) was not passed by the National Assembly, so the current system remains in force in 2026. A trust is not an inheritance-tax-saving product.

Forced heirship is hard to avoid with a trust

Civil Code Article 1112 guarantees lineal descendants and the spouse a forced share (유류분) of one-half of their statutory inheritance share. An early lower-court ruling (Suwon District Court Seongnam Branch, 2017Gahap408489, decided 2020-01-10) excluded trust assets from the forced-heirship base because the trust was set up more than a year before death. However, later Supreme Court reasoning looks at substance — whether the disposition really reduced the deceased’s estate without consideration — so a will-substitute trust cannot be relied on to escape forced heirship.

This calculator conservatively assumes trust assets are included in the forced-heirship base. The more you concentrate assets on one child or a third party, the larger the other heirs’ infringement becomes, so check it while designing the distribution.

Acquisition tax and trusts

The formal transfer of ownership from settlor to trustee is exempt from acquisition tax under Local Tax Act Article 9(3). Taxation at trust termination or when the beneficial right is realized is separate, and trust acquisition-tax practice keeps developing (for example, Supreme Court 2025Du33790, decided 2025-09-25). When you place real estate in trust, also review holding-stage taxes such as property tax and the comprehensive real estate tax.

Will vs will-substitute trust

A notarized will is cheap to set up but takes effect only at death, needs heir cooperation to execute, and cannot designate second-generation heirs. A will-substitute trust takes effect immediately, enables lifetime asset management and dementia planning, transfers assets automatically through the trustee, and can chain succession across generations. In exchange, trust fees are higher than notary fees, the inheritance tax is the same, and forced heirship still applies.

So the key question is whether lifetime management, automatic execution, and multi-generation succession are worth the extra cost. Use the comparison table, then consult a trust specialist, tax accountant, or lawyer.

Frequently asked questions

Q. Does a will-substitute trust lower inheritance tax?

A. No. Under Inheritance & Gift Tax Act Article 9, trust property is included in the estate, so the tax is the same as with a will.

Q. Can a trust avoid forced-heirship claims?

A. It is difficult. Early rulings excluded trust assets, but recent Supreme Court reasoning looks at economic substance, so a trust is not a reliable way to avoid forced heirship.

Q. How much are the trust fees?

A. It varies by institution: setup fees start around KRW 1–3 million, management fees accrue annually, and an execution fee applies at death. Longer trusts accumulate more management fees.

Q. Can I designate my grandchild as a later heir?

A. Yes. A successive-beneficiary trust (Trust Act Article 60) lets you name second- and third-generation beneficiaries.

Simulate your will-substitute trust plan

Check trust fees, inheritance tax, and forced-heirship risk in numbers, and compare with a will.

All calculations run in your browser; the asset figures you enter are never sent to a server.