Korean Annuity and Trust Beneficial Interest Gift Valuation Calculator
Value a Korean annuity right or trust beneficial interest for gift or inheritance tax under the 2026 rules: 3% present value, life expectancy for life annuities, the 20-times cap, the surrender lump-sum rule and split income and principal rights, then compare gift tax and the donee’s net value by gift form.
South Korea 2026 · Inheritance and Gift Tax Act Article 65 · Decree Articles 61 and 62 · Rule Article 19-2 (3% a year)
Initial values are a fictional example. Replace them with the contract’s payment and term and the surrender value the insurer or trustee quotes for the gift date. The same rules value the right at the date of death on inheritance; this calculator does not recompute the whole inheritance tax.
Valuation and gift tax by option
3% present value
157,993,421 KRW
Lowest-tax option
Surrender and gift the cash
Highest net value to the donee
Gift the annuity right as it is
Gift tax filing deadline
2027-02-28
| Option | Basis | Value | Tax base | Computed tax + surcharge | Filing credit | Gift tax | Net to donee |
|---|---|---|---|---|---|---|---|
| Gift the annuity right as it is | 3% present value | 157,993,421 KRW | 107,993,421 KRW | 11,598,684 KRW | 347,960 KRW | 11,250,724 KRW | 146,742,697 KRW |
| Surrender and gift the cash★ lowest tax | Cash after surrender costs | 150,000,000 KRW | 100,000,000 KRW | 10,000,000 KRW | 300,000 KRW | 9,700,000 KRW | 140,300,000 KRW |
Value = max(Σ annual payment ÷ 1.03ⁿ, surrender lump sum). Fixed-term values cannot exceed 20 times one year, perpetual equals 20 times, and life annuities discount up to the truncated life expectancy. Net to donee = economic value at the same 3% − gift tax.
View the yearly discount schedule (17 years)
| Year | n | Amount | Factor 1/1.03ⁿ | Present value |
|---|---|---|---|---|
| 1 | 1 | 12,000,000 KRW | 0.970874 | 11,650,485 KRW |
| 2 | 2 | 12,000,000 KRW | 0.942596 | 11,311,151 KRW |
| 3 | 3 | 12,000,000 KRW | 0.915142 | 10,981,700 KRW |
| 4 | 4 | 12,000,000 KRW | 0.888487 | 10,661,845 KRW |
| 5 | 5 | 12,000,000 KRW | 0.862609 | 10,351,305 KRW |
| 6 | 6 | 12,000,000 KRW | 0.837484 | 10,049,811 KRW |
| 7 | 7 | 12,000,000 KRW | 0.813092 | 9,757,098 KRW |
| 8 | 8 | 12,000,000 KRW | 0.789409 | 9,472,911 KRW |
| 9 | 9 | 12,000,000 KRW | 0.766417 | 9,197,001 KRW |
| 10 | 10 | 12,000,000 KRW | 0.744094 | 8,929,127 KRW |
| 11 | 11 | 12,000,000 KRW | 0.722421 | 8,669,055 KRW |
| 12 | 12 | 12,000,000 KRW | 0.701380 | 8,416,559 KRW |
| 13 | 13 | 12,000,000 KRW | 0.680951 | 8,171,416 KRW |
| 14 | 14 | 12,000,000 KRW | 0.661118 | 7,933,414 KRW |
| 15 | 15 | 12,000,000 KRW | 0.641862 | 7,702,343 KRW |
| 16 | 16 | 12,000,000 KRW | 0.623167 | 7,478,003 KRW |
| 17 | 17 | 12,000,000 KRW | 0.605016 | 7,260,197 KRW |
Total 157,993,421 KRW — terms are summed precisely and truncated to the won. 20 × one year = 240,000,000 KRW. Life expectancy used: 17 years.
If you keep it until inheritance
Inheritance tax applies the same Article 65 and Decree Articles 61 and 62 with the date of death as the valuation date. A life annuity that ends at the annuitant’s death leaves nothing; a remaining guarantee period passing to survivors is valued as a fixed-term annuity. This calculator does not recompute the whole inheritance tax.
The life expectancy is interpolated from five-year 2024 life table values. Before filing, replace it with the single-age KOSIS value (truncated) and recalculate.
Changing the policyholder or beneficiary of an annuity insurance policy can also be taxed as an insurance-proceeds gift (Act Article 34). Check who paid the premiums and the payout start with the death-benefit calculator and an adviser.
The lowest-tax option is not the one with the highest net value to the donee. Surrendering lowers the taxable value but gives up the remaining annuity value, so do not choose on tax alone.
Why gifts of annuity and trust rights start with the valuation
An annuity policy that has started paying, or a trust that yields income every year, has no visible market price like real estate or a deposit.
So when parents in Korea transfer an annuity right to a child or change a trust beneficiary, it is hard to know what value to report for gift tax.
Article 65 of the Inheritance and Gift Tax Act requires rights to periodic payments and trust beneficial interests to be valued by presidential decree according to their nature and remaining term.
Four rules matter most.
First, future payments are valued at their present value discounted at 3% a year.
Second, a life annuity is discounted only up to the life expectancy by sex and age, with decimals truncated.
Third, a fixed-term annuity cannot exceed 20 times one year’s payment, and a perpetual annuity equals 20 times one year.
Fourth, if the lump sum obtainable by surrender or revocation on the valuation date is larger, that lump sum is the value.
The calculator applies the statutory formulas to annuities and trust income rights and compares gift tax and the donee’s net value for gifting the right as it is, surrendering and gifting cash, or splitting income and principal rights.
Defaults are a fictional example and do not represent a real contract or a tax office decision.
Valuation rules for annuities and trust rights at a glance
The formula depends on whether the asset is an annuity or a trust and whether the term is fixed.
The table summarises Decree Articles 61 and 62 and Rule Article 19-2.
| Type | Formula | Limit or special rule | Basis |
|---|---|---|---|
| Fixed-term annuity | Σ annual payment ÷ (1 + 3%)ⁿ | Cannot exceed 20 times one year’s payment | Decree Article 62(1) |
| Perpetual annuity | 20 × one year’s payment | No discounting | Decree Article 62(2) |
| Life annuity | Σ annual payment ÷ (1 + 3%)ⁿ up to the life expectancy | Life expectancy by sex and age, decimals truncated | Decree Article 62(3) |
| Trust: same principal and income beneficiary | Trust property value on the valuation date | Use the surrender lump sum if larger | Decree Article 61(1)1 |
| Trust: income right | Σ (annual income − withholding equivalent) ÷ (1 + 3%)ⁿ | Undetermined yield = principal × 3% | Decree Article 61(1)2(b) |
| Trust: principal right | Trust property value − income right | Undetermined period = 20 years or life expectancy | Decree Article 61(1)2(a) and 61(2) |
In every case the provisos of Decree Articles 61(1) and 62 apply: if the lump sum obtainable by revoking, surrendering or cancelling the contract on the valuation date exceeds the formula value, the lump sum is the value.
Formulas: 3% present value versus the lump sum
Annuity valuation
- Present value PV = Σ A ÷ 1.03ⁿ (A = one year’s payment, n = years elapsed from the valuation date)
- Fixed-term = min(PV, A × 20), perpetual = A × 20, life annuity = PV up to the life expectancy
- Value = max(formula value, surrender or revocation lump sum on the valuation date)
Trust income and principal rights
- Annual net income = principal × yield (3% if undetermined) − withholding equivalent (15.4% for interest and dividends)
- Income right = Σ annual net income ÷ 1.03ⁿ (n = 1 … years to the income date; 20 years or the life expectancy if undetermined)
- Principal right = trust property − income right; both rights together = trust property value
Gift tax
- Taxable value = value + gifts from the same donor (including a lineal ascendant’s spouse) within 10 years when they total KRW 10 million or more
- Tax base = taxable value − exemption (spouse KRW 600 million; from lineal ascendants KRW 50 million for adults and KRW 20 million for minors; other relatives KRW 10 million; 10-year totals)
- Computed tax = tax base × 10–50% progressive rates, plus a 30% surcharge for grandchildren (40% for a minor receiving over KRW 2 billion)
- Final tax = computed tax + surcharge − credit for prior gift tax − 3% filing credit
If the first payment is one year after the valuation date, n starts at 1.
If a payment on the valuation date is still outstanding you can choose n = 0, but payments already received are not valued, so confirm the actual payment date.
How to use the calculator
- Choose the gift date and the asset.
The gift date is the valuation date, and the filing deadline (three months after the end of the gift month) is calculated from it.
Choose an annuity or a trust beneficial interest. - For an annuity, enter the payment terms.
Enter one year’s payment, the type (fixed-term, perpetual or life), remaining years, first payment timing and the surrender value the insurer quotes for the gift date.
For a life annuity enter the sex and age of the person whose life expectancy applies, or type the table value directly. - For a trust, enter the principal and income terms.
Enter the trust property value, any fixed yield (otherwise 3%), the withholding rate, the income period and the lump sum on surrendering the whole trust.
Tick the box if the settlor keeps revocation or beneficiary-change powers. - Enter the donee and gifts within 10 years.
The relationship sets the exemption, and gifts from the same donor within 10 years are added when they total KRW 10 million or more. - Compare the options.
Compare the value and its basis, gift tax and the donee’s net value, open the yearly discount schedule and save a TXT with the checklist.
Fictional example 1: life annuity right versus cash after surrender
A 72-year-old mother receiving KRW 12,000,000 a year from a life annuity policy plans to transfer the right to an adult child on 2026-11-30.
The first payment falls one year after the valuation date, and the insurer quotes a surrender value of KRW 150,000,000 on the gift date.
Interpolating the built-in 2024 life table values (female 19.2 years at 70 and 15.0 years at 75) gives 17.52 years at 72, truncated to 17 years.
| Option | Value (KRW) | Basis | Tax base (KRW) | Gift tax (KRW) | Net to donee (KRW) |
|---|---|---|---|---|---|
| Gift the annuity right as it is | 157,993,421 | 3% present value | 107,993,421 | 11,250,724 | 146,742,697 |
| Surrender and gift the cash | 150,000,000 | Surrender value | 100,000,000 | 9,700,000 | 140,300,000 |
Seventeen years of KRW 12 million discounted at 3% give KRW 157,993,421, larger than the surrender value, so it is the value of the right.
After the KRW 50 million adult-child exemption the tax base is KRW 107,993,421, computed tax KRW 11,598,684, filing credit KRW 347,960 and gift tax KRW 11,250,724.
Giving KRW 150 million cash after surrender costs KRW 9,700,000 of tax, KRW 1,550,724 less, but the donee’s net value of KRW 140,300,000 is KRW 6,442,697 below the KRW 146,742,697 of the annuity option.
Counting the first payment at n = 0 raises the present value to KRW 162,733,224, and a 25-year fixed-term annuity of KRW 12 million is KRW 208,957,772, within the KRW 240 million 20-times cap.
Fictional example 2: splitting trust income and principal rights
A money trust with KRW 500 million principal, an undetermined yield (principal × 3%), 15.4% withholding and a 10-year income period is gifted to an adult child.
Annual income of KRW 15,000,000 less KRW 2,310,000 withholding leaves annual net income of KRW 12,690,000.
| Option | Value (KRW) | Gift tax (KRW) |
|---|---|---|
| Gift only the trust income right | 108,248,273 | 5,650,083 |
| Gift only the trust principal right | 391,751,727 | 56,599,835 |
| Gift the whole trust | 500,000,000 | 77,600,000 |
| Surrender and gift the cash | 480,000,000 | 73,720,000 |
The income right is KRW 12,690,000 a year discounted over 10 years at 3%, KRW 108,248,273, and the principal right is the remaining KRW 391,751,727.
The two rights add up to the trust property, so giving them to different people can lower each donee’s tax base.
If the settlor keeps revocation or beneficiary-change powers, however, each payment date becomes the gift date and this lump valuation does not apply as is.
Four things to compare when choosing the gift form
Gift the right as it is
Change the policyholder and beneficiary so the remaining annuity passes over.
The value is the larger of the present value and the surrender lump sum, and the donee keeps receiving the payments.
Surrender and gift cash
A smaller surrender value lowers the taxable value and the tax.
But surrender taxes and fees and the lost annuity value must be weighed through the net value.
Split trust income and principal
The income right is the discounted future income and the principal right is the rest.
Each donee gets a separate exemption and progressive bracket.
Keep it until inheritance
Inheritance tax applies the same rules at the date of death.
A life annuity conditional on the deceased’s survival may leave nothing, and a remaining guarantee period is valued as a fixed-term annuity.
Use cases
Parents receiving an annuity
Parents receiving an immediate or life annuity compare tax and net value of transferring the right versus surrendering and giving cash.
Naming money-trust beneficiaries
Before naming a spouse for the principal and a child for the income, check each right’s value and gift tax.
Preparing the gift tax return
Save the yearly discount schedule and valuation basis as TXT for the valuation statement and an adviser meeting.
Checking underreporting risk
If you planned to report only the surrender value, check whether the present value is larger to avoid the 10% underreporting penalty and 0.022% daily late-payment penalty.
Check before filing
- Get the surrender value as of the gift (valuation) date from the insurer or trustee.
- The default life expectancy interpolates five-year 2024 life table values; replace it with the single-age KOSIS value.
- With split principal and income beneficiaries, one surrender value is not applied to each right; check the lump sum the holder of each right could take.
- If the premium payer and the recipient of an annuity policy differ, the insurance-proceeds gift rule (Act Article 34) may apply separately.
- If the settlor keeps revocation or beneficiary-change powers, each payment date becomes a gift date (Decree Article 25(1)3(b)).
Assumptions
The annual payment is constant, and the terms are summed precisely and truncated to the won.
The marriage and childbirth exemption, annuity or surrender income tax, variable or investment returns and a full inheritance tax recalculation are not included.
Gift tax uses the 2026 five-bracket 10–50% rates, the KRW 500,000 minimum and the 3% filing credit.
Frequently asked questions
If I give an annuity policy to my child, is the gift value the surrender value?
When the annuity has started and you transfer the right to the periodic payments, the gift value is the larger of the Decree Article 62 annuity value and the lump sum obtainable by surrender or revocation on the valuation date.
Filing at a smaller surrender value can be underreporting.
Conversely, if the present value is smaller than the surrender value, the surrender value is the base.
Where does the 3% discount rate come from?
Enforcement Rule Article 19-2(1) and (3) set the rate for trust income rights and periodic payments at 30/1,000 a year.
The current text (MST 284609) was checked through the National Law Information OPEN API on 2026-10-29.
Market rates do not change it until the Rule is amended.
Which table gives the life expectancy for a life annuity?
Decree Article 62(3) uses the life expectancy by sex and age in the statistical table approved and announced by the head of Statistics Korea under Article 18 of the Statistics Act, truncating decimals.
In practice the latest life table published on the valuation date is used, which in October 2026 is the 2024 life table on KOSIS.
The default here interpolates five-year published values, so enter the single-age value before filing.
When does the 20-times cap apply to a fixed-term annuity?
At 3% the present value approaches 20 times one year only when more than about 30 years remain.
A very long fixed term can exceed 20 times, and the value is then capped at 20 times one year’s payment.
A perpetual annuity is always 20 times one year.
Gift tax is lower if I surrender and give cash. Is that better?
If the surrender value is below the annuity’s present value, the cash option has a smaller taxable value and less gift tax.
But the donee gives up the remaining annuity value and receives only cash, so the net value after tax can be smaller.
In the fictional example the cash option saves KRW 1,550,724 of tax but leaves KRW 6,442,697 less net value.
When is gift tax due if my child is named as a trust beneficiary?
Act Article 33 and Decree Article 25 generally treat the day the principal or income is actually paid as the gift date.
For payments in several instalments the whole right is valued at the first payment, but if the settlor keeps powers to revoke or change beneficiaries, each payment becomes a separate gift when paid.
Check the revocation and change powers in the trust deed first.
Does changing the annuity policyholder also raise the insurance-proceeds rule?
If the person who paid the premiums differs from the recipient, Act Article 34 can tax the insurance proceeds as a gift when the insured event occurs (annuity start, maturity or death).
This calculator covers only the annuity valuation and the choice of gift form; it does not allocate premiums.
Check the death-benefit calculator and an adviser.
How is it valued if I keep it until inheritance?
Inheritance tax uses the same Article 65 and Decree Articles 61 and 62 with the date of death as the valuation date.
A life annuity conditional on the deceased’s own survival ends at death and may leave nothing, while a remaining guarantee period paid to survivors is valued as a fixed-term annuity.
Use a separate calculator for the full inheritance tax.
Legal basis and reference date
The current texts were checked through the National Law Information OPEN API on 2026-10-29 (Inheritance and Gift Tax Act MST 276123, Decree MST 290845, Rule MST 284609).
Court decisions on annuity valuation were found but their texts were not returned, so none is cited, and no official interpretation was found.
Life expectancy follows the Statistics Korea 2024 life table (published December 2025, the latest as of October 2026).
- Inheritance and Gift Tax Act, Article 65 (valuation of other rights)
- Enforcement Decree, Article 62 (right to periodic payments)
- Enforcement Decree, Article 61 (trust beneficial interests)
- Enforcement Rule, Article 19-2 (3% annual rate)
- Act Article 33 and Decree Article 25 (gift of trust benefits and timing)
- Act Articles 47, 53, 56, 57 and 69 (aggregation, exemptions, rates, surcharge, filing credit)
- Statistics Korea life tables (KOSIS complete life table)
Check the value before transferring an annuity or trust
With the annual payment, term and the surrender value on the gift date you can compare values and gift tax by option right away.
For insurance-proceeds tax or the full inheritance tax, use the calculators below.
Related calculators
- Death Benefit Inheritance Tax CalculatorDecide whether a Korean life-insurance death benefit is subject to inheritance tax, gift tax, or is non-taxable, based on who paid the premiums (Inheritance and Gift Tax Act Articles 8 and 34, Enforcement Decree Article 4). Apportions the benefit by premium source and estimates the added 2026 inheritance tax.
- Korea Private Annuity Guarantee-Period Survivor Value CalculatorCompare actual insurer monthly-annuity illustrations by owner and beneficiary present value, support gap, and assumed death age.
- Gift and Inheritance Tax CalculatorEstimate Korea-related gift or inheritance exposure under simplified tax and asset-growth assumptions.
- Will-Substitute Trust Estate PlanningWill-Substitute Trust Estate Planning helps estimate Korea-related inheritance acceptance, will dispute, pet trust, estate management, and succession assumptions in English.
- Child Gift Investment Plan CalculatorChild Gift Investment Plan Calculator helps estimate Korea-related gift, inheritance, transfer, or deduction scenarios in English.
- Korean Apartment Gift Valuation Calculator: Appraisal vs Comparable SaleCompare filing a Korean apartment gift at a same-complex comparable sale or at an in-period appraisal: 2026 gift tax, gift acquisition tax and appraisal fee, the 6-month-before to 3-month-after valuation period, the 5% similarity tests and the appraisal threshold.