Case on Inheritance by Default

[10-2 KCCR 339, 96Hun-Ka22 et al., August 27, 1998]

A. Background of the Case

In this case, the Constitutional Court delivered a decision of nonconformity to the Constitution for Article 1026 Item 2 of the Civil Act (hereinafter referred to as the “Inheritance by Default Provision”) that imputes absolute acceptance to an heir who fails to effect qualified acceptance or renunciation within three months from the date of his or her knowledge of the inheritance.

The petitioners had passed the three-month period of consideration having been unaware of the amounts of debt of the deceased, for reasons not imputable to them. The petitioners filed suit, during which they motioned for request for constitutional review of the aforementioned provision. The requests were granted and were referred to the Court.

B. Summary of the Decision

The Court delivered a decision of nonconformity to the Constitution and temporary application for the Inheritance by Default Provision, for the following reasons.

The phrase “the day the inheritor becomes aware of the commencement of the inheritance” of Article 1026 Item 2 of the Civil Act is accepted to mean the day the inheritor becomes aware of the death of the inheritee, by which the inheritance commences, and thus recognizes that he or she has become the inheritor. In light of this interpretation, the provision may impose all the liabilities of the deceased on the inheritor after three months of such date even when, due to no fault of their own, they did not know that the negative assets exceeded the positive ones, thereby not selectively accepting or renouncing the inheritance. This infringes on the inheritor’s right to property guaranteed under the Constitution.

Nowadays extended families are dissolving into nuclear ones. Inheritors often live far from the inheritees, and business transactions have become more complicated. Thus, it is now difficult for inheritors to learn the details about the inherited assets within the period of consideration. Moreover, when the inheritee has signed a floating guarantee agreement for undetermined future debts arising

out of a continuing business relationship, the principal obligation may arise even after the period of consideration of three months. In such cases, it is likely that inheritors fail to partially acknowledge or renounce the inheritance, not knowing that the negative assets exceed the positive ones. Nonetheless, the Inheritance by Default Provision imposes all the inherited debts on the inheritors regardless of what the reason may be after three months, with no chance for qualified acceptance or renunciation. This is not an appropriate means of restricting fundamental rights.

Provided, as the immediate revocation of the Inheritance by Default Provision would incur a legal vacuum or confusion, the Court delivers a decision of nonconformity to the Constitution instead of unconstitutionality, and suspends the application of the provision until revision by December 31, 1999.

C. Aftermath of the Case

In the amendment of the Civil Act by Act No. 6591 on January 14, 2002, the National Assembly added Article 1019 Section 3, prescribing that where an inheritor has made an absolute acceptance without knowing the fact that his or her inherited liability exceeds his inherited property within three months of being informed of the commencement of the inheritance without any gross negligence, a qualified acceptance may be made within three months from the date of becoming aware of the fact.

Provided, Section 3 of the Addenda, as a transitional measure, prescribed that from among those who have known the commencement of inheritance from May 27, 1998 (date of the decision of nonconformity to the Constitution) to before the enforcement of the amended Civil Act, a person who has failed to make a report on a qualified acceptance, as he or she has not known the fact that the inherited liability exceeds the inherited property within the three-month period of consideration without any gross negligence but comes to know such fact before the enforcement of the amended Civil Act, may make a qualified acceptance under the amended provision of Article 1019 Section 3 within three months from the date of enforcement of the amended Civil Act. However, in the event he or she fails to make a qualified acceptance within such period, he or she shall be deemed to have made an absolute acceptance.

A constitutional complaint was filed against this Addenda provision (2002Hun-Ba40 et al.), and the Court, on January 29, 2004, delivered a decision of nonconformity to the Constitution on the grounds that it infringed the right to equality or right to property of the inheritors who had been aware of the commencement of inheritance before May 27, 1998, and had become aware of the existence of liabilities in excess after that date.

On December 29, 2005, the National Assembly amended the Addenda by introducing Article 4 in its revision of the Civil Act by Act No. 7765. It stipulated that in the case a person who was aware of the commencement of inheritance before May 27, 1998, but was not aware of the fact that the inherited liability exceeds the inherited property within three months from the date knowing the commencement of the inheritance without gross negligence, such person may have alternative ways to execute the qualified acceptance. If the inheritor knew the fact that the inherited liability exceeds the inherited property before the effective date of the Act amended by Act No. 7765, the inheritor may execute qualified acceptance within three months from the effective date of the Act, and any inheritor who knew such fact after the effective date of the Act may execute qualified acceptance within three months from the date when he or she becomes aware of above mentioned fact. Accordingly, absolute acceptance shall be presumed only when qualified acceptance has not been made within such period.