Court ruling benefits aging societyThe Supreme Court handed down a landmark ruling on Wednesday that would make it possible for children to be exempt from hefty inheritance taxes for taking over their parents’ house. The decision comes as a relief to many Koreans, since a home is commonly their primary asset.
Under the ruling, the supporting family will be exempt from paying a high gift tax when the parents surrender their house to their child or children, who then support them. The supporting family would be exempt from the tax as the handover instead would be seen as a kind of “children’s pension” that offers monthly returns for the aged parental unit. The ruling therefore sets a legal precedent for the pension, paving legal ground for the parents to secure legitimate monthly support from their children in return for giving up their home.
Currently, offspring face heavy inheritance taxes when taking over their parents’ houses. Elderly and retired parents who don’t have an income must often seek out loans to survive, using their home as collateral, and adult children in many cases feel obliged to support their parents. But if parents could offer living space to their children and receive living expenses in return, it should serve as a practical arrangement for both parties.
Society can no longer rely on outdated traditional customs that blindly force filial obligations upon young people. The younger generation is no longer committed to filial duties and many barely manage to keep up with their own families. Still, our society forces financial duties on them.
Senior citizens with no income, who are eligible for monthly state-funded basic allowances, often cannot receive them if their children or in-laws pull in a monthly income. About 30,000 people per year cannot get monthly allowances from national coffers because they have children as breadwinners - a family of four earning a minimum of 2.12 million won ($1,900) per month. But that much income does not guarantee a comfortable living in Korea. Low-income families are doubly stressed because they have an additional obligation to support their elderly parents, who receive little aid from the government.
Obliging young people to support their parents is not a solid social security net. Many European countries emphasize individual obligations to support senior citizens due to costly social expenses. Too much financial onus transferred onto society can generate a number of problems. Illegal inheritances must be contained, but a win-win arrangement for both parents and children poses as a creative way to solve many of the problems in an aging society.