Giving versus leaving — how the same ₩500M splits between a gift and an inheritance

Parents have ₩2B to pass on. Left alone and inherited, the tax is ₩232.8M. Gifting ₩500M to a child now and leaving the rest ten years later brings the total to ₩164.9M, ₩67.9M less. But if the same ₩500M is given and the inheritance opens five years later, the total is back to ₩232.8M and nothing was saved. Whether giving or leaving is cheaper is not set by the amount but by the date and the nature of the asset. Most people either believe a gift is always cheaper or give up because it is added back anyway; both are half right, staring at the rate table without knowing what they missed. A gift is cheaper under three conditions, all of them about time. As of 2026-09-05 the estate-tax method applies and the reform has not passed.

Step ② The ten-year add-back is where the two results in the opening parted. If the inheritance opens within ten years for an heir, five for a grandchild, the gift goes back into the estate; inheritance tax is computed on the total and the gift tax paid is credited. Gift ₩500M and inherit five years later and it comes back, ₩232.8M again, nothing saved. Ten years later, ₩1.5B less ₩1B of deductions leaves ₩500M taxable, ₩87.3M, plus ₩77.6M gift tax for ₩164.9M, a ₩67.9M saving. Most people stumble here: a single day flips it. The earlier the gift the better; starting late means paying gift tax first with no saving.

Step ④ Where the deductions sit is below ₩1B. With a spouse and children there is no inheritance tax up to ₩1B, so below ₩1B a plain inheritance is cheapest. A gift deducts only ₩50M before tax: on an ₩800M estate, gifting ₩300M costs ₩38.8M while leaving it costs ₩0. On top of that, the inheritance deduction limit can be cut by what was given early. A gift earns its keep only from estates above ₩1B where tax arises. Most people have the order backwards, paying ₩38.8M they need not and losing deductions. Your decision sheet is three lines. ① Does the estate exceed ₩1B; if not, plain inheritance. ② Is the asset appreciating; if so, gift; if not, no. ③ Can the parents' age clear the ten-year line; even if not, an appreciating asset keeps the fixed-value saving. Who gets how much follows the ten-year combination rule, filing is within three months, and write the gift date down as a family.

All four steps are passed: the rate table is the same, within ten years it comes back, the value is fixed, and below ₩1B it is a loss. The family that gave ₩500M early saved ₩67.9M, or ₩190.94M on an appreciating asset; start late and you pay gift tax first, hurry below ₩1B and you pay ₩38.8M. Two things to do now: note whether the estate exceeds ₩1B and whether the asset appreciates, and count the ten-year line from the parents' age to set the timing. Growth rates are unknown and deduction cuts vary by asset, so consult a tax adviser.