[PB Notebook] Strategies Beyond Tax Savings from a Tax Accountant's Perspective: Inheritance Is a Matter of 'Control'

Minsu Yang, Tax Accountant of WM Team at Kyobo Life Insurance

Minsu Yang, Tax Accountant, WM Team, Kyobo Life Insurance

There is a common question that frequently arises when consulting with high-net-worth individuals these days.

"Which is more advantageous: inheritance or gifting?"

"Is it better to make a gift now, or should I wait and pass assets on through inheritance?"

As a tax accountant, answering these questions is a familiar part of my work. Our role is to recommend the most favorable strategy based on tax regulations, deduction structures, and the nature of the assets involved. In reality, many affluent clients are preparing various tax-saving strategies, such as considering early gifting to reduce inheritance tax burdens or utilizing family corporations and insurance products.

However, after encountering numerous inheritance cases in the field, there is an important truth that becomes clear. The success of inheritance is not solely determined by the amount of tax paid. I have often witnessed cases where, despite substantially reducing inheritance tax, family disputes arise or asset management fails, resulting in a rapid depletion of wealth. Conversely, families that have a well-designed asset management structure often sustain their wealth stably, even if some tax burden remains. Ultimately, what matters more in inheritance is not "how much tax is paid," but "how the remaining assets are managed afterward."

Recently, our society has seen significant changes in the inheritance landscape. As life expectancy increases, it is now common for parents to reach nearly 90 years old before inheritance occurs. So-called "old-to-old" inheritance has become the norm. In many cases, heirs themselves are already around 60 years old. In addition, with the diversification of family structures and the rise in cases involving divorce or remarriage, family relationships are becoming increasingly complex.

Amid such changes, it is difficult to approach inheritance simply as a "wealth transfer event." Instead, affluent individuals are increasingly concerned with issues such as:

"Will my children be able to manage the assets properly?"

"Will there be any family disputes?"

"Will the plans I have put in place be maintained 10 or 20 years from now?"

All of these questions ultimately converge on a single issue: control. Taxes are quantifiable. However, inheritance cannot be resolved by numbers alone, as family relationships, methods of asset management, and future uncertainties all interact. In particular, variables like the loss of decision-making ability due to conditions such as dementia, or unexpected family disputes, can undermine even the most carefully designed tax-saving strategies.

The tax accountant's role is to calculate taxes and design strategies for tax savings. However, assets continue to move even after tax filings are complete. Over time, the matter of asset management becomes even more important. As a result, the focus of high-net-worth clients has recently shifted from "how much to leave behind" to "how to ensure proper management of what is left." The perspective of inheritance as not just a transfer of assets, but as an asset management system, is gradually spreading.

A common trait among families who have preserved their wealth over generations is not simply that they left behind significant assets, but that they established structures and principles for managing those assets. Ultimately, the core of inheritance lies not in the scale of the assets, but in creating a sustainable structure.

During consultations, I often find myself asking clients the following question:

"Will the inheritance structure you have established now still be intact ten years from now?"

It is not as easy to answer this question with confidence as one might think. That is because inheritance is not a matter that can be resolved by tax planning alone.

Going forward, inheritance planning is likely to evolve toward a direction that considers asset management structures alongside tax-saving strategies. Rather than viewing inheritance as merely a tax issue, it is time to take a more multidimensional approach that includes how to protect and manage assets.

The completion of inheritance does not end with taxes. In fact, the true value is revealed in the asset management challenges that begin after taxes are settled.

Minsu Yang, Tax Accountant of WM Team at Kyobo Life Insurance

This content was produced with the assistance of AI translation services.