“Divide even assets the spouse had no hand in” ... Business-world wave of separate-property division [Seocho Intersection]

[Financial News] “It’s an apartment my parents passed down to me, and not a single cent of anyone else’s money went into it. Why should I have to hand over nearly half of it in a divorce?”Clients visiting family-court counseling offices or divorce lawyers’ offices have recently found themselves with one more grievance. The conventional belief that assets bought with money they had saved themselves before marriage, or inherited or received as a gift from their parents, were entirely “theirs” is being repeatedly overturned in court. Courts are increasingly broadening the scope of contributions they recognize from a spouse even with respect to what is known as “separate property”—property belonging exclusively to one spouse.
According to legal circles on the 18th, the Seoul Family Court’s Third Family Division, ruling on the 9th of last month in a divorce suit between Kwon Hyuk-bin, Smilegate’s founder and chief vision officer (CVO), and Lee, Kwon’s spouse, recognized their respective contributions to the formation of their assets as 65% and 35%. Lee is to receive 65 billion won in cash and 35% of Smilegate’s shares. According to the court’s valuation, the shares were worth about 7.1049 trillion won in total, and the court recognized about 2.4867 trillion won as Lee’s share.
The trial court explained, “In assessing the contributions, we also took into account that Lee handled household duties and raised the children for a long time, and that Lee’s family provided financial support early in the marriage.”
Article 830 of the Civil Act defines as “separate property” the property either spouse owned before marriage and property acquired in that spouse’s own name during the marriage. As a rule, it is excluded from division in a divorce. The purpose is to protect such property by law from claims by the other spouse, since it was acquired without that spouse’s help or cooperation.
Recently, however, courts have increasingly taken a broad view of household work and child-rearing performed by a spouse over decades of marriage, intangible support, and even a partnership in the early stages of a business, treating them as “active contributions to the formation, maintenance and growth of corporate value.” Even when a spouse did not engage directly in paid work and was a full-time homemaker, courts are increasingly recognizing broadly that if the spouse took sole responsibility for household duties and child-rearing, they contributed to “maintaining the assets and preventing their diminution.” The rationale is that the other spouse’s household labor made it possible to pay loan interest and reduce living expenses, thereby preserving the real estate or other assets in full.
Attorney Jo Su-young of S Law Firm explained, “Compared with the past, courts are increasingly recognizing the contributions of full-time homemakers, particularly those raising children,” adding, “It is especially notable that contributions have been assessed more highly by taking into account the support-related factors that arise when children are young.”
In particular, Jo analyzed the trend, saying, “Previously, even when a family business was passed down, the division was settled in cash based on the value of the assets. It is somewhat unusual for courts to recognize division of shares in divorce cases in the business world and the like. Risks to management control, among other things, will also be considered in the property-division process, but recognition of contributions has increased compared with the past.”
Even outside the business world, where division amounts can be astronomical, the expanding scope of separate property is becoming a source of fierce disputes. An apartment acquired before marriage may rise in value by hundreds of millions of won amid a sharp increase in property prices; likewise, assets such as rural land or an ancestral burial ground inherited from parents, or a jeonse deposit—property once thought to be “entirely mine”—may be found to have benefited from the other spouse’s contributions.
Attorney Jo noted, “Typically, once a marriage has lasted at least three years, more of the assets than people expect become subject to division.” Jo added, “Recently, out of concern about this, arrangements have also emerged in which someone is allowed to move into a home and live there without an inheritance or transfer of title taking place.”
[email protected] Lee Chang-hoon Reporter