After receiving a gift of shares in a company run by the decedent, our client has managed and developed the company on behalf of the decedent. However, after the decedent's death, one of the heirs claimed the return of the forced share of the gifted shares “based on the value per share at the time of the commencement of the inheritance,” which was approximately seven times higher than the value at the time of the gift, but we defended our client against a large part of the other party's claim by calculating the forced share based on the value of the shares at the time of the gift.

We actively argued and proved that, as a result of the client's direct management of the company, including the provision of labor and management skills, the company acquired additional assets and increased its net asset value, and as a result of the stable development of the company by increasing its assets and capital and reducing its debt ratio, the net income value also increased, resulting in an increase in the value of the company's shares.

In particular, we emphasized that, unless the other party was involved in the management of the company, even if the increase in corporate value and the resulting increase in stock value due to the client's active management activities would not be reflected in the distribution of the inheritance, it would not harm the equity with the other heirs, but rather, if the benefits were attributed to the other party, it would lead to an unfair advantage in the relationship with the other heirs.

Both the first instance and appellate courts accepted our arguments and determined the value of the shares to be based on the value per share at the time of the gift, which was approximately 14% of the value per share at the time of the commencement of the inheritance, and the case was finally affirmed.

​3. Implications

The principle is that the value of inter vivos gifts should be valued on the basis of the time of the inheritance. However, if this principle is strictly applied, it may result in excessive benefits to a person entitled to the forced share, which is inconsistent with the purpose of the forced share system.

​In particular, in the case of a successor who inherits and grows a company after receiving stock during the decedent's lifetime, if the increase in the value of the company due to the successor's efforts is included in the scope of estate subject to the return of the forced share, it will not only disincentivize the successor to grow the company, but also place a great burden on the management of the company.

This case is significant in that it confirms that even if the value of a stock increases significantly after being gifted, the increased value of the stock may not be subject to the return of forced shares if the increase in value is due to the relevant heir's contribution of labor or management skills.

□ Attorneys in charge: Choi Yeong-noh, Cho Woong-kyu