Division of Property

A system for dividing property jointly formed by a married couple upon divorce according to each spouse's contribution, based on Article 839-2 of the Civil Act.

Division of Property

Overview

Division of property (재산분할) is a system under which property jointly formed by a married couple during marriage is divided at or after divorce according to each spouse's contribution. It is based on Articles 839-2 and 843 of the Civil Act, and applies to both divorce by agreement and judicial divorce. The key point is that it is not a simple division of assets but a legal procedure that has both a liquidation and a support character arising from the dissolution of the marital community.

Main Details

Legal Nature and Basis

Article 839-2(1) of the Civil Act provides that 'either party to a divorce by agreement may claim division of property against the other party.' Paragraph 2 provides that if the parties fail to agree or cannot agree, a claim may be filed with the Family Court. In the case of judicial divorce, Article 839-2 is applied mutatis mutandis pursuant to Article 843. Case law views the right to claim division of property as a property liquidation claim premised on the dissolution of the marital community and as a right including a support element (Supreme Court Decision 97Meu513 delivered on Dec. 29, 1998, etc.). Accordingly, even a spouse at fault may claim division of property.

Property Subject to Division

In principle, the subject of division is all property in the names of both parties, such as real estate, deposits, stocks, insurance, retirement pay, business shares, and virtual assets. Separate property held before marriage or property received by inheritance or gift may also be subject to division if the other spouse contributed to maintaining or increasing that property. On the other hand, property held in the name of a third party merely as a title trust, property formed after the breakdown of the marriage, and property unsuitable for division by its nature may be excluded. As for retirement pay, the portion corresponding to the period of employment during the marriage is in principle subject to division (Supreme Court Decision 2013Meu2250 decided July 16, 2014).

Division Ratio and Criteria

The Civil Act does not set a specific ratio; instead, the Family Court decides by taking into account the degree of cooperation of both parties and other circumstances. In practice, contribution is based on 50:50, but recognition of a full-time homemaker's contribution to housework and childcare, the length of the marriage, the background of property formation, each party's occupation and income, age, health status, and need for support are comprehensively considered. In the past, ratios in the 30–40% range were common, but recently cases around 50% or exceeding it have increased.

Subject of Liquidation and Calculation

In practice, the net property subject to division of property is calculated, and then the division ratio is applied. Net property is obtained by deducting joint debts from the total amount of the couple's joint property, and this is multiplied by the division ratio to calculate the amount one party will receive. At this time, various methods are used, such as transfer of title, cash payment, installment payment, and division in kind. In principle, the value of the property subject to division is assessed as of the closing date of the fact-finding hearing in the divorce litigation or the date of application for confirmation of intention to divorce by agreement.

Procedure and Limitation Period

In the case of divorce by agreement, the right to claim division of property must be exercised within two years from the date of application for confirmation of intention to divorce; in the case of judicial divorce, within two years from the date the divorce judgment becomes final (Article 839-2(3) of the Civil Act). If this period passes, the claim is extinguished. However, if the property subject to division still remains joint property, a claim may exceptionally be permitted. The procedure is conducted by filing a lawsuit for division of property with the Family Court or by joining it to a divorce lawsuit.

Taxes and Registration

When real estate is transferred through division of property, capital gains tax is in principle not levied (Article 151 of the Enforcement Decree of the Income Tax Act), and acquisition tax and registration license tax are also exempted or reduced under certain requirements. However, portions exceeding the division ratio or payments in the nature of settlement of purchase price may be subject to taxation, so prior review is necessary.

Recent Trends

In 2024–2025, several distinct trends are observed in the practice of division of property. First, virtual assets (such as Bitcoin), overseas stocks, stock options, and intellectual property rights such as patent rights and trademark rights are being actively treated as subjects of division. Second, courts have strengthened the tendency to view a full-time homemaker's contribution to housework and childcare not as simple labor but as the creation of economic value, and cases of raising the division ratio have increased. Third, evidence-securing procedures such as applications for property specification and property inquiry, requests for provision of financial information, and factual inquiries are being used more actively to trace property. Fourth, issues such as revocation of fraudulent acts concerning concealment or transfer of property before or after divorce and the division of presumed inherited or gifted property are also emerging as major issues. Fifth, the proportion of amicable agreed division through mediation, family investigation, and counseling procedures is increasing, and courts are being operated in a direction that first encourages autonomous agreement between the parties.