The wealthy in Korea are turning more to banks for trust and fiduciary service as such accounts can be a tax-saving option to park their riches and hand them down in the country with notoriously high inheritance taxes.

According to industry sources on Sunday, the outstanding balance in fiduciary accounts at Shinhan Bank, Hana Bank and Woori Bank reached 1.39 trillion won ($1.16 billion) as of May, up 14.7 percent from a year ago and 20.1 percent from December.

Trust accounts can be opened at banks acting as fiduciary to manage funds and hold them for designated beneficiaries. The deposits are saved from creditors even if the trustee or the fiduciary goes bankrupt.

They have come under spotlight as a safe way for the rich to park their money and hand them down their children with less tax hassle and burden.

“Calls inquiring about the trusts have more than tripled this year, especially from small- to mid-sized company owners,” said an unnamed official from a commercial lender.

Banks with marketing curbs on equity-linked trusts after they caused big consumer losses are now eager to sell the wealth trusts for inheritance.

Under the new rule, ELT sales volume cannot exceed 40 trillion won, the outstanding amount as of the end of November last year. The outstanding balance in ELT products managed by Shinhan Bank, Hana Bank and Woori Bank since then fell 11.4 percent to 18.18 trillion won, according to the banks.

By Lee Sae-ha and Lee Ha-yeon

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]