The Relationship Between Foundation (Trust) Establishment and Reserved Portion in line with the Turkish Inheritance Law

In the event that the deceased leaves heirs next of kin, those individuals become inheritors to the estate in proportion to their reserved portion ratios. For instance; the deceased A has an estate worth TRY 80 and leaves two children as inheritors. A dies intestate and each of A’s children has reserved portion of ½ on the estate accordingly. Thus, each child gets TRY 40 from the total TRY 80.

However, in case A has concluded a Will before his/her death and left all of his estate to non-heir B, each child gets TRY 20 instead of TRY 40 depending on the their reserved portion since B gets TRY 40 depending on the Will.

Establishment of a Foundation

In line with the Turkish Inheritance Law, it is tied to very strict conditions (to commit a serious crime against the legator etc.)  in order to lose the title of inheritor namely to be disinherited. In a word, it is very hard to disinherit an heir with a reserved portion. However establishing a foundation is one way to do that. Such foundation may either be established in Turkey or abroad. It is certain that the abroad foundation is much more beneficial to the legator in terms of privacy and confidentiality.

The legator, while s/he is alive, transfers his assets to the foundation that s/he owns all the shares of. Hereunder, s/he may stipulate that those shares are to be transferred to a third party (regardless of his/her heir status) or transfer the management of the foundation to a professional operation and allocate the foundation estate to a special cause.

In addition to this; an abroad foundation will eliminate some tax liabilities (such as inheritance and transfer tax) following the death of the legator.

Inheritance Rights of a Foreigner in Turkey

A foreigner is the individual who is not the citizen of the country s/he has been living in. A foreigner may both be an individual or a legal entity. In this regard, the law to be applied to foreigners is the law for the foreigners and the International Private and Procedural Law (“PPL”). The said law designates the testamentary dispositions of the testator and determines to which such dispositions are subject to.

1. Situation of the Heritage

The heritage is subject to the deceased’s national law. In other words, Turkish law shall be applied if the deceased is a Turkish citizen however the related country’s law shall be applied if s/he is the citizen of another country.

On the other hand, Turkish law is applied for the real estate located in Turkey. Since Turkish law is applied on such matter, there are some limitations and the principle of reciprocity is implemented. Namely, in case a foreigner intends to claim right on a real estate located in Turkey, the same right shall be applicable for a Turkish citizen in the claimant’s country.

Opening, inheritance and partition of the estate is handled by the law of where the estate is located. In the event that the estate of the deceased is in Turkey, Turkish inheritance law is applied to such estate.

2. Reserved Portion 

Reserved portion is the part of the estate that cannot be transferred to anyone else both when the testator is alive or deceased. This portion is allocated the legal heirs. In the event that the deceased has children, reserved portion of such children is the half of the estate. In case there are no children the reserved portion for each of the parents is ¼ of the estate. The portion is 1/8 of the estate for each of the sisters and brothers. In the event that there is a surviving spouse and s/he is the heir of the estate with the children, she has the whole of the reserved portion and ¾ of the estate in other circumstances. The deceased is not allowed to execute testamentary disposition but s/he may execute such disposition for the portion that is not reserved. In the event that the deceased has ignored such portion and executed such disposition, the related plaintiffs may file a case to retrieve their rights.

For instance; the deceased, with 2 children and a surviving spouse, is a Turkish citizen or a foreigner and s/he owns 4 flats (with the same worth) in Turkey and 2 of these flats are within the reserved portion of the children and each children get 1 flat and the remaining 1 flat is within the reserved portion of the surviving spouse. The deceased, surely before his death, may execute testamentary disposition on the remaining 1 flat.

In the event that the deceased’s estate is located in Turkey and s/he has no heir, the estate is inherited by the Government.

3. Testamentary Dispositions (Will and Inheritance Contract)

A Will is a unilateral disposition and may be executed in 3 ways:

a. Written Will

b. Official Will

c. Oral Will

Since the Will shall be applicable after the death of the deceased, it is subject to tight form requirements in line with the Turkish law. Therefore the most common Will type is the official will. Such Will may be stored at notary publics and civil courts.

The competency of the testator in terms of executing a will is subject to the testator’s national law. Excluding the real estate located in Turkey, the national law of the deceased shall be applied to the content of the Will.

4. Situation of the Will after Divorce

Following divorce, the spouses are no longer legal heirs to each other for the estate located in Turkey. Accordingly the provisions regarding heirship that are designated in the will are no longer valid. However such determination does not affect the status of the other provisions. Divorcing spouses may appoint his/her ex-wife/husband as his/her heir. Namely, even though the legal heirships of the spouses are over by the end of the divorce, the spouse may still appoint his/her ex-wife/husband as his/her heir provided that reserved portions of the other heirs are preserved.

In the event that the deceased has executed complimentary dispositions 1 year prior to his/her death, other heirs may apply to the court to cancel such dispositions.

5. Recognition of the Foreign Court Orders

In case a foreign court order is recognized by Turkish courts, such order becomes applicable in Turkey. However reciprocity principle is applied for such recognitions, namely the same right for Turkish citizens living in the claimant’s country shall have the same rights of recognition of a Turkish court decision.