Deceased's Fraudulent Transaction

One of the most fundamental pillars of civil law systems is the right to property and the mechanisms of its transfer upon death. The Turkish Civil Code regulates, through mandatory and supplementary rules, to whom and in what proportions the assets of individuals pass after their death. However, although the legislator has foreseen protective measures in favor of legal heirs and those entitled to reserved shares, in practice it is observed that testators attempt to circumvent these legal balances through certain dispositions made before their death. In this context, one of the most delicate, most litigated, and most judicially shaped institutions in Turkish property and inheritance law fraudulent transfer of property by the testator, commonly known as "concealing assets from an heir .

Deceased fraud is a type of fraudulent transaction that appears legally valid but is established through false declarations of intent, aiming to prevent legal heirs from receiving their fair share. This article will address the conceptual framework, doctrinal and legal foundations, constituent elements, procedures and principles of title cancellation and registration lawsuits, burden of proof, and statute of limitations aspects of deceased fraud with academic depth but in a simple style easily understandable to everyone.

1. Conceptual Framework and Legal Nature of Fraudulent Transactions by the Deceased

1.1. Distinction Between the Concepts of Collusion and Inherited Collusion

In general, collusion is regulated in Article 19 of the Turkish Code of Obligations. Collusion is defined as an agreement between parties to perform a seemingly valid legal transaction that does not conform to their true intentions, with the aim of deceiving third parties. Collusion is divided into two types: absolute collusion (an intention to produce no legal consequences) and relative (qualified) collusion (giving the appearance of a different transaction to conceal the fact that a different transaction is actually intended).

Inheritance fraud is a form of relative fraud, specifically related to inheritance law. In this type of fraud, one party is the testator (the one who leaves the inheritance), and the other is the recipient (usually a child, a third party, or a second spouse). The testator's primary goal is to prevent the division of their assets among legal heirs upon their death and to provide a gratuitous transfer to whomever they choose.

1.2. Conflict Between Apparent and Hidden Transactions

In a fraudulent transfer of inheritance, there are two separate declarations of intent and transactions involved:

• Apparent Transaction (Official Transaction): The deceased and the transferee conduct an official sales contract before the land registry office. The title deed contains false statements indicating that the property was sold for a specific price, that the buyer paid this price, and that the deceased received this payment.

• Concealed Transaction (True Intent): The true intention of the parties was not a sale, but a gratuitous transfer, i.e., a donation (gift). The transferee did not pay any money to the deceased. The parties used this sale as a cover to deceive third parties, and especially the other heirs.

2. Historical and Legal Basis of Fraudulent Inheritance Transactions: The 1974 Unification of Jurisprudence Decision

In the Turkish legal system, the concept of fraudulent transactions by the deceased was not directly included in written legal texts for many years, but was shaped by court precedents and doctrinal studies. The most fundamental and unshakeable legal basis on this issue the Supreme Court's Grand General Assembly's Unification of Jurisprudence Decision No. 1/2 dated April 1, 1974.

Prior to this landmark decision, there were debates regarding the validity of hidden donation agreements, given that formal requirements for the transfer of registered immovable properties were met. The Unification of Jurisprudence Decision has put an end to these debates. According to the decision, if a testator, intending to defraud their heirs, conceals their true intentions by conducting official sales transactions in the land registry as a donation, this sales agreement is invalid from the outset due to collusion. The hidden donation agreement is also legally void because it does not comply with the formal requirements stipulated by the Turkish Civil Code (because it was made in an ordinary written or oral form instead of an official deed before a land registry official). Consequently, this transfer of title becomes completely devoid of legal basis.

3. Constituent Elements of Fraudulent Transactions by the Deceased

For a legal dispute to be classified as "fraudulent transfer by the deceased" and accepted by the courts, certain constituent elements must be present simultaneously. These elements are classified in legal doctrine as follows:

3.1. The Legal Capacity of the Deceased (Heir) and the Date of Death

For a person to acquire the status of testator, they must be deceased or have a declaration of absence issued against them. Heirs cannot file a lawsuit alleging collusion regarding the assets of a living person; because no claim can be made on the inheritance of a living person ("no one has an inheritance while alive" principle). Furthermore, the testator must have possessed legal capacity (sound mental health) at the time of the sale. If the testator was mentally ill or mentally weak at the time of the transaction, the lawsuit is based directly on the legal ground of "incapacity," not on collusion by the testator.

3.2. Characteristics of the Property Subject to the Transaction (Generally Real Estate)

Cases of fraudulent transfers of inheritance mostly registered immovable properties (land, buildings, houses, fields). This is because the transfer of registered properties is subject to official procedures, and official registers are subject to the principle of public accessibility. While claims of fraud can also be made regarding movable property (money, gold, vehicles, etc.), in practice, disputes primarily arise from real estate transfers due to the ease of proof and the fact that claims for compensation are made directly without requiring the cancellation of the title deed.

3.3. Intent to Conceal Assets from Heirs (Collusion)

The testator's primary intention in making this transfer is to reduce the amount of the estate that legal heirs will claim in the future, and to favor a particular heir or exclude others entirely. The existence of this intent is assessed by the judge according to the specific circumstances of the case.

4. Deceased's Fraudulent Transaction (Title Deed Cancellation and Registration Case)

A lawsuit filed upon the determination of fraudulent transfer of property by the deceased a "Lawsuit for Cancellation and Registration of Title Deed Based on Fraudulent Transfer of Property by the Deceased" . The legal nature, structure, and procedural rules of this lawsuit require great care.

4.1. Plaintiff Status: Who Can File a Lawsuit?

• Legal Heirs: All persons who have the status of legal heir, such as the deceased's descendants (children, grandchildren), spouse, parents, and siblings, can file this lawsuit.

• There is No Obligation to Be a Reserved Shareholder: Unlike reduction (reduction lawsuit) cases, it is not necessary for the plaintiff to be a "reserved shareholder" to file a lawsuit regarding fraudulent transfer of inheritance. Every legal heir whose inheritance share has been affected is entitled to file this lawsuit in proportion to their share.

• Designated Heirs: Individuals designated as heirs by the deceased through a will can also file a lawsuit for collusion.

• Creditors of the Heir: Creditors whose rights have been affected by bankruptcy or seizure of assets also have the right to file a lawsuit for the annulment of the transaction or for fraudulent activity in order to protect the rights of their debtors.

4.2. Defendant Status: Against Whom is the Lawsuit Filed?

• Beneficiary of a Confidential Donation: The person to whom the property is transferred in the land registry (e.g., the child or third party to whom the deceased transferred the property).

• Third Parties Acting in Bad Faith: If the property has been transferred fraudulently from one person to another, and that second party knew or should have known about the fraud (acted in bad faith), the lawsuit can also be brought against that person. However, according to Article 1023 of the Turkish Civil Code, the rights of third parties who acquired ownership based on the land registry records in good faith are protected.

4.3. Purpose and Legal Outcome of the Case

The primary objective of this lawsuit is to annul the fraudulent and collusive registration in the land registry, return the property to the deceased's estate (the joint ownership of all heirs), and register it in the land registry in proportion to the inheritance shares. In its decision, the court does not grant the entire property to the plaintiff; instead, it registers the property in proportion to the inheritance shares of all heirs.

5. Burden of Proof, Evidence, and Statute of Limitations

5.1. Burden of Proof and Freedom of Evidence

According to Article 6 of the Civil Code, unless otherwise stipulated in the law, both parties are obligated to prove the existence of the foundations they claim. In cases of fraudulent transfers by the deceased, the burden of proof rests with the heir who initiates the lawsuit. The plaintiff must prove that the transfer was a gift and that the sale was fraudulent.

However, since collusion is based on a secret agreement, the parties usually do not formalize this in a written document. Therefore, our legal system of freedom of evidence . The plaintiff may rely on the following evidence to prove their claim:

• Witness Testimony: Testimony from neighbors, relatives, or third parties who were aware of the deceased's intentions during their lifetime and the family relationship between the parties.

• Deceased's Economic Situation and Purchasing Power: Whether the child acquiring the property at that time could afford to pay the price (for example, if the inheritor was a student or unemployed with no income at that time).

• Market Value Discrepancy: An excessive and exorbitant difference between the sale price shown in the title deed and the actual market value at that time (for example, a property worth millions being shown with symbolic figures in the title deed).

• Justifiable and Reasonable Reasons of the Deceased (Subjective Reasons): Whether the deceased provided financial assistance to their other children, and whether they distributed their assets fairly.

5.2. The Issue of Statute of Limitations and Preclusive Periods

One of the most important advantages of lawsuits concerning fraudulent transfers of inheritance is that there are no statutes of limitations or forfeiture periods for these cases .

• Because the claim of collusion constitutes an absolute legal invalidity (absolute nullity), this lawsuit can be filed even years after the death of the deceased.

• In accordance with the 1974 Unification of Jurisprudence Decision and the established precedents of the Court of Cassation, it is not legally possible to dismiss a case on the grounds of statute of limitations, regardless of how much time has passed since the collusion occurred.

6. Similar Legal Institutions Often Confused with Fraudulent Transfers by the Deceased

In practice, fraudulent transactions by the deceased are often confused with other inheritance law institutions in terms of their legal consequences and appearance. Clearly defining these distinctions academically is essential for resolving disputes

• Distinction between a Reduction (Protection of Reserved Share) Action and a Reduction Action: In a reduction action, the transfer made by the deceased is genuine (for example, a donation or will is valid, but it violates the reserved shares). In a fraudulent transaction by the deceased, however, the transaction is deceptive and collusive from the beginning; that is, there is no genuine sale. While there is a one-year statute of limitations in a reduction action, there is no statute of limitations in a fraudulent transaction by the deceased.

• Distinction from Equalization (Restitution) Lawsuit: According to Article 669 of the Turkish Civil Code, gratuitous transfers made to legal heirs are subject to equalization by deducting them from their inheritance shares. In cases of collusion, the property is returned to the estate, whereas in equalization, a deduction is made from the inheritance share.

7. Problems Encountered in Practice and Proposed Solutions

Cases involving fraudulent inheritance transactions constitute one of the busiest types of cases in the courts. The main problems encountered in practice are as follows:

• The Skill in Concealing Collusive Transactions: The heirs' attempts to obscure the collusion by involving multiple intermediaries (chain transfers) make the proof process more difficult.

• Rights of Bona fide Third Parties: If the person who acquired the property fraudulently immediately sells it to innocent third parties, it becomes difficult for the rightful heirs to obtain their due rights, due to the principle of security of the land registry.

Proposed Solutions

To prevent such disputes, land registry offices need to establish more effective declaration mechanisms to verify the true intentions of the parties involved in transfer transactions. Furthermore, the rigorous application of the rules of evidence consistently enforced by the Supreme Court to ensure fairness among heirs guarantees legal certainty.

Conclusion and Evaluation

Fraudulent transactions by the deceased are the most prominent manifestation of the conflict between the transfer of property rights and the mandatory rules of inheritance law. In the Turkish legal system, since the landmark Unification of Jurisprudence Decision of 1974, seemingly fraudulent sales transactions carried out by the testator with the intention of defrauding their legal heirs have been considered null and void.

The right to file a lawsuit for the cancellation and registration of title deeds, granted to all legal heirs without the requirement of being entitled to a reserved share, is a critical safety valve in ensuring justice in property and inheritance matters. Its exemption from statute of limitations, the broad freedom to prove it with evidence, and its ability to ensure restitution to the estate increase the effectiveness of this type of lawsuit in Turkish civil litigation. Consequently, the establishment of equity in inheritance law depends on the meticulous scrutiny by judicial authorities of attempts by testators to deprive legal heirs through formal transactions, and on the resolution of collusion cases based on concrete evidence and within the bounds of fairness.