What can be done when an indebted estate is inherited?
If bank, tax or enforcement debts come to light after the death of a relative, both assets and liabilities form part of the inheritance. Under the Turkish Civil Code (TMK), an inheritance passes to statutory and appointed heirs upon death. An heir who believes that the liabilities may exceed the assets should promptly assess the time limit for rejection and any actions concerning the estate.
Rejecting an inheritance does not allow an heir to avoid the debts while retaining the assets. The rejection must be unconditional. The heir ceases to be an heir in respect of the entire estate. Transactions such as payments, sales or transfers made before the extent of the liabilities has been established may affect the right to reject the inheritance. The estate’s assets and liabilities should therefore be considered together.
What is the difference between express rejection and deemed rejection?
Express rejection (gerçek ret) requires the heir to make an explicit declaration of intent within the applicable time limit. The heir must notify the Civil Court of Peace (sulh hukuk mahkemesi), orally or in writing, that the inheritance is rejected unconditionally. There is no requirement to prove that the estate is over-indebted. It is sufficient that the person does not wish to inherit.
In a deemed rejection (hükmen ret), the law treats the inheritance as having been rejected if certain conditions are met. The deceased’s inability to pay must have been clearly apparent or officially established at the date of death. The estate may be over-indebted if its liabilities exceed its assets. The subsequent discovery of an unknown debt does not, by itself, satisfy the conditions for deemed rejection.
The procedures for the two forms of rejection also differ. Express rejection is made by a non-contentious application to the Civil Court of Peace at the place where the succession opens. Deemed rejection may be raised as a defence against a creditor. If a separate declaratory action is brought, the dispute is generally heard by the Civil Court of First Instance (asliye hukuk mahkemesi).
When does the three-month time limit for rejecting an inheritance begin?
The standard time limit for express rejection is three months. For statutory heirs, the period begins on the date they learn of the deceased’s death. If it is proved that their status as an heir was learned later, the commencement date may be determined accordingly. For an heir appointed by will, the period runs from the date on which the testamentary disposition is formally notified to that heir.
The three-month period is a time limit resulting in forfeiture of the right. Once the period expires, the inheritance is generally deemed to have been acquired unconditionally. If there are compelling reasons, the Civil Court of Peace judge may extend the period or grant a new period. However, this does not occur automatically. The reason for the delay and the circumstances of the case must be presented to the court.
Deemed rejection is not subject to the three-month time limit applicable to express rejection. Nevertheless, waiting for an extended period may make proof more difficult. Creditors may initiate enforcement proceedings, or the heir may carry out transactions involving the estate. These developments directly affect how the claim of over-indebtedness may be raised.
Where and how is an application to reject an inheritance made?
A declaration of express rejection must be submitted to the Civil Court of Peace at the deceased’s last place of residence. The declaration may be made orally or in writing. The court records a timely declaration in its minutes and enters it in the special register. The intention to reject must be explicit and unconditional. An heir cannot reject a particular debt or only some of the assets.
The application must state the deceased’s identity, the date of death, the applicant’s relationship to the deceased as an heir and the intention to reject in unambiguous terms. If there is more than one heir, the applicable time limit and intention to reject are assessed separately for each heir. For minors and persons under legal restriction, representation, conflicts of interest and any required authorisations must also be examined.
Where the procedure is carried out through a representative, the power of attorney must include authority to reject the inheritance. Whether the application reached the court within the applicable period is also decisive. To avoid the risk of missing documents or incorrect legal classification, records establishing the dates of death and knowledge should be reviewed at the outset.
Which actions may extinguish the right to reject an inheritance?
An heir may lose the right to reject the inheritance by taking actions that exceed the ordinary administration of the estate before the rejection period expires. Selling an estate asset, transferring it to oneself or making extensive dispositions in the capacity of an heir may have this result. A person who conceals or appropriates estate assets also cannot reject the inheritance.
Not every action amounts to acceptance of the inheritance. Preserving assets, preventing their deterioration or paying necessary expenses may fall within ordinary administration. Applying for a certificate of inheritance does not, by itself, constitute acceptance in every case. The purpose and scope of the action and the impression it creates for third parties are assessed together.
In its decision dated 15.11.2022, File No. 2020/241 and Decision No. 2022/1515, the General Assembly of Civil Chambers of the Court of Cassation (Yargıtay Hukuk Genel Kurulu) based its assessment on the particular circumstances of the case. The heirs had received an asset of relatively low value from the estate against a very substantial debt of which they had been unaware. The General Assembly held that, in that case, the transaction did not constitute acceptance of the over-indebted estate. The decision does not mean that every sale will be without effect. The difference between the values, whether the debt was known and the heir’s intention were considered together.
How is it proved that an estate is over-indebted?
Deemed rejection is assessed according to the deceased’s financial position at the date of death. Real property, vehicles, bank accounts and receivables constitute the estate’s assets. Loans, tax debts, liabilities under guarantees and enforcement debts constitute its liabilities. Subsequent changes in value do not replace the financial position at the date of death.
Inability to pay may be established by an official certificate of insolvency, a bankruptcy record or unsuccessful enforcement proceedings. The absence of such evidence does not automatically preclude a claim of deemed rejection. Bank records, land registry and vehicle records, tax information, social security records and witness statements may also be considered.
According to the decision of the General Assembly of Civil Chambers of the Court of Cassation dated 26.05.2022, File No. 2019/719 and Decision No. 2022/752, deemed rejection may also be raised as a defence. The General Assembly stated that the court must conduct a comprehensive investigation of the assets and liabilities existing at the date of death. It overturned the judgment for inadequate investigation because the records of the land registry directorates, banks, tax offices and other relevant institutions had not been examined.
If the extent of the debts is not yet known, an official inventory may also be considered. This must be requested from the Civil Court of Peace judge within one month from the commencement of the rejection period. An official inventory is distinct from the rejection of an inheritance. Its time limit and the resulting rights of election must be assessed separately.
To whom do the share and debts pass when an inheritance is rejected?
If one of the statutory heirs rejects the inheritance, distribution takes place as if that person had not been alive at the date of death. In many cases, the rejecting heir’s share may pass to their descendants. A rejection by only one person may therefore also affect the position of that person’s children. The applicable time limit, representation arrangements and need for rejection must be examined separately for each heir.
If all the closest statutory heirs reject the inheritance, the estate is liquidated by the Civil Court of Peace in accordance with the bankruptcy provisions. If any value remains after the debts have been paid, it is distributed to the beneficiaries as if they had not rejected the inheritance. The special rule under which the shares pass to the surviving spouse when all descendants reject the inheritance must also be taken into account.
Rejection does not provide unlimited protection against the deceased’s creditors in every case. The law contains special provisions concerning certain assets received from the deceased before death and rejections intended to prejudice creditors. The heir’s own creditors may also seek annulment of the rejection under certain conditions. These possibilities require an assessment of both the estate and the heir’s financial position.
Frequently Asked Questions
Must the existence of debts be proved in order to reject an inheritance?
For express rejection, there is no need to prove the existence of debts or over-indebtedness. It is sufficient for the heir to make an unconditional declaration of rejection within the three-month period. For deemed rejection, the deceased’s inability to pay at the date of death and the estate’s over-indebtedness are examined.
Can an inheritance no longer be rejected after the three-month period has expired?
For express rejection, the period generally expires at that point. If there is a compelling reason, the judge may be asked to extend the period or grant a new period. If the estate was clearly over-indebted at the date of death, a qualifying claim of deemed rejection is not subject to the three-month period.
Do the children of a person who rejects an inheritance become liable for the debts?
When a single statutory heir rejects the inheritance, the share passes to the beneficiaries as if that person had not been alive at the date of death. The children may therefore become heirs. Different rules apply where all the closest heirs reject the inheritance and where all descendants reject it.
Does obtaining a certificate of inheritance amount to accepting the inheritance?
Applying for a certificate of inheritance does not, by itself, constitute acceptance of the inheritance in every case. However, selling or concealing estate assets or making dispositions that exceed ordinary administration may extinguish the right to reject. Each action is assessed according to its purpose and scope.