Official Procedures to be Followed Upon Death

Official Procedures Following Death

1. Issuance of Death Certificate and Notification to the Civil Registry Office

If a death occurs in official health institutions or the deceased is brought to an official health institution, the death certificate is issued by the health institution and certified by the institution's director or chief physician.

If the death occurs in private health institutions, a death certificate issued by the physician who treated the deceased during the illness that caused the death is valid, provided that it is certified by the municipal physician, or in their absence, the community health center physician or the family physician.

Deaths must be notified to the civil registry office electronically by the public health directorate within 10 days from the date of the death event. When reporting the death event to the civil registry office, the original ID card/identity card of the deceased person is also sent to the civil registry office. No documents other than the written declaration of the deceased's Turkish Identification Number are required from the deceased's relatives, nor is any population registration excerpt or other identification-related document requested.

2. Obtaining a Certificate of Inheritance

Upon application, those determined to be legal heirs are issued a document by a civil court of peace or a notary public indicating their status as heirs. The invalidity of a certificate of inheritance obtained without adversary proceedings can always be asserted.

Since the original certificate of inheritance will be needed in several places, you will need to obtain more than one original copy from the court or notary public. It is possible to request the necessary number of copies from the notary or the court later as well.

3. Notification to the Tax Office

One of the first tasks that must be performed by heirs who have not renounced the inheritance is the written notification of the death event to the tax office. Notification of the death by any of the heirs relieves the other heirs of this duty[1]. This notification is legally required to be made within 1 (one) month following the date of death[2]. However, in cases where there is no provision in tax laws, since 3 (three) months are added to the notification and declaration submission periods for the fulfillment of duties transferred to heirs due to death, it can be said that the notification period for death to the tax office is at most 4 (four) months[3].

Inheritance and Transfer Tax Declaration: The scope of the Inheritance and Transfer Tax, which is levied on wealth, covers Turkish citizens and goods transferred within the borders of the Republic of Turkey. In every province or district, a tax office is assigned to handle inheritance and transfer tax. If the deceased's legal domicile is in Turkey and the death occurred in Turkey, if the taxpayers are also in Turkey, the declaration is submitted to the relevant Tax Office within 4 months following the date of death; if the deceased's legal domicile is in Turkey and the death occurred in a foreign country, within 6 months following the date of death; if the taxpayers are in another foreign country other than where the deceased was located, within 8 months following the date of death. The documents used to clear debts with the tax office are as follows:

1. Certificate of Inheritance 2. Death Certificate 3. Will and Inheritance Contract, if any 4. Notification of Death and Inheritance: This notification form must be obtained from the tax offices authorized to assess inheritance and transfer tax and, after being filled out, must be certified by the headman (muhtar) of the deceased's last domicile. However, since 2007, as it is possible for tax offices to query the deceased's T.R. Identification Number and obtain a document showing the last domicile of the deceased from the population registration system (MERNIS), this document does not need to be obtained from the headman. 5. Real Estate Declarations: By going to the real estate service of the relevant municipality with a photocopy of the title deed or title registration, you can apply to receive a current market value letter to be submitted to the inheritance and transfer tax office; provided there is no real estate tax debt, the current market value letter will be issued and given by the municipality. If there is a real estate tax debt, this debt must be paid first. Photocopies of the title deed will also be added to the declaration. 6. Commercial Capital: For those keeping books based on the balance sheet, the equity capital to be found according to the balance sheet of the calendar year preceding the date of death will be considered as commercial capital. However, taxpayers may, if they wish, determine and declare their equity capital based on the balance sheet they prepare as of the day of death. Those keeping books on the basis of business accounts and those taxed under the simple method will also declare their commercial assets as of the date of the deceased's death as commercial capital. Therefore, the commercial balance sheet and income statement will be added to the declaration. 7. Declaration of Movable Assets: Taxpayers will declare movable goods and ships at their current market values. Current market value is the normal buying and selling value. Therefore, movable goods and ships included in the inheritance must be declared with their normal buying and selling values on the date of death. Photocopies of vehicle licenses and other documents related to money and movable assets will be added to the declaration. 8. Declaration of Shares: Whether included in commercial capital or not, if shares are registered on the stock exchange, they are valued at the latest transaction value they saw on the stock exchange within the last three years before the date of death. For this reason, inheritance and transfer tax payers will declare the shares they have acquired through inheritance or gratuitously at the latest transaction value seen on the stock exchange within the last three years before the date of death if they are registered on the stock exchange; if they are registered on the stock exchange but have not been traded in the last three years, or if they are not registered on the stock exchange, at their nominal value. 9. Declaration of Bonds (Debt Instruments): Debt instruments are valued at their nominal value[4]. Accordingly, taxpayers will declare debt instruments at the value written on them. 10. Declaration of Foreign Currencies: Foreign currencies will be declared in the inheritance and transfer tax declaration at the stock exchange rate. However, if there is no stock exchange rate, they will be evaluated and declared according to the exchange rate to be determined by the Ministry of Treasury and Finance. 11. Declaration of Rights: The value of all rights subject to registration will be declared based on the value recorded in the land registry at the time of their establishment. The valuation of rights whose value is not shown in the land registry and all other rights will not be made by the taxpayers, and these rights will not be taken into account in the first assessment.

In determining the tax base for inheritance and transfer tax, the following debts and expenses can be deducted if the taxpayers show them in the relevant section of the declaration and attach valid documents regarding them to the declaration:

1. In transfers by way of inheritance, the debts and tax debts of the deceased based on valid documents, 2. If these debts have not been assumed by the donor, in gratuitous acquisitions, the debts and tax debts corresponding to the property itself, 3. Debts corresponding to properties located in foreign countries belonging to persons of Turkish Republic nationality, and inheritance and transfer taxes paid due to these properties in foreign countries, provided that they do not exceed the value of the declared goods (However, the aforementioned debts and taxes 4. Expenses for the funeral equipment, burial, and announcements made by the heirs in the newspaper to announce the death event. 5. Income Tax Declaration: Heirs who accept the inheritance must submit the deceased's income tax declaration within the same 4 (four) month period[5]. 6. Notice of Cessation of Business: In the event of the death of a sole proprietor, since death is considered cessation of business, a notice of cessation of business must be submitted on behalf of the deceased. In this notification, (i) information regarding the taxpayer's identity (ii) the business activity ceased (iii) address (iv) date of cessation (v) the latest domicile address as of the date of cessation (vi) whether there are any other earnings and income subject to declaration will be sought. In addition, the tax plate and the plate belonging to cash register devices will be requested. 7. Regarding Value Added Tax: In the event of the death of the taxpayer, the submission period for the Value Added Tax declaration will be extended by 3 months. Since no special regulation has been made for Stamp Duty and other taxes, the general provisions regarding periods in the Tax Procedure Law have been taken as a basis. If the business is to be continued by the heirs, they will also be able to use the Deductible Value Added Tax they will take over from the deceased. 8. Regarding Special Consumption Tax: According to Article (15/2-a) of the Special Consumption Tax Law No. 4760, in the acquisition of goods listed in list (II) attached to the Law, which are subject to registration and inscription, by those other than those benefiting from the exemption in their first acquisition, excluding transfers by way of inheritance, special consumption tax is collected at the rate valid on the date of registration and inscription, based on the tax base in the first acquisition; however, this matter is not valid in cases where those who benefit from the exemption under Article 7/2 of the Law dispose of the goods subject to registration and inscription that they acquired by benefiting from this exemption after using them for more than 5 years.

4. Notification to the Social Security Institution and Pension Enrollment

The death event must also be reported to the relevant Social Security Institution[6]. In order for a pension to be paid to the rightful heirs of the insured who passed away while paying premiums or receiving a retirement pension within the scope of the law, those who are of age and have the power of discernment must apply personally, and those who do not must have their legal representatives apply in writing to the Social Security Institution.

If the rightful heirs have appointed a proxy, the power of attorney must also be attached to the application petition; these petitions must specify whether an advance payment on the pension to be linked is requested and the domicile address.

5. Inheritance Transfer Procedures

Heirs acquire the inheritance as a whole upon the death of the deceased, by law. Subject to the exceptional cases provided for in the law, heirs directly acquire the deceased's rights in rem, receivables, other property rights, and possession of movable and immovable property, and are personally liable for the deceased's debts[7].

In this respect, it can be said that there are two important principles regarding the acquisition (transfer) of inheritance in Turkish inheritance law: the "principle of automatic acquisition" and the "principle of universal succession"[8].

The "principle of automatic acquisition" provides the heir with the opportunity to acquire the inheritance, that is, the estate, without the need for any declaration of intent or public allocation, while also serving to prevent the inheritance (estate) from being left ownerless for even a moment. In other words, with the death of the inheritor, all rights and debts in the estate pass to the heirs ipso iure (automatically) and ipso morte (at the moment of death). However, for this principle of automatic acquisition to be reflected in legal records, transfer procedures must be registered in the registry for each asset in the deceased's estate. Although heirs legally acquire the deceased's estate automatically, as long as the estate has not yet been shared among the heirs, the transfer must be carried out in the names of the heirs as "joint ownership" in legal records.

The "principle of universal succession" (succesio per universitatem), which was developed in Roman and Pandect law, serves to ensure that the inheritance (estate) that passes automatically to the heirs at the moment of the deceased's death is acquired by these heirs as a whole and without the need for the special conditions required by law for the transfer of each right contained in this estate. Therefore, there are two main values protected by this principle. Heirs possessing the estate they automatically acquired upon death as a whole ensures the protection of equality among heirs by preventing preferential allocations, while also ensuring the security of the deceased's creditors and debtors by preventing any individual right or debt contained in the estate from being left out.

On the other hand, in the event that there is more than one heir, the legislator has adopted a system of "inheritance partnership" until distribution, and has regulated that all heirs will be "joint owners" over all values contained in the estate, subject to exceptions[9]. Therefore, none of the heirs has the right to dispose of or manage the values contained in the estate alone; in other words, they do not have any individual rights over any particle of the estate.

Due to this strict regime of joint ownership, if heirs wish to dispose of any values in the estate or manage the estate, they must act together. In inheritance partnerships, acts of disposition such as using and benefiting from estate property, transferring, collecting receivables, filing lawsuits, or initiating enforcement proceedings cannot be carried out by a majority vote.

However, for this requirement of acting together to be fulfilled, it is not required that the heirs declare their consent at the same time, and implied consent is also accepted as valid. Likewise, it should not be forgotten that third parties seeking to obtain rights from the estate are obliged to sue all heirs or initiate enforcement proceedings against all of them.

The inheritance partnership continues until the distribution (partition) of the estate.

6. Distribution (Partition) of the Estate

As explained in detail above, with the passing of the inheritance, until distribution occurs, a partnership covering all rights and debts in the estate arises among the heirs; an inheritance partnership is a partnership arising from the law. Heirs own the estate jointly and dispose of all rights together.

The law has forced them into a partnership relationship; to soften this severe result, it has given them the right to request distribution whenever they wish; because an inheritance partnership is, by nature, a temporary partnership.

If the heirs distribute the inheritance by reaching an agreement among themselves, voluntary distribution is in question. The essence of the Turkish Civil Code system is the distribution of the inheritance through the agreement of the heirs[10]. Voluntary distribution can also take place in two ways: (i) physical distribution and (ii) distribution agreement.

If all heirs have transferred the assets in the estate to each other in accordance with the agreement between them, the inheritance has been physically distributed[11]. A physical distribution agreement is not subject to any form; the completion of the necessary act of disposition according to the nature of each element of the estate is sufficient for the completion of physical distribution.

If the heirs merely agree on the distribution of assets in the estate instead of transferring them to each other, then a distribution agreement is in question. A distribution agreement refers to the agreement made unanimously by the heirs regarding to whom the assets and/or liabilities of the estate will be allocated in whole or in part. The distribution agreement[12], which must be made with the participation of all heirs, is subject to a written form for validity[13]. What is in question here is simple written form; even if an official form is required for the transfer of some goods and rights included in the estate, it is necessary and sufficient that the distribution agreement be made in simple written form.

It is not a condition that the agreement made among the heirs regarding the distribution of the inheritance covers the entire estate; it is perfectly possible to make an agreement aimed at distributing only some of the assets in the estate.

7. Specific Topics

Opening of the Will: To open a will, it must be delivered to the civil judge. After the death of the deceased, the person holding it is obliged to deliver it to the judge. If the will was drawn up by a notary, the duty to deliver it to the judge belongs to the notary. In case of failure to deliver, liability for damages will belong to the person who found the will or the official who prepared it. To open the will, a petition will be submitted to the Civil Court of Peace, and the judge will open the will, read it, examine its contents, and convey the content of the will to the interested parties within 1 (one) month. To convey the will to the interested parties, the judge will summon everyone involved. Interested parties have the right to be present while the will is being disclosed if they wish, but this is not a requirement.

♦ Protection Measures for the Estate: Protection measures aim to eliminate dangers that prevent the inheritance from passing and to ensure that the transfer is fully realized. With this, firstly, it is intended to ensure that the entire estate passes to the heirs and to prevent the estate's goods from being destroyed or smuggled. Secondly, it aims to determine and identify the heirs as much as possible.

The protection measures described in the law are; sealing the estate, taking inventory, official management of the inheritance, delivery of the will, opening of the will, and issuing a certificate of inheritance to the heir upon their request. Apart from these, upon the request of one of the heirs or on its own initiative, the civil court may appoint a representative for the inheritance partnership until distribution.

♦ Transfer of Joint Stock Company Shares by Death: In joint stock companies, company shares do not pass directly to the heirs after the death of a partner and are registered in the name of the estate until the distribution of the inheritance[14]. As long as the distribution of company shares included in the estate upon death is not carried out in accordance with the procedure, in accordance with the mandatory regulation of the Turkish Civil Code (TMK), the registration of company shares in the joint stock company share ledger before distribution can only be in the form of joint ownership.

On the other hand, the legal limitation that shares whose price has not been fully paid in joint stock companies can only be transferred with the company's approval will not apply to the transfer by inheritance. That is, in joint stock companies, even if the price has not been fully paid, there is no need for the company's approval for the transfer of rights related to the assets of the shares by inheritance[15]. However, for this transfer, an application must be made to the company by all the heirs or with a written distribution agreement they have made among themselves. The company will carry out the registration in the share ledger as joint ownership or shared ownership, depending on whether the shares have been distributed.

Similarly, contractual transfer restrictions foreseen in the company's articles of association will find limited application in the transfer of shares by inheritance. If the shares have been acquired through inheritance or as a requirement of the distribution of the inheritance, the company will not be able to refuse the transfer by citing the existing restrictions in the articles of association, provided that it proposes to take over the shares from the person who acquired them at their real value[16].

If the shares are acquired through inheritance and the distribution of the inheritance, their ownership and the property-related rights arising from them pass immediately; participation rights in the general assembly and voting rights pass to the transferee only with the company's approval. If the company has not rejected the request for approval within 3 (three) months at the latest from the date it received it, or if the rejection is unjust, approval is deemed to have been granted[17]

♦ Transfer of Limited Liability Company Shares upon Death: Unlike in joint-stock companies, in limited liability companies, in cases of transfer of capital shares through inheritance or partition of an estate, all rights and obligations pass to the person acquiring the capital share without the need for approval from the general assembly. However, the company may refuse to approve the person to whom the capital share has passed, provided that the company offers, within 3 (three) months from learning of the acquisition, to take over the shares at their real value for its own account, for the account of a partner, or for the account of a third party indicated by the company[18]. The refusal decision is effective retroactively as of the date the transfer occurred. The refusal shall not affect the validity of the general assembly decisions taken during the period until such a decision is made.