The Principle of Equalization in Inheritance Distribution

The Principle of Equalization in Inheritance Distribution. Inheritance law is a complex discipline that regulates the pecuniary consequences of the termination of a natural person’s legal personality upon death and determines how this estate is to be distributed among the surviving subjects. One of the most fundamental pillars of this discipline is the principle of equalization (collation), which serves as an equity mechanism aimed at eliminating the potential injustice created among legal heirs by the deceased’s inter vivos dispositions. Diligently regulated between Articles 669 and 675 of the Turkish Civil Code (TCC), this institution stipulates that gratuitous transfers made by the deceased during their lifetime to their legal heirs “on account of their inheritance share” must be included in the estate account at the time of distribution. The primary objective of equalization is to prevent the balance among legal heirs from being disrupted by inter vivos transfers and to establish absolute justice in the distribution of the inheritance.

Philosophical and Legal Foundations of Equalization

Equalization in inheritance is not merely a technical calculation method; it is a manifestation of the ideals of “equality” and the “protection of family unity” at the philosophical core of inheritance law. When a deceased person, while alive, provides capital to one child to start a business or transfers a significant real estate property to another for marriage preparations, this creates an imbalance to the detriment of other heirs. The legislator has presumed that, unless the deceased has expressed a contrary will, such large-scale transfers are essentially an “advance” and should be taken into account in the final distribution of the inheritance. This institution complements the status of legal heirship and builds a bridge between the deceased’s freedom of disposition and the legitimate expectations of the heirs.

In terms of its legal nature, equalization creates an obligatory relationship. However, this debt is not an ordinary creditor-debtor relationship but rather a liability specific to the inheritance distribution process, strictly tied to the principle of universal succession. Paragraph 1 of Article 669 of the Turkish Civil Code clearly states that legal heirs are mutually obligated to return the inter vivos gratuitous transfers they obtained from the deceased on account of their inheritance shares to the estate to ensure equalization. This obligation arises with the opening of the inheritance (the death of the deceased) and continues until the distribution is completed.

Material Conditions and Scope of the Equalization Liability

Certain objective and subjective conditions must coexist for a transfer to be subject to equalization. The absence of these conditions leads to the evaluation of the claim not within the framework of equalization law, but on the grounds of an action for reduction (tenkis) in case of violation of reserved portions, or a lawsuit for the cancellation and registration of title deeds in the case of collusive transactions.

The Element of Gratuitous (Inter Vivos) Transfer

The most fundamental material condition for equalization is that the transfer made from the deceased’s assets must be gratuitous. The gratuitous nature of the transfer may manifest as the deceased donating an asset, assuming a debt, or waiving a claim in favor of an heir. In cases of “mixed donation” (negotium mixtum cum donatione), frequently encountered in practice—where an asset is sold to an heir significantly below its value—if the difference was intended as a donation, that portion is subject to equalization. A decrease in the deceased’s assets without receiving an economic value in return is the triggering factor for the birth of the equalization debt.

Inter Vivos Transaction Nature

Equalization only concerns transactions carried out during the deceased’s lifetime. Testamentary dispositions, such as wills or inheritance contracts, are generally not subject to equalization; such dispositions are already met from the estate upon its opening and are subject to reduction to the extent they violate reserved portions. Equalization, on the other hand, questions the fate of values actually removed from the assets while the deceased was alive.

Transfer Made to a Legal Heir

The parties to an equalization relationship are always legal heirs. Transfers made by the deceased to a third party who is not a legal heir (e.g., to a nephew or a friend while the deceased’s siblings are alive) cannot be subject to equalization; such transactions can only be the subject of an action for reduction if they impair reserved portions. The status of plaintiff and defendant is based on the principle of benefiting from a gratuitous transfer and the subsequent impairment of the inheritance share. The person receiving the transfer must retain the status of heir at the time the inheritance opens; however, in cases such as renunciation of inheritance or disclaimer of inheritance, the liability of those who take their place remains reserved under TCC Article 670.

Intent to Act on Account of the Inheritance Share

For a transfer to be subject to equalization, the transaction must have been made as a deduction from the future inheritance share (on account of it). Here, the legislator has established two different presumption mechanisms based on the identity of the heir. These presumptions are the most critical elements determining the fate of the case by establishing which party bears the burden of proof.

Special Status of Descendants and Presumptions under TCC 673/2

The Turkish Civil Code makes a clear distinction between the deceased’s descendants (children, grandchildren, etc.) and other heirs regarding the equalization obligation. This distinction aims to protect the rights of other siblings or descendants when the economic future of a descendant is supported by the deceased.

Categories of Legal Equalization for Descendants

Pursuant to TCC 669/2, certain transactions made by the deceased for their descendants that serve to establish or maintain an independent economic life are subject to equalization “unless explicitly stated otherwise by the deceased.”

1. Providing Starting Capital: This includes the deceased providing monetary or in-kind capital for a child to open a workplace, equip an office, or establish a commercial enterprise. The goal here is for the heir to gain an economic foundation for their own livelihood.
2. Providing a Dowry: Expenses incurred during the marriage process are subject to equalization. However, the “customary measure” criterion applies; while dowry expenses that are reasonable and in accordance with local customs remain outside the scope of return, extraordinary expensive items or jewelry are included in the equalization.
3. Transferring Assets: Transactions such as transferring the title deed of a real estate property or transferring stock certificates are presumptively subject to equalization.
4. Debt Relief: The payment of an heir’s debt to third parties by the deceased or the deceased’s waiver of their own claim (release) against the heir creates a return obligation.

Transfers and Exceptions Outside the Scope of Equalization

Due to the social structure of society and the requirements of intra-family solidarity, it was not intended for every type of gratuitous transfer to become a subject of dispute among heirs. The law ensures this balance by exempting certain transfers from equalization.

Ordinary Gifts and Customary Expenses

Gifts given on holidays, birthdays, graduation ceremonies, or weddings that are proportional to the deceased’s socio-economic status are not subject to equalization. In determining whether a gift is “ordinary,” the size of the deceased’s assets, the family’s standard of living, and local customs in that region are taken into account. For example, a standard jewelry set given at a wedding by a very wealthy family may be considered ordinary, whereas a high-value piece of jewelry relative to the total assets of a middle-income family may be subject to return.

Education and Training Expenses

Expenses incurred for the education of children and their acquisition of a profession are, as a rule, outside the scope of equalization. This is an extension of the parents’ obligation to care for and educate their children. However, if these expenses “exceed customary limits” (for example, if one child receives an extremely costly private education abroad while the other siblings attend local schools, and this situation strained the deceased’s budget), only the portion exceeding the customary limit may be subject to equalization. Here, unless the deceased has a contrary will, only the amount exceeding the reasonable limit is included in the calculation.

The Deceased’s Intent to Exempt from Equalization

The provisions on equalization are not mandatory but supplementary rules of law. The deceased can always declare their wish for a transfer not to be returned. While this exemption for descendants must be “explicitly” stated (provable in writing or orally), for other legal heirs, the deceased’s silence already creates a presumption of exemption. This intent of the deceased can be proven by any evidence and is not subject to any formal requirements.

Equalization Procedure and the Exercise of Election Rights (TCC 671)

The heir under the equalization obligation is granted an “election right” by law regarding how to fulfill this debt. This right provides flexibility to protect the economic situation of the debtor.

1. Return in Kind: The heir physically returns the asset received during the lifetime (e.g., a real estate property or an antique item) to the inheritance partnership. In this case, the asset takes its place in the distribution pool, and the heir receives their own share from the estate on equal terms with other heirs.
2. Offset Against Value: The heir continues to hold the asset but deducts an amount equal to its value “at the time of equalization” from their own inheritance share. If the value of the asset received is more than their inheritance share, they are obligated to pay the excess to the other heirs in cash; if it is less, they can claim the difference from the estate.

Equalization Value and Technical Calculation Method

Ensuring justice in the distribution of inheritance is directly related to the question of at what point in time the prices of asset values will be taken into account. TCC Article 673 clarified the time of valuation by stating, “Equalization is made according to the value of the transfer at the time of equalization.”

Valuation Time and the Effect of Inflation

There are different views in legal doctrine and Court of Cassation (Yargıtay) decisions regarding the term “moment of equalization.” While values at the moment the inheritance opened (date of death) were taken as a basis during the old law period, the modern approach and TCC No. 4721 argue that the value “at the date closest to the moment of distribution” should be taken as a basis, considering changes in the purchasing power of money. This approach prevents the heir receiving the transfer from unfairly benefiting from an increase in value or suffering from a loss in value.

The Virtual Estate (Adding to the Pool) Calculation

the equalization process begins with a summation process carried out on paper, referred to as the “virtual estate.”

• Determination of Net Estate: The actual net estate is found by subtracting debts and expenses from the active assets left by the deceased at the time of death.
• Addition of Values Subject to Return: All values received by heirs during the lifetime and subject to equalization are added to this net estate at their current fair market values.
• Calculation of Shares: This “virtual total” is divided by the legal share ratios of the heirs.
• Offsetting: Each heir’s share is reduced by the amount they received during the lifetime, and the actual amount they will receive from the estate is revealed.

Destruction or Damage of the Asset Subject to Transfer (TCC 673/2)

In cases of damage, benefit, or complete destruction (loss) of the item subject to equalization occurring before or after the opening of the inheritance, the relationship between the heirs is resolved within the framework of the provisions on unjust enrichment (TCO 77-82).

Distinction Between Bona Fide and Mala Fide Heirs

Whether the heir is “in good faith” (bona fide) is the fundamental measure determining the limit of liability in the application of unjust enrichment provisions.

• Bona Fide Heir: An heir who does not know or is not expected to know that the transfer is subject to return. If the asset has been destroyed or its value has decreased without their fault, they are only obligated to return the amount remaining in their possession. If they have disposed of the asset, they return the proceeds obtained. They have the right to claim mandatory and beneficial expenses incurred from the estate.
• Mala Fide Heir: An heir who knows or, through gross negligence, does not know that the asset will one day be subject to equalization. They are responsible for the destruction or loss of value of the asset, even without their fault. Even if the asset is no longer in their possession, they must return the full value of the asset at the time of equalization.

Loss of Heir Status and Transfer of Equalization Debt (TCC 670)

The obligation of equalization is accepted as a debt tied to the “inheritance share” possessed, not to the heir personally. Therefore, the loss of the status of heir for various reasons does not eliminate the return debt.

1. Liability of Successors: If an heir dies before the opening of the inheritance or loses the status of heir for another reason (renunciation, unworthiness), their descendants who take their place are obligated to equalize the transfers the original heir received. For example, a father who received starting capital from his father dies before him; when the grandchildren become heirs to their grandfather, they must return this capital received by their father to the estate.
2. Principle of Universal Succession: In accordance with the principle that the inheritance passes as a whole with all rights and debts, the equalization debt also passes along with the share. This prevents one branch (stirps) from receiving more in total than other branches if the deceased transferred part of their assets to that branch during their lifetime.

Differences Between Equalization and Action for Reduction (Tenkis)

Although both equalization and reduction (tenkis) lawsuits oversee the deceased’s dispositions, they differ in the legal interests they protect. Which lawsuit a transfer will be subject to depends on the status and purpose of the person filing the lawsuit.

Distinction Between Equalization and Collusion by the Deceased (Muris Muvazaası)

Although the equalization lawsuit and the lawsuit for collusion by the deceased (muris muvazaası – smuggling property from inheritance) are frequently confused in practice, both sit on completely different legal grounds.

In collusion by the deceased, the deceased shows a real estate property they actually donated as a “sale” or a “contract for maintenance until death” in the land registry. This transaction is “invalid” because the apparent transaction does not comply with the will, and the hidden transaction does not comply with the formal requirement (official deed at the land registry). The goal in a collusion lawsuit is to have the title deed corrected by ensuring the asset is deemed never to have left the estate.

In an equalization lawsuit, however, the transaction made by the deceased (e.g., a donation) is completely “valid.” However, it is requested that this valid transaction be taken into account during distribution to ensure justice. According to the Court of Cassation, if a transaction is collusive, provisions for equalization or reduction are not applied; first, the path of annulment due to collusion must be taken.

Conclusion: The Social and Legal Role of the Equalization Principle

The principle of equalization in inheritance is one of the most elegant and equitable institutions of Turkish Inheritance Law. It transforms the asymmetric aid provided by the deceased to their children or legal heirs during their lifetime from being sources of dispute after death into a fair mathematical calculation. In order to protect “intra-family peace,” the legislator presumed that major aid is an advance on the inheritance share; however, by respecting the deceased’s freedom of disposition, the legislator allowed for the declaration of a contrary will at any time.

In practice, although equalization lawsuits require complex financial calculations and retrospective readings of intent, they are the most effective way to establish justice in the generational transfer of property. Especially in inflationary economies, the “value at the time of equalization” rule is a vital valve preventing heirs from suffering loss of rights. It is of critical importance for legal heirs to observe the hierarchy with reduction and collusion lawsuits when exercising these rights and to correctly understand their burdens of proof for the health of the judicial process. Ultimately, equalization proves that inheritance is not just a distribution of property but a process where intra-family justice is registered for the last time.