A contract of maintenance until death is a type of contract under which a person who, by reason of advanced age or illness, is in need of care and supervision undertakes to transfer specified assets to the other party, while the other party undertakes to care for and look after that person until the end of his or her life and to meet his or her requirements. The purpose of the institution is to ensure that the needs of a person who has become in need of protection are met to an extent consistent with equity.
Article 612 of the Turkish Code of Obligations No. 6098 requires such contracts to be concluded in the form of a contract of inheritance. That form is a condition of validity; maintenance contracts not drawn up in the form of a contract of inheritance produce no legal effect. The contractual relationship may come to an end through withdrawal from the contract, the death of the maintenance debtor, bankruptcy, or agreement between the parties.
In practice, such contracts are frequently found to have been concluded with the aim of concealing assets from the heirs. In that event the heirs may bring a claim for annulment of title deed and registration, relying on simulation by the deceased.
Heirs whose reserved portions are impaired by the maintenance contract may, in addition, bring an action for abatement.
What Is a Contract of Maintenance Until Death?
Even persons of comfortable means may not feel secure, particularly in periods of old age and illness. In such periods they may need someone to look out for them, meet their requirements and take a close interest in them.
In a relationship of this kind, the person who assumes the obligation to transfer a specified asset to the other party is called the maintenance creditor. The party who undertakes the obligation to care for and look after that person until death and to meet his or her requirements is regarded as the maintenance debtor. The relationship so established gives the elderly or ill party the assurance that he or she will be cared for, while conferring on the other party a right over a specified asset. In practice this relationship is called a contract of maintenance until death.
The statutory definition of the institution is found in Article 611 of the Turkish Code of Obligations No. 6098:
Turkish Code of Obligations Art. 611
“A contract of maintenance until death is a contract under which the maintenance debtor undertakes to care for and look after the maintenance creditor until death, and the maintenance creditor undertakes the obligation to transfer to him a body of assets or certain assets.”
The scope of the maintenance debtor’s obligation is not fixed; it is determined in accordance with equity, having regard to the value of the assets received and to the social position previously occupied by the maintenance creditor.
How Is a Contract of Maintenance Until Death Made?
Article 612 of the Turkish Code of Obligations No. 6098 makes it mandatory for this contract to be drawn up in the form of a contract of inheritance. Where that form is not observed, the contract cannot acquire validity.
The Act provides one exception to that rule. Where the contract has been concluded by a care institution recognised by the State and in a manner conforming to the conditions laid down by the competent authorities, written form is regarded as sufficient; drawing it up in the form of a contract of inheritance ceases to be a condition of validity.
This exception covers cases in which the care relationship is subject to a specific regulatory framework and is conducted under the supervision of a care institution of official character. So long as the conditions imposed by the competent authorities are observed, contracts of this kind may be concluded in writing and will produce effect. In all other cases the form of a contract of inheritance must be observed.
Form of the Contract and the Conditions Required
We noted above that, pursuant to Article 612 of the Turkish Code of Obligations No. 6098, the contract must be concluded in the form of a contract of inheritance. Contracts of inheritance drawn up in the form of an official will are in practice predominantly executed before a notary.
Beyond this, further conditions are required for the validity of the contract:
Mutual agreement of intention: The contract must have been concluded by the free will of both parties and as the result of mutual agreement.
Capacity of the parties: Both the maintenance creditor and the maintenance debtor must possess the capacity to conclude the contract. Legislation or the competent authorities may regulate whether particular persons hold that capacity.
Drawing up in writing: It is mandatory for the contract to be reduced to writing. The rights and obligations of the parties and the content of the contract are thereby clarified, and the document serves as evidence should a dispute arise.
Presence of witnesses: Since the contract is concluded in the form of an official will, two witnesses must also be present before the public officer. The witnesses attest that the instrument was drawn up in due form and sign the document.
The assets must belong to the maintenance creditor: The assets forming the subject matter of the contract must be owned by the maintenance creditor. Assets belonging to third parties may not be used for this purpose, nor may rights over immovable property be transferred by this contract.
Living in the same dwelling (unless otherwise agreed): As a rule, the parties are expected to live together in the same house. The parties are nonetheless free to make a different arrangement in this respect.
The conditions listed are decisive for the survival of the contract. A contract concluded in conformity with them is regarded as legally valid, and a lifelong maintenance obligation together with the rights attached to it arises between the parties.
Parties to the Contract
The two parties to the contract are the maintenance creditor and the maintenance debtor. For validity, both parties are required to possess the capacity of discernment, to be of full age and not to be subject to legal restriction of capacity.
The Maintenance Creditor
The maintenance creditor is the person who is to be cared for under the contract. Only natural persons may occupy this position. By the contract, the maintenance creditor assumes the obligation to transfer a body of assets, or certain assets, to the maintenance debtor.
Where the maintenance creditor has transferred an immovable to the maintenance debtor during his or her lifetime, he or she holds a statutory mortgage right over that immovable in the same way as a seller. The purpose is to afford the maintenance creditor a safeguard against the possibility that the maintenance debtor may, after the transfer, neglect the obligations of care and supervision.
The Maintenance Debtor
The maintenance debtor is the party entitled under the contract to require that a body of assets, or certain assets, be transferred to him or her. This capacity may be held by natural persons, and legal persons may likewise be maintenance debtors.
The maintenance debtor is obliged to perform his or her obligations to the extent required by equity, taking as the basis the value of the assets received and the maintenance creditor’s previous social position. Providing suitable nourishment and accommodation, showing the necessary care in the event of illness and arranging for treatment are the principal manifestations of that obligation.
Termination of the Contract
Withdrawal from the Contract
Turkish Code of Obligations Art. 616 affords the parties the possibility of withdrawing from the contract in certain cases upon a period of notice. Under that provision, where there is a marked disproportion between the parties’ obligations and the party obtaining the greater benefit is unable to establish that the excess was conferred with the intention of making a gift, the party invoking the imbalance may give notice of termination at any time. Upon the expiry of 6 months from a notice based on disproportion, the contract falls away of its own accord and with retrospective effect.
Turkish Code of Obligations Art. 617, for its part, governs termination without a period of notice. Where the other party’s conduct in breach of its contractual obligations has rendered the contractual relationship intolerable, or where other important grounds have made it impossible to continue the relationship, termination without notice is possible.
Where the contract is brought to an end on these grounds, the party at fault must return what it has received; it is also required to pay appropriate compensation for the loss suffered by the party not at fault.
Although the text of the Act uses the expression of termination, according to the case law of the Court of Cassation the provisions concerning withdrawal from the contract are applied here.
Termination on the Death of the Maintenance Debtor
Where the maintenance debtor dies after the contract has been concluded, the maintenance creditor may request the termination of the contract within 1 year.
Bankruptcy of the Maintenance Debtor
Where the maintenance debtor becomes bankrupt after the conclusion of the contract, the maintenance creditor may register with the bankruptcy estate a claim corresponding to the capital value agreed in the contract. That claim may be asserted as a preferential claim in the bankruptcy proceedings.
Setting the Contract Aside by Agreement of the Parties
The parties may bring the contract to an end at any time by agreement. Although the conclusion of the contract is subject to official form, ordinary written form is regarded as sufficient for setting it aside.
Annulment of the Contract and the Action for Abatement
The annulment of a contract of maintenance until death is governed by Article 615 of the Turkish Code of Obligations No. 6098. Under that provision, where the maintenance creditor, by reason of the contract concluded, loses the ability to perform his or her obligation towards the persons to whom he or she owes alimony by law, those thereby deprived may seek annulment of the contract.
A court faced with such a request by alimony creditors may, instead of annulling the contract, order that alimony be paid to the persons to whom that obligation is owed, to be set off against the obligations to be performed by the maintenance debtor. Under this solution the contractual relationship continues and only the content of the parties’ obligations changes.
Heirs who consider that their reserved portions have been impaired by the contract may, for their part, bring an action for abatement. Where, for example, the maintenance creditor has transferred to the maintenance debtor the dwelling that is his or her only immovable, the heirs may make a claim for abatement on the ground of infringement of the reserved portion. In that event the court may make the necessary adjustments, having regard to the rights of the heirs.
For the details of the institution of abatement, the note entitled “What Is an Action for Abatement?” may be consulted.
Annulment of Simulation by the Deceased Disguised as a Maintenance Contract
The conclusion of a contract of maintenance until death with the aim of concealing assets from the heirs is frequently encountered in practice. Where the deceased has transferred his or her immovable property under the guise of a contract of maintenance until death, the heirs may bring an action for annulment of title deed and registration, relying on simulation by the deceased.
The essence of simulation lies in the divergence between the result the parties actually intend and the transaction they present to the outside world. Where no genuine care relationship has arisen between the parties and no such obligation has ever been assumed, yet the appearance of such a relationship is created so that the deceased’s immovable is transferred to the other party with the intention of making a gift, the transaction is a simulated one. The heirs may assert that the transfer was made in order to conceal assets from them and seek the annulment of the entry in the land registry and registration of the immovable in their own names.
The judgment of the 1st Civil Chamber of the Court of Cassation of 12 June 2013, case no. 2013/9933, decision no. 2013/9763:
“Whether disputes of this kind can be brought to a sound, just and correct resolution depends upon the true aspect of the transfer made to the respondent — in other words, upon the deceased’s real intention and purpose — being brought to light in a manner leaving no room for doubt. Since the real intention and purpose, being an internal matter and a concealed one, is generally difficult to establish and to elucidate, it is of great importance that the evidence on this point be gathered in full and also that it be assessed together and correctly. To that end it is necessary to have recourse to such matters as the customs and traditions of the country and the locality, social tendencies, the ordinary course of events, whether the deceased had a justified and reasonable ground for making the contract, whether the respondent side had the purchasing power, the difference between the sale price and the true value at the date of the contract, and the human relationship between the parties and the deceased.
Turning to the present case, it is established on the register that the deceased persons transferred to the respondents, by a contract of maintenance until death, the 13 immovables that form the subject matter of the present action and that constitute close to the whole of their assets. When this concrete fact is assessed together with the principles referred to above, the conclusion is reached that the real intention of the deceased persons T. and S., in transferring so large a number of immovables when it was open to them to secure the contract of maintenance until death by transferring a smaller quantity of immovable property, was in truth not to make a maintenance contract but to conceal assets from the heir who was their other, female child, in favour of the male child to whom the transfer was made and his wife.”
For the details of the discussion of simulation as a whole, the note entitled “Concealing Assets from the Estate – What Is Simulation by the Deceased?” may be examined.
Example of a Contract of Maintenance Until Death
When the text of the contract is drafted, matters such as the identity details of the parties, the determination of the assets to be transferred in a manner leaving no room for doubt, the scope of the obligations assumed by the maintenance debtor and whether the parties are to live together are expected to be regulated expressly. Since the contract is subject to the form of a contract of inheritance, the instrument must be drawn up before a public officer and in the presence of two witnesses.
Frequently Asked Questions
Between whom is the contract concluded?
The parties to the contract are the maintenance creditor, whose care, supervision and requirements are to be provided for, and the maintenance debtor, who undertakes those obligations. There may be a relationship of kinship or marriage between the parties, but persons with no blood tie whatever between them may equally conclude the contract.
Which needs fall within the scope of the contract?
The contract is essentially concerned with meeting the maintenance creditor’s basic requirements. Accommodation, nourishment, clothing, cleanliness and treatment may be counted within that scope. Depending on the particular circumstances of the parties, however, other needs and services may also arise.
What is the duration of the contract?
The maintenance obligation continues for so long as the maintenance creditor is alive. The duration of the contract is therefore tied to the maintenance creditor’s lifetime.
What are the maintenance debtor’s basic obligations?
Pursuant to Article 614 of the Turkish Code of Obligations No. 6098, the maintenance debtor is obliged to provide suitable food and accommodation, to show the necessary care in the event of illness and to arrange for treatment. These are minimum responsibilities, and equity requires that other needs be met as well.
In what circumstances may the contract be annulled?
Where there are defects of intent (such as mistake, deceit, duress or fraud), the validity of the contract may be open to question. Moreover, pursuant to Turkish Code of Obligations Art. 615, where the maintenance creditor is by reason of the contract rendered unable to perform his or her obligation towards persons to whom he or she owes alimony, those affected may make a request for annulment.
How does the death of one of the parties affect the contract?
The contract comes to an end on the death of the maintenance creditor, since the obligation consists in an undertaking of lifelong care. The death of the maintenance debtor, by contrast, does not bring the contract to an end of its own accord. The maintenance creditor may terminate the contract within 1 year of that death. If this right is not exercised, the relationship continues with the maintenance debtor’s heirs. Where, however, the contract is of an inheritance-law character — that is, where it has been undertaken that the assets will pass to the maintenance debtor on the maintenance creditor’s death — the contract likewise comes to an end on the maintenance debtor’s death.
May the terms of the contract be altered subsequently?
The parties may, by mutual agreement, recast the terms of the contract at any time.
In which legislation is the institution regulated?
The contract of maintenance until death is dealt with in Articles 611 to 619 of the Turkish Code of Obligations No. 6098. Since the contract may be concluded only in the form of a contract of inheritance, the provisions on contracts of inheritance in Articles 545 to 549 of the Turkish Civil Code No. 4721 also find application.
May the maintenance creditor transfer his or her rights?
Article 619 of the Turkish Code of Obligations No. 6098 expressly prohibits this; the maintenance creditor may not transfer the rights arising from the contract to a third party.
What are the parties’ mutual obligations?
Depending on the type of contract, the maintenance creditor may assume the obligation to transfer a specified asset during his or her lifetime. Under arrangements of an inheritance-law character, the maintenance debtor becomes entitled to the asset forming the subject matter of the contract upon the maintenance creditor’s death. The maintenance debtor, for his or her part, is obliged, for so long as the creditor is alive, to attend to and look after that person, to undertake his or her care, to arrange for treatment and to meet requirements such as clothing and cleanliness.
May a contract concluded in official form be terminated in ordinary written form?
Even where the contract has been concluded in the form of a contract of inheritance, the parties may agree to bring the relationship to an end by an ordinary written agreement.
What may be done where the reserved portion is infringed?
The shares of heirs entitled to a reserved portion may be impaired by this contract; in that event an action for abatement comes into play. Where, for example, a person who has children and is in need of care concludes a maintenance contract with his or her sibling and undertakes that the dwelling that is his or her only asset will pass to that sibling on death, the children may make a claim for abatement in their capacity as heirs entitled to a reserved portion.
What is the definition of the contract?
The name is given to a contract under which the maintenance creditor undertakes to transfer a specified asset and the maintenance debtor undertakes the obligation to care for and look after that person until death and to meet his or her requirements.
What is the condition as to form?
The Act prescribes a special form for this contract: it must be drawn up in the form of a contract of inheritance. Where that form is not observed, the contract does not acquire validity.
May the whole of a person’s assets be transferred in this way?
Since transferring the whole of a person’s assets by this contract would infringe the shares of heirs entitled to a reserved portion, those heirs may bring an action for abatement. The transfer of the entirety of a person’s assets may, in addition, carry weight in any subsequent action for simulation by the deceased as regards proof of the simulation.
What consequences does a party who acts in breach of its obligations face?
Where one of the parties fails to perform its contractual obligations, or where other important grounds make it impossible to continue the relationship, the contract may be brought to an end. In that event the party at fault returns what it has received and pays appropriate compensation for the loss of the party not at fault.
What happens if an alimony obligation is affected?
Where the maintenance creditor is by reason of the contract unable to perform his or her obligation towards persons to whom he or she owes alimony, the alimony creditors may seek annulment of the contract. Instead of annulment, the judge may also order that alimony be paid to those persons, to be set off against the obligations of the maintenance debtor.
The Independent Legal Assessment
Where a genuine care relationship exists between the parties, the contract of maintenance until death is a balanced legal instrument that both affords security to a person in need of protection and gives the other party a return consistent with equity. The difficulty begins where the contract is detached from that function and used as a technique of transfer. The criterion to which the courts give weight in practice is whether the extent of the assets transferred and the maintenance obligation assumed genuinely correspond to one another.
The steps taken when the contract is concluded determine the course of the file in any subsequent action for abatement or for simulation. Keeping records from the outset that demonstrate that the care was actually provided is the strongest defensive tool in such actions.
In a particular file, attention should be paid above all to the following matters:
- That the contract has been concluded in conformity with the form of a contract of inheritance, before a public officer and in the presence of two witnesses
- Assessing whether the assets transferred and the maintenance obligation assumed correspond to one another in value
- Where the maintenance creditor has heirs entitled to a reserved portion, anticipating the risk of abatement at the contract stage
- Where an immovable has been transferred, agreeing whether the statutory mortgage right is to be exercised
- Keeping regular records of expenditure, health and residence relating to the performance of the maintenance obligations
- Not missing the period of 1 year in the event of the maintenance debtor’s death
Independent Legal provides advisory services and conducts litigation at every stage of the process, from the conclusion of contracts of maintenance until death to the pursuit of abatement and simulation disputes based on such contracts.