Divorce is a process with many layers not only emotionally but also legally. When the marital union comes to an end, one of the first headings to arise for the spouses is the basis on which their assets are to be divided. The questions most frequently raised in practice are gathered under the following headings:
- How are assets held before the marriage positioned in the liquidation?
- To what extent are joint debts included in the division?
- Do the spouses’ personal assets enter the division?
- In what proportion are assets acquired during the marriage divided?
The framework of the division on divorce is set by the matrimonial property regimes regulated in the Turkish Civil Code. Unless the spouses have agreed on a different regime, the statutory matrimonial property regime — the regime of participation in acquired property — applies. The same result does not, however, follow in every file; the spouses having chosen a different regime during the marriage, the nature of the assets they hold and the circumstances particular to the case may directly affect the course of the division.
In this briefing note we address in detail how the division of property is conducted, which assets are included in the liquidation, and the matters to be borne in mind for the protection of rights.
Which Matrimonial Property Regime Governs the Division of Property?
The framework of the division is shaped according to the matrimonial property regime adopted by the spouses before or at the time of the marriage. The principal regimes encountered in practice in Türkiye are as follows:
- The regime of separation of property with shared ownership: The spouses hold shared entitlements over certain elements of the assets, and those values are divided at the divorce stage.
- The regime of separation of property: Each spouse retains full authority over his or her own assets throughout the marriage.
- The regime of participation in acquired property: This provides for the equal division between the spouses of the values acquired during the marriage.
When and How Is an Action for the Division of Property Brought?
The division of property is carried out with a view to the fair apportionment of the values acquired after the marital union has come to an end. The Turkish Civil Code has placed this division on the principle of equality; as a rule, the assets acquired during the marriage are divided equally. The process is nevertheless subject to certain statutory rules and to the decisions of the courts.
The divorce action and the action for the division of property cannot be determined at the same time; certain conditions must first be met. The process operates as follows:
- Claims relating to the liquidation of the matrimonial property regime are not taken into account while the divorce proceedings are pending.
- The court may not give judgment on the division unless the judgment of divorce has become final.
- The action for the division of property may be brought before the divorce is concluded; the court will, however, first await the divorce becoming final.
How Does the Process Operate Once the Judgment of Divorce Has Become Final?
Whether the divorce is concluded on an uncontested or a contested basis, the liquidation stage may begin once the judgment becomes final. Following that, the court conducts the proceedings directed at the division of the assets.
The liquidation is completed by following these stages:
- Identifying the elements of the spouses’ assets
- Establishing whether each value is personal property or acquired property
- Calculating the remaining amount by deducting debts and passive values from the acquired property
- Determining the spouses’ participation claims
Identifying the Assets to Be Included in the Division
In determining how the division is to be carried out, the first task is to establish which values will enter the liquidation. The Turkish Civil Code divides assets in two, as acquired property and personal property. Only acquired property is taken into account in the liquidation; personal property is left outside the division.
Acquired Property
Acquired property is defined in Article 219 of the Turkish Civil Code No. 4721 and denotes the assets obtained by the spouses for consideration during the marriage. These values, gained within the marital union, are regarded as joint assets within the framework of the regime of participation in acquired property and are divided following the divorce.
The Scope of Acquired Property
A spouse’s acquired property consists principally of the following heads:
- Values replacing acquired property: New property purchased in place of property acquired during the marriage and subsequently disposed of is likewise regarded as being of the same character. Where, for instance, a vehicle bought during the marriage is sold and another vehicle bought in its place, the new vehicle is also acquired property.
- The proceeds of personal property: Income such as rent, interest or a share of profit obtained by a spouse from his or her personal property is regarded as acquired property. The rental income from immovable property owned by one of the spouses before the marriage falls within this scope, for example.
- Compensation paid for loss of earning capacity: Compensation paid on grounds such as an occupational accident, disability or occupational disease is assessed as acquired property.
- Social security and benefit payments: Pensions received from institutions such as the Social Security Institution (SGK), Emekli Sandığı and Bağ-Kur, retirement bonuses, unemployment benefit and similar payments fall within this scope.
- Income obtained in return for work: All income of a similar nature earned by one of the spouses through his or her labour — salary, wages, bonuses and premiums — is in the nature of acquired property.
The Passive Values of Acquired Property
The gross amount of the acquired property is not taken directly as the basis of the division; there may be certain heads that must be deducted from those values. These make up the passive side of the acquired property:
- Statutory encumbrances on the assets: If there is a mortgage or a similar legal encumbrance on one of the items of acquired property, the total of those encumbrances is also deducted from its value.
- Contributions transferred from personal property to acquired property: Where a spouse has made a contribution from his or her own personal assets to the acquired property, the amount of that contribution is deducted from the value of the acquired property.
- Debts attaching to acquired property: If credit was used in the purchase of an immovable or a vehicle and an unpaid balance of that credit remains, that debt must be deducted from the value of the item in question.
Personal Property
Personal property, for the purposes of the Turkish Civil Code, denotes the assets held by the spouses while the matrimonial property regime is in force and regarded as belonging to them exclusively. The elements accepted as personal property by law are as follows:
- Values replacing personal property: Values taking the place of an item of personal property are likewise regarded as being of the same character.
- Claims for non-pecuniary damages: Non-pecuniary damages obtained by one of the spouses by reason of an infringement of his or her personality rights are personal property.
- Property existing at the start of the regime or acquired without consideration: Values belonging to one of the spouses at the time the matrimonial property regime began, together with assets subsequently obtained by way of inheritance or another gratuitous transfer, fall within this scope.
- Items devoted solely to the personal use of one spouse: Items acquired for the purpose of personal use belong to the spouse concerned and remain outside the scope of the matrimonial property regime.
The Liquidation of Acquired Property
Liquidation is the whole of the successive legal operations concerning how the assets are to be divided following the divorce.
Identifying the Acquired Property
Establishing which value is to be regarded as acquired property may be one of the most laborious stages of the file. At this stage the elements of the assets are examined one by one and a distinction is drawn between the spouses’ joint and personal property.
What Is the Participation Claim and How Is It Calculated?
The determination of the active and passive values relating to the spouses’ acquired property forms the core of the liquidation of the matrimonial property regime. That determination is made by deducting the passive values from the active values.
Calculating the Residual Value
Let us consider by way of an example the picture that emerges once the active and passive values of the wife’s and the husband’s acquired property have been established.
The result of this calculation is the “participation claim”. Half of the residual value found on the acquired property of each spouse corresponds to the other spouse’s participation claim:
- Half of the residual value calculated on the husband’s acquired property: TRY 380,000
- Half of the residual value calculated on the wife’s acquired property: TRY 250,000
As will be seen, each of the spouses is a creditor of the other. These claims are set off against one another and the balance constitutes the amount the creditor spouse may claim from the other. In the example the balance is TRY 130,000 (TRY 380,000 – TRY 250,000 = TRY 130,000). Accordingly, and subject to exceptional circumstances, the wife acquires a claim in the amount of TRY 130,000.
The Division of Debts and Set-Off
In the divorce process it is not only the assets that are divided but also the joint liabilities. The credits used jointly by the spouses and their joint debts are determined in the course of the proceedings; each spouse’s share of liability is assessed by the court.
Reduction or Removal of the Participation Claim
The participation claim is the basic instrument of calculation relied upon in dividing acquired property, and the residual value taken as the basis of the calculation determines, as a rule, the spouses’ share ratio. Certain exceptional circumstances may nevertheless lead to that ratio being reduced or removed altogether. Those exceptions are laid down in the second paragraph of Article 236 of the Turkish Civil Code No. 4721.
Exceptional Circumstances under Turkish Civil Code Art. 236(2)
That paragraph allows for the alteration of the share ratio of the spouse at fault in the calculation of the participation claim to be made by reason of the divorce:
Turkish Civil Code No. 4721 Art. 236(2)
“In the event of divorce by reason of adultery or an attempt on life, the judge may order that the share ratio of the spouse at fault in the residual value be reduced or removed in accordance with equity.”
Under the provision, where the divorce is founded on the ground of adultery or an attempt on life, the judge may reduce the share of the spouse at fault in the residual value in accordance with equity, or remove it entirely. The provision is of importance in ensuring that faulty conduct is reflected in the division of property and that rights are protected fairly.
Allegations of Concealment of Assets and the Legal Process
Concealment of assets is a phenomenon frequently encountered in divorce files that may give rise to grave legal consequences. One of the spouses may seek to injure the other’s entitlement by hiding assets, keeping them out of sight or transferring them to third parties. Such conduct is not only unethical but also unlawful, and may lead to serious sanctions.
What Is Concealment of Assets?
Concealment of assets is where one of the spouses seeks to cause the other loss, both legally and economically, at the time of the division, by disposing of assets below their true value, transferring them to others or hiding them.
The Legal Dimension of the Allegation
Allegations of concealment of assets advanced in divorce and division of property actions constitute a breach of the Turkish Civil Code and of the other relevant provisions. A spouse hiding assets or transferring them to other persons directly affects the other party’s entitlement arising from the division. Such an attitude is also irreconcilable with the principle of fair division.
The Court Process and the Measures That May Be Taken
Where an allegation of concealment of assets arises, the courts are obliged to examine those accusations in detail and to take the necessary legal measures. The evidence submitted by the parties is assessed, a court-appointed expert is instructed where required, and a sanction may be applied to the party who breaches the obligation to declare assets.
The principal legal measures that may be resorted to against allegations of concealment of assets are as follows:
- Redress by way of the participation claim and damages: Where concealment of assets is established, the loss suffered by the other spouse may be remedied through the participation claim or through pecuniary damages.
- Uncovering the act of concealment: The detection of such transactions is not always easy; where it is established, however, the court may examine the transfers made and secure the return of the property to the assets of the spouse concerned.
- Declaration of assets and attachment: The spouses are obliged to declare their assets in the course of the divorce. Where a suspicion of concealment arises, the court may impose an attachment on the assets or restrict rights of ownership provisionally.
Arrangements the Spouses May Make in an Uncontested Divorce
An uncontested divorce is the route by which the process is completed by agreement and within a shorter period. Along this route the spouses may also reach agreement on the division of property; for the purposes of the Turkish Civil Code, agreements of the spouses relating to the division are binding.
The court nevertheless reviews whether the agreement reached is consistent with equity and may set the agreement aside where it considers this necessary. Arrangements between the spouses acquire legal validity upon the completion of the divorce.
Payment of the Participation Claim
The Form of Payment
Payment of the participation claim may be sought in cash. Let us suppose that the debtor spouse owns an immovable; the creditor party may not claim that title to that immovable be transferred to him or her. What is open to the creditor spouse is the right to claim the participation claim in cash alone. The debtor spouse may, by contrast, choose to make payment in cash or in kind.
Assignment and Transfer of the Claim
The participation claim acquires the character of a claim in law from the moment it becomes final. As a result, the creditor spouse may transfer that right to a third person, assign it or pass it to his or her heirs. Where certain conditions are present, the participation claim is assessed as a financial right that may be transferred to others.
The Action for the Division of Property
Divorce is the moment at which the marital union comes to an end and the parties begin to build legally separate lives. With the divorce, the matrimonial property regime between the spouses also comes to an end, which requires the division of the values acquired during the marriage. For the purposes of the Turkish Civil Code, division following divorce is a legal necessity, and an action for the division of property may be brought to that end.
When May the Action Be Brought?
The action for the division of property may be brought in parallel with the divorce action or after the divorce. Where it is brought together with the divorce action, the judgment of divorce becoming final is awaited. This prevents a decision being given on the division before the divorce has become final in law. Once the judgment becomes final, the spouses’ entitlements in the division are determined and the operation of dividing the assets is set in motion.
The Time Limit for Bringing the Action and the Statute of Limitations
The action for the division of property may be brought once the judgment of divorce has become final. An application must, however, be made within a period of ten years from that judgment becoming final. If no action is brought within that period, the claim to a division may be regarded as legally invalid and the possibility of dividing the assets falls away.
The Court with Subject-Matter and with Territorial Jurisdiction
Court with subject-matter jurisdiction: Subject-matter jurisdiction in divorce and division of property actions lies with the family courts. In places where no family court has been established, these actions are heard by the civil courts of first instance sitting as family courts.
Court with territorial jurisdiction: The court that ordered the divorce is accepted as having territorial jurisdiction. There is nevertheless no rule of exclusive jurisdiction here; where an action is brought before a court lacking jurisdiction, an objection to jurisdiction must be advanced in time.
Independent Legal Assessment
In files concerning the liquidation of the matrimonial property regime, the element determining the outcome is most often not the legal argument but the work done on records and documents. Whether a value is to be regarded as acquired property or personal property, whether a contribution made from personal property can be proved, and whether credit balances have been correctly entered on the passive side, directly alter the amount of the participation claim.
The second important heading is timing. Since no decision on the liquidation can be given before the judgment of divorce becomes final, claims are most often advanced in a separate file. Where it is overlooked that the ten-year period runs from the date on which the judgment became final, even a well-founded claim on the merits may come to nothing on grounds of time.
In a particular dispute we recommend that the following headings be prioritised:
- Drawing up in full, from the records, the immovables, vehicles, bank accounts and company shares acquired during the marriage
- Collating the inheritance, gift and pre-marital title documents founding a claim that property is personal
- Correctly calculating credit balances and mortgage encumbrances as passive heads
- Assessing the possibility afforded by Turkish Civil Code Art. 236(2) in files where the ground of divorce is adultery or an attempt on life
- Advancing requests for interim measures and attachment in good time where there is a suspicion of concealment of assets
- Diarising the ten-year period by reference to the date on which the judgment became final
Independent Legal provides advisory services and litigation representation across the whole of the process in disputes arising from the liquidation of the matrimonial property regime, from the identification of the assets to the recovery of the participation claim.