What is Inheritance Transfer and Concealment of Inheritance?
Fraudulent title transfer is an agreement made by parties that does not reflect their true intentions, appears valid but does not produce any legal consequences between them, and is made with the intent to deceive third parties. For example, an heir who transfers real estate to third parties through a sale registered in the land registry in order to avoid inheritance has committed a fraudulent transaction. This is because the purpose of the sale transaction ostensibly carried out by the parties is to conceal the avoidance of inheritance. Therefore, both the ostensible sale transaction and the contract secretly (verbally or in writing) made between the parties are invalid.
The following three conditions must be met for collusion to occur:
There must be a deliberate and conscious discrepancy between the parties’ true intentions and the transactions they carry out.
There must be an intent to deceive third parties.
The parties must act in agreement to engage in a fraudulent transaction between themselves.
The subject of our article, ‘fraudulent title transfer’ (concealment of property acquired through inheritance), is legally referred to as qualified (relative) fraudulent title transfer. There are two transactions in qualified fraudulent title transfer: apparent title transfer and hidden title transfer. The parties aim to deceive third parties with these two transactions. Apparent title transfer does not reflect the real intention of the parties and aims to deceive third parties.
For example, the property to be donated is transferred through a sale transaction with the intent to deceive third parties. In fraudulent title transfer, it is not the apparent title transfer that reflects the parties’ true intent, but the hidden title transfer. In the above example, the donation transaction is a hidden title transfer.
Fraudulent Title (Avoiding Inheritance)
Fraudulent inheritance transfer (avoiding inheritance) is when a person makes gratuitous transfers, such as sales or lifetime care agreements, with the aim of depriving their heirs of their inheritance rights. The main purpose here is to prevent heirs with a reserved share from filing an inheritance reduction lawsuit in the future to claim their inheritance share. In other words, the testator wants to prevent future lawsuits by pretending to transfer assets that he or she wishes to donate in exchange for a sale. The avoidance of inheritance lawsuit investigates whether the four elements of fraud are present:
The apparent transaction (contract),
Collusive agreement,
Intent to defraud third parties (heirs),
Secret agreement.
Apparent Transaction
The apparent transaction appears in practice as a sale, donation, or lifetime care agreement. These transactions are carried out with the aim of depriving heirs of their inheritance in a manner that does not reflect the true intent of the testator and does not produce any legal consequences.
For example, the purpose of the testator transferring a house to another person as if donating it in order to deprive the heirs of their inheritance is to prevent the hidden shareholders from filing a lawsuit in the future.
Fraudulent Agreement
A fraudulent agreement is an agreement between the testator and a third party that the contract is ostensibly made solely for the purpose of deceiving the heirs. The parties agree that the ostensible transaction made to conceal property from the estate will not have any legal consequences between them. This agreement may be oral or written.
Intent to Deceive Heirs
Another element of fraudulent conveyance is that the transaction, i.e., the apparent sale or other contract created by the parties, is made with the intent to deceive the heirs. If the parties (the testator and the third party) do not have the intent to deceive the heirs, no lawsuit can be filed to recover the property from the estate in relation to the transaction.
Secret Agreement
This is a contract that reflects the true will of the testator and is hidden behind the apparent transaction. For example, the testator wants to donate his property but hides this behind a sales contract in order to deceive the heirs. The secret agreement (donation) is generally valid as it reflects the true will of the parties. Here, it is important whether the secret agreement is subject to formal requirements. Secret transactions are not subject to formal requirements for immovable and movable property not registered in the land registry.However, registered immovable properties are subject to formal requirements, and the ‘secret agreement’ is invalid because it does not comply with these formal requirements.