Turkish Foundations (Vakıf) vs. Common Law Trusts: Wealth & Family Asset Planning
Building wealth often takes decades. Preserving it, managing it responsibly and ensuring that it benefits future generations can be even more challenging.
For families with international connections, these decisions become particularly important. A family might own property in Istanbul, operate a business in Türkiye, maintain investments in the United Kingdom and have children or other beneficiaries living in different countries. Although these arrangements may reflect a family's success, they can also create complicated legal questions when it comes to ownership, inheritance, asset management and succession.
Two legal structures that often enter these discussions are Turkish foundations (Vakıf) and common law trusts.
At first glance, they may appear to serve similar purposes. Both involve setting aside assets and establishing arrangements for their future management. However, their legal foundations are quite different, and that difference matters when a family has assets, business interests or beneficiaries connected to Türkiye.
A Turkish foundation is an independent legal entity created by dedicating sufficient assets to a specific and permanent purpose. A common law trust, on the other hand, is a legal relationship in which a settlor places assets under the administration of trustees for the benefit of beneficiaries or a legally permitted purpose.
Neither structure is automatically the right answer for every family.
A foundation may provide a suitable framework for preserving assets for a continuing institutional or family-related purpose. A common law trust may offer greater flexibility where the intention is to manage and distribute wealth among family members over several generations. Yet, when Turkish property, companies or residents are involved, additional questions arise about inheritance rights, ownership, taxation and the treatment of foreign legal arrangements.
One important point should be clear from the beginning: a Turkish foundation is not simply the Turkish version of a common law family trust.
Understanding this distinction before transferring property or establishing an international structure can prevent expensive misunderstandings later.
At Kurucuk & Associates, an Istanbul-based Turkish law firm, we advise international individuals, families, investors and businesses on Turkish legal matters, including corporate law, real estate, civil law, family law and cross-border legal considerations.
In this article, we explore how Turkish foundations and common law trusts work, where their legal differences lie and what international families should consider when planning the future of their wealth in connection with Türkiye.
1. What Is a Turkish Foundation (Vakıf)?
A Vakıf is a legal entity established by dedicating sufficient assets and rights to a specific and permanent purpose.
Its principal legal framework is set out in the Turkish Civil Code No. 4721, particularly Articles 101–117, alongside Foundations Law No. 5737 and the relevant implementing regulations.
Article 101 of the Turkish Civil Code describes a foundation as a community of property with legal personality, formed by allocating sufficient assets and rights to a specific and permanent purpose.
In practical terms, this means that a founder does not simply create a document expressing how they would like their wealth to be used. They establish an independent legal entity and dedicate assets to support its stated objectives.
Once the foundation has been properly established and registered, it has its own legal personality, property and governing arrangements.
The founder may determine the foundation's purpose and establish its initial governance structure. However, the assets dedicated to it no longer remain the founder's personal property.
This is an important consideration for families accustomed to managing their wealth through personal ownership.
1.1 What Can a Turkish Foundation Be Established For?
The purpose is at the heart of every Turkish foundation.
Turkish law requires the foundation to have a specific, understandable, lawful and permanent purpose. Its objectives must also comply with constitutional principles, public order and applicable legislation.
Depending on the proposed structure, foundations may be established for purposes such as:
Providing educational opportunities and scholarships.
Supporting healthcare and social assistance.
Protecting cultural and historical heritage.
Promoting scientific research.
Supporting community development.
Preserving assets for a defined institutional purpose.
Pursuing certain family-related and private wealth management objectives where legally permissible.
For example, a family might wish to preserve a historic property for cultural activities or dedicate financial resources to a continuing educational program.
A foundation may provide an appropriate legal framework for such objectives, provided the arrangement satisfies Turkish law.
It is important, however, not to confuse a foundation's permanent purpose with the flexible distribution arrangements commonly found in private family trusts.
The Directorate General of Foundations (Vakıflar Genel Müdürlüğü) is the principal public authority responsible for the administration and supervision of foundations in Türkiye. Its official resources provide useful information about foundation legislation, registration and ongoing obligations.
1.2 Who Can Establish a Foundation in Türkiye?
Both natural persons and eligible legal entities may establish foundations in Türkiye, subject to the applicable legal requirements.
A founder may be:
A Turkish citizen.
A foreign individual who satisfies the relevant legal requirements.
A Turkish company or another eligible legal entity.
Another legal person authorized to dedicate assets to the proposed purpose.
Foreign individuals should pay particular attention to Article 5 of Foundations Law No. 5737.
This provision addresses the establishment of new foundations by foreigners under the principle of de jure and de facto reciprocity.
In other words, a foreign individual should not assume that the rules applicable to a Turkish citizen will necessarily apply in exactly the same way to them. Their nationality and the relevant legal circumstances may need to be examined before the establishment process begins.
The founder must also have the necessary legal capacity and authority to dedicate the proposed assets.
1.3 How Is a Turkish Foundation Established?
Establishing a foundation requires proper legal preparation. The purpose, assets, governing arrangements and foundation deed should all be considered before an application is submitted.
The process generally involves the following stages.
Step 1: Establishing the purpose
The founder must decide what the foundation is intended to achieve.
The purpose should be clear, lawful and permanent. It should also be realistic in light of the assets available to the foundation.
A vague objective can create difficulties when the foundation's activities and expenditure are assessed later.
Step 2: Identifying the assets
The founder must determine which assets and rights will be dedicated to the foundation.
These may include money, immovable property and other legally transferable rights.
The resources should be sufficient to support the proposed purpose. The minimum amount applicable to new foundations is determined annually by the competent Foundations Council, so the current requirement should be checked before applying.
Step 3: Preparing the foundation deed
The foundation deed is the central document governing the arrangement.
It normally addresses:
The name of the foundation.
Its purpose and objectives.
The assets and rights being dedicated.
Its registered headquarters.
Its governing and administrative arrangements.
The appointment and authority of its representatives.
Its decision-making procedures.
Other provisions required for its lawful operation.
The document should reflect the founder's actual intentions while remaining consistent with Turkish legislation.
Step 4: Completing the formal establishment requirements
Under Article 102 of the Turkish Civil Code, the intention to establish a foundation must be declared through an official deed or a testamentary disposition.
The relevant formalities must be completed before the application can proceed.
Step 5: Applying for registration
The application is submitted to the competent civil court at the foundation's place of domicile.
A foundation acquires legal personality when it is entered into the relevant register.
Step 6: Meeting ongoing legal requirements
Registration is not the end of the process.
The foundation must comply with applicable rules concerning management, financial records, declarations, supervision and other statutory responsibilities.
The official guidance on establishing a foundation published by the Directorate General of Foundations is a useful starting point for understanding the procedure.
1.4 Who Owns the Foundation's Assets?
This is probably the most important practical difference between a Turkish foundation and a common law trust.
A properly established Turkish foundation owns its own assets.
Once property has been validly dedicated and the foundation has acquired legal personality, the founder no longer owns that property personally.
For example, imagine that a founder transfers a commercial building in Istanbul to a foundation.
After the transfer has been completed, the building belongs to the foundation. The founder cannot simply sell it, mortgage it or use its rental income as personal money without regard to the foundation's governing arrangements and applicable law.
The foundation's authorized organs are responsible for managing its assets in accordance with its purpose and legal obligations.
For families considering this structure, the practical question is not only whether the foundation can hold the property. It is also whether they are comfortable with the legal separation between their personal wealth and the assets dedicated to the foundation.
That decision should be made before any significant transfer takes place.
2. What Is a Common Law Trust?
A common law trust is a legal arrangement under which one person, known as the settlor, places assets under the control of another person or entity, known as the trustee, for the benefit of beneficiaries or a legally recognized purpose.
Trusts have developed through the principles of common law and equity. They are particularly well established in jurisdictions such as England and Wales and various other common law countries.
Unlike a Turkish foundation, a traditional common law trust is generally not a separate legal person.
Instead, it operates through the legal relationship between the settlor, trustees and beneficiaries.
The trustee generally holds legal title to the trust property, while beneficiaries may have equitable interests or other rights under the trust instrument and applicable law.
The precise treatment of these rights depends on the jurisdiction governing the trust.
2.1 Who Is Involved in a Family Trust?
A typical family trust involves three principal parties.
The settlor
The settlor is the person who creates the trust and transfers assets into it.
The settlor determines the initial terms of the arrangement, identifies the intended beneficiaries and establishes how the trust property should be administered.
Depending on the governing law and the trust deed, the settlor may retain certain powers.
These might include appointing or removing trustees, amending particular provisions or exercising specified rights.
However, the extent of retained control matters. An arrangement in which the settlor continues to exercise unrestricted personal control may not produce the intended legal separation.
The trustee
The trustee is responsible for administering the trust assets.
Trustees may be individuals, professional trust companies or other eligible entities, depending on the applicable law.
Their responsibilities generally include:
Holding and managing trust property.
Acting in accordance with the trust deed.
Complying with fiduciary duties.
Acting in the interests of the beneficiaries or within the permitted purpose.
Maintaining appropriate financial and administrative records.
Making distributions where authorized.
For example, under English law, the Trustee Act 2000 addresses important matters concerning trustees' investment powers, duties of care and delegation.
The beneficiaries
Beneficiaries are the people or entities intended to receive benefits from the trust.
In a family arrangement, they may include:
A spouse.
Children.
Grandchildren.
Other relatives.
Future generations.
Charitable organizations.
The trust deed determines who can benefit and how distributions are made.
Some trusts give beneficiaries defined entitlements. Others allow trustees to decide, within specified limits, who should receive distributions and when.
This ability to accommodate changing family circumstances is one reason why trusts are commonly used in private wealth planning.
2.2 Why Do Families Establish Trusts?
A family trust can provide a framework for managing assets without transferring direct ownership of every asset to individual family members.
Consider parents who have built a substantial investment portfolio and want their children to benefit from it over time.
They may prefer that the children do not receive unrestricted control of the entire portfolio at a young age.
A trust can establish arrangements for education, living expenses, investment management and future distributions.
Depending on the structure, it may also help families plan for:
Children who are still minors.
A surviving spouse.
Family members who require long-term financial support.
Business interests that need continuity.
Investment portfolios intended to benefit future generations.
Different beneficiaries living in different countries.
The trust does not remove the need for careful legal and tax planning. It provides a framework through which those objectives may be pursued.
2.3 Common Types of Family Trusts
Not all trusts work in the same way. The type selected can significantly affect the settlor's powers, the trustees' responsibilities and the beneficiaries' rights.
Revocable trusts
A revocable trust generally allows the settlor to amend or terminate the arrangement during their lifetime, subject to the governing law and trust terms.
It can offer flexibility, but the settlor's retained powers may affect the intended separation of assets and the tax treatment.
Irrevocable trusts
An irrevocable trust is generally designed to restrict the settlor's ability to reclaim or freely control the assets.
The precise legal consequences depend on the governing law and the terms of the trust.
Discretionary trusts
A discretionary trust gives trustees the authority to decide which eligible beneficiaries receive distributions, in what amounts and at what times.
This can be useful where a family wants to accommodate changing circumstances rather than give every beneficiary an immediate fixed entitlement.
Fixed-interest trusts
A fixed-interest trust establishes defined entitlements for beneficiaries.
For example, the trust deed might provide that one beneficiary receives a specified share of income while another becomes entitled to capital at a particular time.
Testamentary trusts
A testamentary trust is created through a will and generally takes effect after the testator's death, subject to the applicable succession and trust laws.
The UK legislation portal and the UK government's official guidance on wills and inheritance provide useful background for families examining English succession and estate administration.
The availability and operation of these trust structures differ between jurisdictions. A trust that works under English law should not automatically be assumed to produce the same result under another country's legislation.
3. Turkish Foundations vs. Common Law Trusts: What Are the Real Differences?
Although both structures involve assets being set aside for a particular purpose, they are not built on the same legal principles.
For an international family, the difference is not merely technical. It can determine who owns the property, who makes decisions, how family members benefit and what happens when the founder dies.
The following comparison highlights the main distinctions.
3.1 A Side-by-Side Legal Comparison
Legal consideration | Turkish foundation (Vakıf) | Common law trust |
Legal nature | Independent legal entity | Legal relationship |
Main legal framework | Turkish Civil Code and Foundations Law | Applicable common law jurisdiction |
Ownership of assets | Foundation owns its assets | Trustee generally holds legal title |
Person establishing it | Founder | Settlor |
Administration | Authorized foundation organs | Trustee or trustees |
Beneficiaries | Persons or groups benefiting under its lawful purpose | Beneficiaries identified under trust terms |
Main objective | Specific and permanent purpose | Benefit of beneficiaries or a permitted purpose |
Flexibility | Subject to statutory requirements and foundation deed | Depends on trust type and governing law |
Legal personality | Yes | Generally no |
Founder’s control | Limited by the independent legal personality and governing purpose | Depends on retained powers and trust terms |
Changes to arrangements | Subject to statutory and judicial requirements where applicable | Subject to trust deed and governing law |
Revocation | Not freely revocable at the founder's discretion | Depends on whether the trust is revocable |
Supervision | Turkish statutory supervision | Depends on the relevant jurisdiction |
The comparison describes the general legal position. The details of a particular arrangement may differ depending on its governing documents and applicable legislation.
3.2 Ownership: Who Actually Owns the Assets?
Ownership is where the difference becomes particularly clear.
When a Turkish foundation is properly established, the assets dedicated to it become the foundation's property.
The foundation is a separate legal person. Its property is not simply held in the founder's name for administrative convenience.
A common law trust works differently.
The trustee generally holds legal title to the trust property, while the beneficiaries may have equitable interests or rights under the trust arrangement.
Consider a family with three residential properties and an investment portfolio.
If the family establishes a Turkish foundation and validly transfers eligible assets to it, the foundation becomes their owner.
If the family establishes a common law trust, the trustees generally hold legal title to the settled assets and administer them according to the trust deed.
Both arrangements can separate personal ownership from the management of assets, but they do so through different legal mechanisms.
3.3 Who Has Control Over the Assets?
Families sometimes assume that transferring assets into a foundation or trust allows them to retain the same control they previously exercised.
That assumption can lead to problems.
A founder of a Turkish foundation can establish its initial governance arrangements and define its purpose. However, once assets have been dedicated, the founder cannot simply treat them as personal property.
The foundation's authorized organs must manage those assets in accordance with the foundation deed and Turkish law.
In a common law trust, the settlor may retain certain powers, depending on the trust structure. Trustees may also have discretionary authority over investments and distributions.
However, trustees remain subject to their legal and fiduciary obligations.
The practical question for a family is therefore not simply how much control can be retained. It is what kind of control is legally appropriate for the intended arrangement.
3.4 Flexibility: Can the Arrangement Change Over Time?
Family circumstances change.
Children become adults, businesses expand, family members relocate and financial priorities evolve. A wealth planning arrangement should take these possibilities into account.
Common law trusts, particularly discretionary trusts, can provide considerable flexibility within the limits of the trust instrument.
For example, trustees may be able to adjust distributions according to beneficiaries' changing needs.
Turkish foundations operate under a different principle.
Their purpose must be specific and permanent. Changes to the foundation deed, purpose or organisational arrangements are subject to the applicable statutory requirements and, where required, judicial procedures.
This does not mean that a Turkish foundation can never be changed. It means that changes cannot simply be made at the founder's personal discretion.
A foundation should therefore be established with a clear understanding of the responsibilities that continue after registration.
3.5 What Rights Do Family Members Have?
In a common law trust, beneficiaries may have specific legal or equitable rights depending on the trust deed and governing law.
A beneficiary might be entitled to a defined share of income, a future capital distribution or discretionary consideration by the trustees.
A Turkish foundation does not operate through the same ownership-based beneficiary relationship.
People who benefit from a foundation's activities do not automatically become owners of its assets.
For instance, a foundation established to provide scholarships may support eligible students throughout their education. Those students benefit from its activities but do not acquire ownership of the foundation's property.
Similarly, a family foundation cannot automatically be treated as a private trust with unrestricted authority to distribute its assets among relatives.
The intended benefits must be consistent with its lawful purpose and governing arrangements.
4. Can a Turkish Foundation Be Used for Family Wealth Planning?
Yes, but the family's objectives must fit within the legal framework governing Turkish foundations.
It is important to avoid two opposite misconceptions.
First, Turkish foundations are not limited to a single type of charitable activity. Certain family-related and private wealth management purposes may be possible within the applicable legal framework.
Second, this does not mean that every private family wealth arrangement can be established as a Turkish foundation.
The foundation must have a specific and permanent purpose. Its assets and activities must support that purpose.
4.1 Keeping Family Assets Together Over Generations
Some families spend several generations building a business, acquiring properties and accumulating investments.
Over time, the family estate may become increasingly complicated.
A property originally owned by one person may eventually involve several heirs. Business shares may be divided among siblings. Different family members may have conflicting views about whether an asset should be sold, retained or developed.
A properly structured Turkish foundation may offer an institutional framework for holding and managing eligible assets for a defined purpose.
For example, a family may wish to preserve a historic property and dedicate it to cultural or educational activities.
The foundation can provide continuity beyond the lifetime of the original founder.
However, a foundation is not a substitute for a will or a complete inheritance plan. The consequences of dedicating assets must be considered in relation to the founder's personal estate and the rights of their heirs.
4.2 Supporting Family-Related Objectives
A family may want its accumulated wealth to support future generations in a meaningful and organized way.
Its objectives might include:
Supporting educational opportunities.
Funding healthcare initiatives.
Providing assistance through a defined family-related program.
Maintaining a particular property for a continuing purpose.
Supporting cultural or social activities.
Preserving assets for a lawful institutional objective.
A Turkish foundation may be considered where these objectives can be expressed as a specific, permanent and legally permissible purpose.
However, there is an important distinction between supporting family-related activities and creating unrestricted entitlements for family members.
For example, a foundation established to support a defined educational program is not necessarily equivalent to a discretionary trust under which trustees can distribute capital to the settlor's children whenever they consider it appropriate.
The proposed activities, beneficiaries and expenditure must be assessed against the foundation's legal purpose.
4.3 Managing Family-Owned Businesses
For many families, a business is more than an investment. It represents years of work, family identity and financial security.
As the founder approaches retirement, questions about ownership and management often become increasingly important.
Who will make important decisions? Should the next generation become involved? What happens if siblings disagree? How can the business continue operating without unnecessary disruption?
Several legal arrangements may help address these issues.
These include:
Shareholder agreements.
Corporate governance arrangements.
Holding company structures.
Succession provisions.
Family business protocols.
A Turkish foundation, where its purpose and the proposed shareholding arrangement are legally appropriate.
Foreign trusts holding interests through an appropriately structured arrangement.
A Turkish foundation may hold eligible company shares, subject to the foundation's purpose and applicable company law.
However, transferring company shares to a foundation does not automatically solve disagreements about business management.
The company's articles of association, shareholder rights, voting arrangements and management structure should also be reviewed.
The Turkish Commercial Code No. 6102 provides the principal legal framework for commercial companies in Türkiye.
4.4 Preserving Family Real Estate
Real estate is often one of the most valuable parts of a family's estate.
International families may own apartments in Istanbul, commercial premises, agricultural land, hotels or other investment properties.
A Turkish foundation may acquire and hold immovable property where doing so is consistent with its lawful purpose and the relevant statutory requirements.
However, transferring property to a foundation is not simply a matter of changing the name on a document.
It changes the legal ownership of the asset.
Consider a family that transfers an income-generating apartment building to a foundation.
The building becomes part of the foundation's estate. The foundation's management must administer the property in accordance with its legal objectives and governing documents.
The founder cannot automatically continue treating rental income and sale proceeds as personal funds.
Before transferring property, the family should consider title registration, existing mortgages, transfer costs, tax implications and the foundation's authority to manage or dispose of the asset.
The General Directorate of Land Registry and Cadastre (TKGM) provides official information about property registration and land ownership procedures in Türkiye.
5. Does Türkiye Recognize Common Law Trusts?
This question is particularly important for families who have already established trusts abroad or are considering doing so.
Türkiye does not have a domestic common law trust system equivalent to the arrangements available in England and other common law jurisdictions.
Its domestic legal framework instead provides for structures such as foundations, companies and other recognized legal arrangements.
However, this does not mean that foreign trusts have no relevance to Turkish legal matters.
There is an important distinction between establishing a domestic Turkish trust and dealing with a trust validly created under foreign law.
5.1 What Happens When a Trust Is Established Abroad?
A Turkish resident or an international family with Turkish connections may establish or participate in a foreign trust, subject to the applicable legal and tax requirements.
For example, a family may establish a discretionary trust under English law while owning property or business interests in Türkiye.
The trust may be valid under its governing law. However, that does not automatically mean that every Turkish authority, financial institution or registry will treat it as though it were a Turkish legal entity.
Its treatment depends on the nature of the arrangement and the Turkish legal rules relevant to the particular issue.
Questions may arise concerning the recognition of the trustee's authority, the ownership of underlying assets, tax treatment, inheritance rights and financial reporting.
These matters should be examined individually rather than assuming that the trust deed alone answers every question.
5.2 The Hague Trusts Convention and Türkiye
The Hague Convention of 1 July 1985 on the Law Applicable to Trusts and on their Recognition was developed to provide common rules for determining the law applicable to trusts and addressing their recognition.
It deals with important matters such as:
The governing law of a trust.
The validity and interpretation of trust arrangements.
The administration of trust property.
The recognition of certain legal effects of trusts.
Türkiye is not a contracting party to this Convention.
Therefore, families should not assume that the Convention provides an automatic mechanism for recognizing their foreign trusts in Türkiye.
The official Hague Conference Convention text explains the Convention's scope and the characteristics of the trusts covered by it.
5.3 What Does This Mean for International Families?
Consider a British family that has established a discretionary trust under English law.
The trust holds shares in a Turkish company, and some beneficiaries live in Istanbul.
Several practical questions may arise:
Who is legally entitled to exercise the rights attached to the company shares?
How should the trustee's authority be documented?
What documentation may be required by the Turkish trade registry?
How will distributions to Turkish-resident beneficiaries be treated?
Could Turkish inheritance rules affect the arrangement?
What beneficial ownership and financial reporting obligations apply?
These questions involve more than trust law.
They may require an examination of English trust legislation, Turkish company law, private international law, tax legislation and applicable regulatory requirements.
The Financial Action Task Force (FATF) provides useful international material on transparency, beneficial ownership and the treatment of legal arrangements.
Its country assessments should be read alongside the relevant Turkish legislation rather than treated as a substitute for it.
6. Turkish Foundations and Inheritance Planning
For many families, the reason for considering a foundation or trust is straightforward: they want to decide what happens to their wealth after they are no longer able to manage it themselves.
That intention is understandable, but Turkish inheritance law must be considered carefully.
Türkiye has a system of protected inheritance shares, known as saklı pay. Certain close relatives are entitled to receive a legally protected portion of an estate.
These rights can become relevant when someone makes a will, gives away property during their lifetime or transfers assets to another legal arrangement.
6.1 Understanding Reserved Inheritance Shares (Saklı Pay)
The Turkish Civil Code protects certain heirs by restricting the extent to which a person can freely dispose of their estate.
Depending on the family circumstances, protected heirs include:
Descendants.
Parents, where they qualify as legal heirs under the applicable succession rules.
The surviving spouse, whose reserved share depends on the relevant inheritance relationship.
Article 506 of the Turkish Civil Code sets out the reserved shares.
For descendants, the reserved share is generally half of their statutory inheritance entitlement. The surviving spouse's reserved share depends on the applicable statutory inheritance share.
The exact calculation cannot be determined without examining the family structure, the applicable succession law and the value and nature of the estate.
The Turkish Civil Code No. 4721 is the primary legislative reference for these matters.
6.2 Can a Foundation Be Used to Avoid Reserved Shares?
This is an issue that deserves particular attention.
Transferring property to a foundation does not automatically remove potential inheritance claims.
The timing and circumstances of the transfer, the founder's intentions, the nature of the assets and the rights of protected heirs may all become relevant.
Articles 560 onwards of the Turkish Civil Code regulate tenkis, the legal mechanism for reducing dispositions that infringe reserved inheritance shares.
Depending on the facts, other legal remedies may also be relevant.
For example, a transfer made during someone's lifetime may be examined more closely if there are grounds to argue that it was intended to defeat the protected rights of heirs.
A Turkish foundation should therefore never be presented as a guaranteed way of bypassing inheritance law.
6.3 Why Estate Planning Should Come Before Asset Transfers
Before dedicating substantial assets to a foundation or transferring them into a foreign trust, families should understand the effect on their personal estate.
A proper assessment may involve:
Identifying the potential legal heirs.
Determining which inheritance law applies.
Reviewing existing wills and testamentary arrangements.
Calculating reserved inheritance shares.
Examining previous lifetime gifts.
Considering jointly owned assets.
Assessing potential inheritance disputes.
Reviewing the founder's future financial needs.
The purpose is not to make the planning process unnecessarily complicated. It is to ensure that an arrangement intended to preserve family wealth does not create a new dispute between family members.
6.4 International Families: Which Inheritance Law Applies?
Cross-border families may face an additional difficulty.
The law governing succession may differ from the law governing the location of particular assets.
For example, a British national may live in Istanbul, own an apartment in Türkiye and have children residing in different countries.
Questions may arise concerning:
The applicable inheritance law.
The treatment of Turkish immovable property.
The validity and effect of a foreign will.
The relationship between a foreign trust and Turkish succession rules.
The rights of surviving spouses and descendants.
These questions require consideration of Turkish private international law, particularly Law No. 5718 on Private International and Procedural Law.
The applicable rules depend on factors such as nationality, habitual residence, the location and nature of assets and the relevant connecting circumstances.
A foreign will or trust should never be assumed to resolve every succession issue involving Turkish property.
7. Tax Considerations: Turkish Foundations vs. Foreign Trusts
Tax is often one of the first subjects raised when families discuss foundations and trusts.
It is also one of the areas where general assumptions can be particularly misleading.
A Turkish foundation and a foreign trust do not automatically receive the same tax treatment. The consequences depend on the legal structure, the nature and location of the assets, the activities involved and the tax residence of the relevant individuals.
For an international family, the analysis may involve more than one country.
7.1 Are Turkish Foundations Tax-Exempt?
A common misunderstanding is that establishing a Turkish foundation automatically provides tax exemption.
That is not correct.
A foundation may have tax liabilities depending on its activities, income, assets and legal status.
Relevant matters may include:
Corporate tax arising from taxable commercial activities.
Value-added tax where applicable.
Property-related taxes.
Taxes and charges arising from asset transfers.
Withholding tax obligations.
Inheritance and gift tax considerations.
Accounting and reporting requirements.
Certain foundations may qualify for particular exemptions or benefits if they satisfy the relevant statutory conditions and obtain the necessary recognition.
However, those benefits should never be assumed simply because an entity has been established as a Vakıf.
The Turkish Revenue Administration (Gelir İdaresi Başkanlığı) publishes official information about Turkish tax legislation, declarations, exemptions and administrative procedures.
7.2 How Are Foreign Trusts Treated for Turkish Tax Purposes?
Foreign trusts can create a more complicated tax picture because several jurisdictions may be involved.
Imagine the following arrangement:
The settlor lives in Türkiye.
The trustee is based in the United Kingdom.
Some beneficiaries live in Istanbul.
The trust holds international investments.
It also has an interest in a Turkish company.
The relevant tax analysis may involve:
The tax residence of the settlor.
The residence and legal status of the trustees.
The tax residence of beneficiaries.
The source and nature of the income.
The location of the underlying assets.
The treatment of trust distributions.
Applicable double taxation agreements.
Turkish declaration and reporting requirements.
The fact that a trust was established outside Türkiye does not automatically place its assets or income beyond Turkish tax rules.
Equally, the presence of a Turkish-resident beneficiary does not mean that every trust distribution will necessarily receive the same tax treatment.
The legal nature of the arrangement and the circumstances of each payment must be examined.
7.3 International Tax Reporting and Transparency
Families with international investments should also be aware of the wider tax transparency environment.
The OECD's Common Reporting Standard (CRS), for example, establishes a framework for the automatic exchange of certain financial account information between participating jurisdictions.
This is particularly relevant when financial accounts, investment structures and individuals have connections with more than one country.
The OECD's official information on automatic exchange of financial account information explains the international framework.
Families should also review the applicable double taxation agreements and domestic reporting requirements.
The important point is that a foundation or trust does not remove the need for proper tax compliance.
7.4 Why Tax Planning Should Follow Legal Planning
Selecting a structure simply because someone has described it as tax-efficient can be a costly mistake.
A family may be told that a foreign trust offers favorable treatment or that a Turkish foundation provides particular tax advantages.
Those statements may be incomplete without examining the family's actual circumstances.
A sensible approach is to establish the legal objectives first, assess the proposed structure under each relevant jurisdiction and then obtain specific tax advice before transferring assets.
8. Asset Protection: What Can a Foundation or Trust Actually Protect?
Asset protection is frequently mentioned in discussions about family wealth planning.
Families naturally want to preserve what they have built and ensure that their assets remain properly managed.
However, asset protection should not be confused with immunity from legal claims.
Neither a Turkish foundation nor a foreign trust automatically protects assets against every creditor, court order, inheritance dispute or regulatory investigation.
8.1 Asset Separation Through a Turkish Foundation
A Turkish foundation has legal personality separate from its founder.
Once assets have been validly dedicated, they become part of the foundation's independent estate.
This can provide a useful institutional framework for managing assets over time.
However, the circumstances surrounding the transfer remain important.
For example:
Existing creditor claims may affect a proposed transfer.
Transactions intended to prejudice creditors may be challenged.
Protected inheritance rights may remain relevant.
Transfers involving jointly owned property may require additional consent.
Foundation assets remain subject to applicable statutory obligations.
A foundation's separate legal personality should not be interpreted as a guarantee that its assets are beyond the reach of every legal claim.
8.2 Asset Protection Through a Common Law Trust
Common law trusts can also create separation between the settlor's personal ownership and the administration of trust property.
An irrevocable trust may provide a different legal arrangement from one in which the settlor retains extensive powers.
However, the effectiveness of the structure depends on the governing law, the trust deed and the actual conduct of the parties.
Courts may examine matters such as:
Fraudulent transfers.
Existing or anticipated creditor claims.
Retained control by the settlor.
Sham arrangements.
Transactions intended to defeat legal obligations.
Insolvency and bankruptcy issues.
A trust established as part of genuine long-term family planning may raise different questions from one established shortly before a foreseeable legal claim.
8.3 Transparency Is Part of Responsible Asset Planning
Modern financial systems require greater transparency about the people who ultimately own, control or benefit from assets.
A foundation or trust does not remove these obligations.
Banks, financial institutions, tax authorities and other regulated organizations may request information about the founder, settlor, trustees, beneficiaries and other relevant individuals.
The Financial Crimes Investigation Board (MASAK) provides official information about Türkiye's anti-money laundering framework.
For international families, compliance should be considered from the beginning rather than treated as an administrative matter to be addressed after the structure has been established.
9. Beneficial Ownership and Regulatory Compliance
An international wealth structure may involve several legal entities, individuals and jurisdictions.
A Turkish company may be owned by a foreign company, which in turn may be connected to a trust. Alternatively, a foundation may hold assets managed by authorised representatives.
In these situations, identifying the people who ultimately exercise ownership or control becomes important.
9.1 Compliance Requirements for Turkish Foundations
Turkish foundations are subject to statutory requirements concerning their management, financial administration and supervision.
Depending on the circumstances, these may include:
Maintaining proper accounting records.
Preparing and submitting required declarations.
Reporting changes to authorized management.
Complying with applicable audit requirements.
Keeping records of assets and transactions.
Using foundation property in accordance with its lawful purpose.
The Foundations Law No. 5737 and related official foundation resources provide the relevant legal and administrative framework.
9.2 Foreign Trusts and Financial Institutions
A foreign trust connected with Türkiye may encounter additional documentation and transparency requirements.
For example, a Turkish bank dealing with a foreign trust may request information about:
The settlor.
The trustees.
The beneficiaries.
Any protector or similar person.
Individuals exercising effective control.
The source of the assets and funds.
The precise requirements depend on the transaction, the institution and the applicable legal framework.
9.3 Why Beneficial Ownership Matters
Consider a foreign trust connected to a Turkish limited liability company.
The trust itself may not be a Turkish legal entity, but the Turkish company remains subject to the relevant corporate and regulatory obligations.
It may be necessary to establish who ultimately exercises ownership or control, rather than relying solely on the name appearing in a particular ownership document.
Depending on the circumstances, the settlor, trustee, beneficiaries or other controlling individuals may be relevant to that assessment.
This is why foreign trust documentation should be reviewed before entering into banking relationships, completing company transactions or acquiring Turkish assets.
10. Can a Foreign Trust Hold Assets in Türkiye?
International families sometimes establish a trust abroad and subsequently consider using it to hold Turkish investments or property.
This can be possible through an appropriately structured arrangement, but the legal position should be examined separately for each asset type.
A foreign trust should not automatically be treated as though it were a Turkish company or foundation.
10.1 Holding Shares in a Turkish Company
A foreign trust may be connected to a Turkish company through a trustee or another legally appropriate ownership arrangement.
For example, a trustee may hold shares in a Turkish company in accordance with the trust's governing law and the relevant Turkish corporate requirements.
Before proceeding, the parties should examine:
Whether the proposed shareholding is legally permissible.
How the trustee's authority will be demonstrated.
What documentation is required for the transfer.
Whether sector-specific foreign ownership restrictions apply.
How voting rights will be exercised.
Whether beneficial ownership information must be disclosed.
How dividends and other distributions will be treated.
The company's articles of association, shareholder arrangements and applicable provisions of the Turkish Commercial Code should also be reviewed.
For official legislative references, the Turkish Ministry of Justice's legislation portal provides access to the relevant commercial legislation.
10.2 Holding Turkish Real Estate
Real estate requires particular care because ownership of immovable property in Türkiye is subject to Turkish property law and land registration requirements.
A foreign trust should not be assumed to be capable of registering property in its own name simply because it is recognized in the country where it was established.
The proposed legal owner, the trustee's authority and any applicable foreign ownership restrictions must be examined.
Depending on the circumstances, the relevant ownership arrangement may need to involve an eligible individual or legal entity.
A proper assessment should consider:
Title registration.
Foreign ownership restrictions.
Transfer taxes and fees.
Existing mortgages and encumbrances.
Financing arrangements.
Rental income.
Inheritance implications.
Future sale and repatriation of proceeds.
The General Directorate of Land Registry and Cadastre provides official information on property ownership and registration in Türkiye.
10.3 Would a Turkish Company Be a Better Option?
In some situations, a Turkish company may provide a more straightforward way of holding investment property or operating business assets.
For example, a family may establish or acquire shares in a Turkish limited liability company (Limited Şirket) or joint-stock company (Anonim Şirket).
A foreign trust may then be considered as part of the wider ownership structure, subject to the applicable legal requirements.
However, a company and a foundation serve different purposes.
A company is generally established to conduct commercial activities. A foundation is established by dedicating assets to a specific and permanent purpose.
The right choice depends on what the family is actually trying to achieve.
A family wishing to operate a property investment business may need a different structure from one intending to preserve a historic building for cultural activities.
11. Practical Examples: Which Structure Might Suit Different Families?
Legal principles become easier to understand when considered in the context of real family circumstances.
The following examples illustrate the types of questions that may arise.
Scenario 1: A Turkish Business Family Planning for the Next Generation
A family owns a successful manufacturing company in Istanbul.
The founder has spent several decades building the business and wants it to continue operating after retirement. There are three adult children, but not all of them are interested in managing the company.
The family is concerned that future disagreements could affect the business.
What should be considered?
The family may need to review:
The company's ownership structure.
Shareholder agreements.
Voting rights.
Management succession.
Corporate governance.
Family business protocols.
Whether a foundation is suitable for a defined and permanent purpose.
A foundation may be worth considering if the proposed asset dedication and purpose comply with Turkish law.
However, a properly drafted shareholder agreement or holding company arrangement may be a more appropriate starting point.
The family should not establish a foundation simply because it wants to keep the business within the family.
Scenario 2: A British Family with Property in Istanbul
A British family owns an apartment and a commercial property in Istanbul.
The parents have already established an English discretionary trust for their children. They are now considering whether the trust can also hold their Turkish assets.
What should be considered?
The family needs to examine:
The governing law of the trust.
The legal authority of the trustees.
Turkish property ownership requirements.
Land registration arrangements.
Turkish inheritance rules.
The tax treatment of income and distributions.
The documents required by relevant institutions.
Advice from professionals familiar with both English trust law and Turkish property law may be necessary.
The family should not transfer property simply because the trust already exists abroad.
Scenario 3: Parents Supporting Children Living in Different Countries
An entrepreneur has three children living in Türkiye, the United Kingdom and Canada.
The entrepreneur wants to provide for their education and healthcare and ensure that the family's investments can continue supporting future generations.
What should be considered?
A foreign discretionary trust may be worth examining if the family needs flexible distributions among beneficiaries.
A Turkish foundation may also be considered if the family has a suitable permanent purpose that can lawfully accommodate the intended activities.
The analysis should include:
The founder's residence and nationality.
The children's respective tax residences.
The nature and location of the assets.
The inheritance position.
The proposed distribution arrangements.
The administration costs.
The legal consequences of dedicating assets.
The most suitable arrangement depends on the family's actual objectives, not simply the number of beneficiaries.
Scenario 4: An International Investor with Turkish Business Interests
An overseas investor has established a foreign trust and intends to acquire shares in a Turkish company.
The investment is intended to remain within the family for an extended period.
What should be considered?
The legal review may involve:
Turkish corporate law.
The trust deed and governing law.
Trustee authority.
Share ownership and registration.
Beneficial ownership disclosure.
Dividend taxation.
Corporate governance.
Future succession planning.
The investor's nationality, tax residence, the company's sector and the trust's governing jurisdiction may all affect the legal analysis.
Scenario 5: A Family Preserving a Historic Property
A family owns a historic building in Türkiye.
Rather than selling the property or dividing it among future heirs, the family wants to preserve it for cultural and educational activities.
What should be considered?
A Turkish foundation may provide an appropriate framework if the proposed purpose and asset dedication satisfy the relevant legal requirements.
The family should examine:
Whether the proposed purpose is legally acceptable.
Whether the property can be dedicated to the foundation.
The existing title and ownership position.
Any cultural heritage restrictions.
The cost of maintaining the building.
The foundation's financial sustainability.
The governance arrangements required for long-term administration.
This example illustrates why a foundation's permanent purpose is so important.
12. Common Mistakes Families Should Avoid
A wealth planning arrangement should make life easier for future generations, not leave them with legal uncertainty.
Unfortunately, several common misunderstandings can create unnecessary complications.
12.1 Treating a Turkish Foundation as a Family Trust
The words foundation, trust and family foundation are sometimes used interchangeably in international discussions.
Their legal meanings, however, are not interchangeable.
A Turkish foundation is an independent legal entity established for a specific and permanent purpose.
A common law trust is a legal relationship involving trustees, trust property and beneficiaries or a permitted purpose.
The distinction affects ownership, administration, beneficiary rights and legal remedies.
12.2 Transferring Property Without Reviewing Inheritance Rights
A family may decide to transfer a valuable property to a foundation without first examining the rights of protected heirs.
This can lead to disputes that could have been identified before the transfer.
Reserved inheritance shares, previous gifts and potential legal challenges should be considered as part of the initial planning process.
12.3 Assuming a Foreign Trust Is Automatically Recognized in Türkiye
A trust may be perfectly valid under its governing foreign law.
That does not mean that every aspect of its operation will automatically be accepted in Türkiye without further examination.
Turkish authorities, banks and registries may require additional documentation or apply mandatory Turkish legal provisions.
12.4 Overlooking Tax and Reporting Obligations
An international structure does not automatically eliminate tax liabilities or reporting requirements.
The settlor, trustee, beneficiaries and underlying assets may have connections with several jurisdictions.
The relevant tax consequences should be examined before assets are transferred.
12.5 Retaining More Control Than the Structure Allows
Some founders want to transfer assets into an independent structure but continue using those assets exactly as they did before.
This can create a contradiction between the intended legal arrangement and the actual conduct of the parties.
The founder should understand which powers can lawfully be retained and which responsibilities must be exercised independently by trustees or foundation organs.
12.6 Ignoring Long-Term Administration Costs
A foundation or trust requires continuing administration.
A Turkish foundation may involve governance, accounting, management and statutory compliance expenses.
A foreign trust may involve trustee fees, legal advice, professional administration and tax filings in several jurisdictions.
These costs should be considered before the family commits substantial assets.
13. How Should a Family Choose Between a Turkish Foundation and a Common Law Trust?
There is no single answer that applies to every international family.
The starting point should be the family's actual objectives.
Does the family want to establish an independent legal entity in Türkiye? Does it want trustees to manage assets for children? Is the priority to preserve a business, maintain a property or provide financial support to future generations?
These questions help determine which legal arrangement deserves consideration.
13.1 When a Turkish Foundation May Be Appropriate
A Turkish foundation may be worth examining where:
The family wants an independent Turkish legal entity.
Assets are intended for a specific and continuing purpose.
The family wishes to support educational, cultural, social or other lawful activities.
Assets are located in Türkiye and can appropriately be dedicated to a foundation.
Long-term institutional management is more important than unrestricted personal distributions.
The proposed purpose and governance arrangements satisfy Turkish legislation.
13.2 When a Common Law Trust May Be Appropriate
A common law trust may be worth considering where:
The family has substantial connections with a common law jurisdiction.
A flexible beneficiary-based arrangement is required.
Trustees are expected to manage assets for several generations.
The family wants arrangements for minors or vulnerable beneficiaries.
The assets are located in jurisdictions that recognise the proposed trust.
The family wants a structure governed by established foreign trust legislation.
Where Turkish property, companies or residents are involved, the arrangement must also be examined under the relevant Turkish legal rules.
13.3 When Another Legal Structure May Be More Suitable
Sometimes neither a foundation nor a trust is necessary.
A family may be able to achieve its objectives through a simpler legal arrangement.
Depending on the circumstances, this could involve:
A properly drafted Turkish will.
A shareholder agreement.
A Turkish holding company.
A family business succession plan.
A matrimonial property agreement, where legally appropriate.
Corporate governance arrangements.
A combination of different legal instruments.
For example, if the family's principal concern is preventing disagreements over the management of a Turkish company, a shareholder agreement and a carefully prepared succession plan may be more useful than establishing a foundation.
Similarly, if an individual's main objective is to determine how personal property should pass after death, a properly prepared estate plan may be a more appropriate starting point.
The important principle is simple: choose the legal structure that serves the family's objectives, rather than trying to fit the family's circumstances into a structure that may not be suitable.
14. What Should Foreign Families Know Before Establishing a Turkish Foundation?
Foreign individuals and families considering a Vakıf should examine several matters before beginning the establishment process.
14.1 Nationality and Reciprocity Requirements
Foreign founders should determine whether the applicable reciprocity requirements are satisfied.
Article 5 of Foundations Law No. 5737 should be reviewed in light of the founder's nationality and the circumstances of the proposed establishment.
This should be addressed before substantial time or money is spent preparing the foundation documents.
14.2 Minimum Foundation Assets
The assets dedicated to a foundation must be sufficient to support its objectives.
The minimum amount for new foundations is determined annually by the competent Foundations Council.
Families should verify the current amount applicable to the year of establishment rather than relying on figures published in older articles or general online discussions.
14.3 The Foundation Deed Must Be Carefully Prepared
The foundation deed is not simply a registration document.
It determines the foundation's purpose and establishes the arrangements through which it will operate.
Its provisions should address:
The foundation's objectives.
The assets being dedicated.
Its governing organs.
The appointment and authority of representatives.
Decision-making procedures.
Financial administration.
Permitted activities.
Statutory compliance.
The deed should be prepared with the foundation's long-term operation in mind.
14.4 Asset Transfers Require Separate Legal Review
A founder intending to dedicate real estate, company shares or other valuable assets should obtain a separate assessment of the proposed transfers.
This may involve reviewing:
Existing ownership documents.
Mortgages and other encumbrances.
Transfer restrictions.
Valuation.
Required approvals.
Registration formalities.
Applicable taxes and fees.
Not every asset can be transferred in the same way, and the legal consequences may differ considerably.
14.5 Ongoing Management Must Be Planned
A foundation continues to have legal and administrative responsibilities after registration.
The founder should consider how its assets will be managed, who will be responsible for important decisions and how the foundation will meet its financial obligations.
A foundation that is properly established but poorly administered may create difficulties for the very people it was intended to benefit.
15. How Kurucuk & Associates Can Assist with Turkish Wealth and Asset Planning
International wealth planning requires more than choosing between a foundation and a trust.
A family may have assets in several countries, different nationalities among its members, a Turkish business, foreign investments and an existing succession arrangement.
Each part of the structure needs to be considered in its proper legal context.
At Kurucuk & Associates, we advise international individuals, investors, families and businesses on Turkish legal matters from our office in Istanbul.
Our work across corporate law, commercial law, real estate, civil law, family law and immigration matters provides a broader understanding of the legal issues that can arise when international interests are connected to Türkiye.
Depending on the circumstances, legal assistance may involve the following areas.
15.1 Turkish Foundation Establishment and Governance
We can assist with examining the proposed purpose, legal requirements, foundation deed and governance arrangements.
The aim is to ensure that the proposed structure is consistent with Turkish legislation and the founder's actual objectives.
15.2 Foreign Trusts Involving Turkish Assets
Where a family has an existing foreign trust, we can examine the Turkish legal implications of its connection with property, company shares or other interests in Türkiye.
This may include reviewing trust documentation, trustee authority and the Turkish requirements relevant to the proposed transactions.
Where foreign law issues require specialist advice, coordination with legal professionals in the relevant jurisdiction may be necessary.
15.3 Inheritance and Succession Matters
Families should understand the effect of lifetime transfers, wills and asset ownership arrangements on their inheritance position.
We can assist in examining relevant Turkish inheritance rules, including reserved shares and potential legal disputes.
15.4 Real Estate Ownership and Transfers
For families holding residential, commercial or investment property in Istanbul and elsewhere in Türkiye, we can advise on relevant Turkish property law considerations.
This may include title documentation, proposed transfers, ownership arrangements and related legal issues.
15.5 Corporate and Family Business Structures
Where family wealth is connected to a Turkish company, we can assist with corporate legal considerations, shareholder arrangements, governance and business-related succession issues.
15.6 Cross-Border Legal Coordination
International arrangements may involve Turkish law alongside the laws of the United Kingdom, European jurisdictions, the United States or other countries.
We can assist with the Turkish legal aspects and coordinate with relevant foreign advisers where the proposed arrangement requires advice under another jurisdiction's law.
Our focus is on understanding the family's circumstances before recommending a legal approach.
A structure that works well for one family may be unsuitable for another. The assets, family relationships, legal residence, nationality and intended purpose all matter.
16. Preserving Family Wealth Requires the Right Legal Structure
A family may spend a lifetime building its wealth, but deciding how that wealth should be managed and preserved for future generations requires a different kind of planning.
Turkish foundations and common law trusts can both play a role in long-term wealth arrangements. However, they achieve their objectives through different legal mechanisms.
A Turkish Vakıf is an independent legal entity created by dedicating sufficient assets to a specific and permanent purpose. It can provide a continuing institutional framework for holding property and pursuing defined objectives.
A common law trust is a legal relationship in which trustees administer assets for beneficiaries or a permitted purpose. Depending on its structure and governing jurisdiction, it may offer considerable flexibility in managing and distributing family wealth.
For international families with connections to Türkiye, the distinction is particularly important.
A foreign trust should not be assumed to operate in Türkiye in exactly the same way it operates in England or another common law jurisdiction. Equally, a Turkish foundation should not be treated as a substitute for a discretionary family trust.
Inheritance rights, property ownership, taxation, beneficial ownership and regulatory obligations all deserve careful consideration before assets are transferred.
Sometimes a foundation will be appropriate. In other circumstances, a foreign trust, holding company, shareholder agreement or conventional succession arrangement may better serve the family's objectives.
Ultimately, successful wealth planning is not about choosing the most complicated structure or following what another family has done. It is about understanding the family's needs, selecting an appropriate legal framework and ensuring that the arrangement can be properly administered over time.
The real value of good family wealth planning is not simply preserving assets. It is giving future generations a clear, legally sound framework through which those assets can continue to serve their intended purpose.
Frequently Asked Questions: Turkish Foundations (Vakıf) vs. Common Law Trusts
1. What is the main difference between a Turkish Vakıf and a common law trust?
A Turkish Vakıf is an independent legal entity established by dedicating sufficient assets to a specific and permanent purpose. A common law trust is a legal relationship in which a settlor places assets under the control of trustees for beneficiaries or a permitted purpose. The foundation owns its assets, whereas trustees generally hold legal title to trust assets.
2. Does Türkiye recognize common law trusts?
Türkiye does not have a domestic common law trust system equivalent to that found in England. However, foreign trusts established under foreign law may have legal and financial connections with Türkiye. Their treatment must be assessed under the applicable Turkish and foreign legal rules.
3. Can a foreigner establish a foundation in Türkiye?
Yes. Foreign individuals and eligible legal entities may establish foundations in Türkiye, subject to the applicable legal requirements. Article 5 of Foundations Law No. 5737 addresses reciprocity requirements for foreign founders.
4. Can a Turkish foundation be used for family wealth management?
Certain family-related and private wealth management objectives may be pursued through a Turkish foundation, provided they comply with Turkish law. The foundation must have a specific and permanent purpose and cannot simply operate as an unrestricted private family trust.
5. Can a Turkish foundation own real estate?
Yes. A properly established Turkish foundation can acquire and own immovable property, provided the acquisition and use comply with its lawful purpose and applicable legislation. The property becomes part of the foundation's independent estate.
6. Can a foreign trust own property in Türkiye?
A foreign trust may be connected to Turkish real estate through an appropriate legal ownership arrangement. However, it should not automatically be assumed that the trust itself can be registered as the owner. The proposed ownership structure, trustee authority and Turkish property legislation must be examined.
7. Can a Turkish foundation distribute money to the founder's children?
A foundation must use its assets in accordance with its legally established purpose and governing deed. It does not operate like a discretionary family trust with unrestricted authority to distribute capital among the founder's children. Any proposed family-related benefits must be legally compatible with its purpose.
8. Can a Turkish foundation protect assets from inheritance claims?
A valid transfer to a foundation separates the dedicated assets from the founder's personal estate. However, it does not automatically eliminate the inheritance rights of protected heirs. Certain lifetime dispositions may be challenged under Turkish inheritance law, including through tenkis proceedings.
9. Are Turkish foundations tax-exempt?
No, not automatically. Their tax obligations depend on their legal status, activities, income and assets. Certain exemptions or benefits may be available where statutory requirements are satisfied and the relevant recognition has been obtained.
10. Can a Turkish resident establish a trust abroad?
A Turkish resident may establish or participate in a foreign trust, subject to the applicable foreign law and relevant Turkish legal, tax and reporting requirements. The consequences depend on the trust's terms, the parties' circumstances and the assets involved.
11. Is a Turkish foundation revocable?
A Turkish foundation is not freely revocable by its founder in the same way as a revocable common law trust. Its termination, purpose changes and other fundamental matters are governed by the Turkish Civil Code, the foundation deed and applicable statutory procedures.
12. What happens to a Turkish foundation when its founder dies?
A properly established foundation is a separate legal entity. It does not automatically terminate when its founder dies. It continues through its authorised governing organs in accordance with its foundation deed and Turkish legislation.
13. Can a Turkish foundation hold shares in a family-owned company?
Yes, a Turkish foundation may hold company shares where the acquisition is legally permissible and consistent with its purpose. The arrangement must also comply with the Turkish Commercial Code and applicable corporate governance requirements.
14. Does the Hague Trusts Convention apply in Türkiye?
Türkiye is not a contracting party to the 1985 Hague Convention on the Law Applicable to Trusts and on their Recognition. Families should therefore not rely on the Convention as an automatic mechanism for recognizing foreign trusts in Türkiye.
15. Which is better for family wealth planning in Türkiye: a Vakıf or a trust?
Neither structure is universally better. A Turkish foundation may be appropriate for dedicating assets to a permanent purpose through an independent legal entity. A common law trust may be more suitable for flexible beneficiary-based wealth management where the family has relevant connections to a trust-recognising jurisdiction. The choice depends on the family's objectives, assets, inheritance position and applicable laws.
16. Can a Turkish foundation and a foreign trust be used together?
Potentially, yes. An international family may consider both structures as part of a wider wealth planning arrangement. However, their respective legal roles, ownership arrangements, tax treatment, governance and reporting obligations must be carefully coordinated.
17. What is the minimum amount required to establish a Turkish foundation?
The minimum assets required for establishing a new foundation are determined annually by the competent Foundations Council. The applicable amount should be verified for the year in which the application is submitted.
18. Can a Turkish foundation be established through a will?
Yes. Article 102 of the Turkish Civil Code allows a foundation to be established through an official deed or a testamentary disposition. Where establishment is intended through a will, the relevant inheritance and foundation registration requirements must be followed.
