We investigate the thermal stability of nearly lattice-matched InAlN layers under metal organic vapor phase epitaxy conditions for temperatures >800 degrees C and show that they are not fully stable. In particular, InAlN top layers undergo degradation during high temperature annealing due to a surface related process, which causes the loss of crystal quality. This strongly impacts the transport properties of InAlN/GaN HEMT heterostructures; in particular, the mobility is significantly reduced. However, we demonstrate that high thermal stability can be achieved by capping with a GaN layer as thin as 0.5 nm. Those findings enabled us to realize in situ passivated HEMT heterostructures with state of the art transport properties. (c) 2014 AIP Publishing LLC.