Balancing of resources - which assets are excluded?

What property is excluded from the Balancing of Resources and Other Exceptions?

What is the Balancing of Resources in Israeli family law? In our article about property division under the Property Relations Law, we discussed how a couples assets are divided after separation. The balancing process of resources is part of said division process. Not all of the couples’ assets will be included in the process. This article will detail which property will be excluded and explain the relevant criteria according to Israeli family law.

The Property Relations Law as the basis for exclusion of property

The Property Relations Law excludes assets the spouses owned before the marriage, gifts received during the marriage and inheritance gained during the marriage from the balancing of resources process. Assets received from third parties or from personal labor prior to the marriage are considered the sole property of the receiving party.

However, assets that one of the parties gained due to personal labor are considered property gained by mutual labor. Therefore, these assets should be balanced between both parties.

How does the exclusion work in practice?

For example, if one of the spouses owned an apartment before the marriage and never indicated to their spouse that half of the apartment belong to said spouse, this apartment will be excluded from the balancing process and the other party has no right to half of the value of the apartment or a different asset in its place.

In contrast the salary gained by each party throughout their marriage is part of the balancing process. The salary, and other capital gains from the workplace, will be divided between the spouses.

Shared ownership in theory and in practice

We will note that the regular property law still applies when dividing the property. Therefore, if one party decided to hand ownership over a certain asset to their spouse, even though this asset would normally be excluded from the balancing process, the second party has the right to half of the asset.

For example, if each party owned a bank account prior to their wedding and they decided to use bank account #1 as a joint bank account, registered it under both parties names and deposited their salaries to it, all the funds that were in bank account 1# prior to the marriage are now legally considered joint funds and are equally owned by both parties. On the other hand, consider the funds in bank account #2, that were not used for the joint needs of the couple. These funds will remain under the sole ownership of its owner.

Case law on the balancing of resources:

Case law in Israel may recognize certain assets as joint ownership assets based on the circumstances of the matter. The primary criteria is whether it is clear that one spouse intended to grant the other spouse joint ownership.

In other words, even if a certain asset was owned by one party before the marriage or given to them by a third party and there is no formal agreement that the other party was granted partial ownership, under certain circumstances the court may see these assets as joint ownership assets.

Real estate and balancing of resources:

One of the most common disputes between couples in the process of separation revolves around ownership over their shared apartment / house.

In many cases the court has stated that the mere fact that a couple is married for many years and has lived in an apartment owned by one of the parties for a long time is not enough to indicate that the owner intended to grant the other party joint ownership.

The party that doesn’t own the real estate must demonstrate the owning parties’ intentions to share the ownership over the asset. Such evidence may include:

The period in which the apartment was bought. If it was bought prior to the marriage this is an indication that the owning party did not intend to share it.
The period of time the couple is married. A short period of time may indicate that the owning party did not intend to share the apartment;
Did the couple live together in the apartment?
Did the couple have any joint expenses related to the apartment?
Was the apartment given as a gift during the marriage and registered under both names?

A negative answer to last questions is a strong indication that the owning party did not intend to share the real estate with their spouse.

Contact our legal experts – Israeli family law lawyers

The dividing of property and the balancing of resources is a complex and confusing process. In order to understand this process fully we advise you to consult with our legal team. Arrange a meeting at our legal office in Tel Aviv or Jerusalem, or contact us via the info below: