A Guide to Inheritance and Estate Management in Israel
Though none of us know the hour of our passing, we can prepare for the future by understanding the rules of inheritance and estate management in Israel. As an Israeli probate lawyer, I wrote this post for Israeli residents and owners of property in Israel. Gaining a better understanding of the topic will help you control the future distribution of your property and care for the needs of your loved ones.
Our law firm has offices in Jerusalem and Tel Aviv and is staffed with expert civil lawyers. The team includes specialists in Israeli probate and inheritance law. Contact us at [email protected] or call 03-3724722 if you need legal advice regarding inheritance law in Israel. We will be delighted to meet you and provide you with the legal services you require.
Topics in Israeli inheritance law
This article will address questions such as:
- What are the consequences of not writing a last will and testament in Israel?
- How do you write an effective and legally binding will?
- Do you need to register your last will and testament with an Israeli government agency?
- What is the role of an estate executor in Israel, and should you appoint one?
- Are there advantages to establishing trusts and endowments compared to direct inheritance?
- What taxes and expenses apply to inheritance in Israel?
Inheritance and estate management in Israel
Estate management is an umbrella term for all the decisions you make in preparation for your eventual passing. It includes writing your will (tzava’a in Hebrew), establishing testamentary trusts and endowments, naming legal guardians for any dependents, and leaving instructions for your funeral and burial. You might also appoint an executor of estate to manage the administrative tasks required to enact your will.
Your last will and testament
The cornerstone of inheritance and estate management in Israel is writing your will. You must write it according to legal requirements defined in Israel’s 1965 Succession Law to ensure that it is a valid will. If you do not write a will, then all your wealth will be distributed according to the default rules of inheritance prescribed by Israeli Law. Without a written will, the Israeli court will take over the management of your estate and divide it according to a default order of succession.
By writing a will, you control how the court divides your estate among your heirs. You can even make the inheritance of an asset contingent on particular stipulations. You can include any stipulation as long as it does not require unlawful activity.
Manage the future of your estate by naming a second heir
According to Israeli inheritance law, you may name a second heir for any part of your estate. Your second heir is the person who will inherit the asset after the first heir passes away (or any other condition you define). The courts will not allow the first heir to ignore or override this instruction. Nonetheless, the first heir can do whatever they want with the asset while it is their property. Alternatively, you can choose to bequeath the use of the property to the first heir while giving the legal ownership of the property to the second heir. Thus you can prevent the first heir from selling the asset before the second heir can inherit it. You can only name a first and second heir to a property. You cannot designate a third heir, fourth heir, etc. 
Using fiduciary trusts as a strategy of inheritance and estate management in Israel
To further define the future management of your wealth, you might consider transferring some of it to a fiduciary trust fund in your will. A trust (ne’emanut in Hebrew) is a formal relationship between beneficiaries who do not own the property and trustees who own the legal title but are not the beneficiaries of the property. The trustees manage the estate for the benefit of prescribed beneficiaries. The trust can be either a private endowment (for the benefit of particular individuals) or a public endowment to promote a social cause. It is highly advisable to use the services of an experienced probate lawyer when writing a will and creating provisions for a fiduciary trust. Only a trained attorney can ensure that the writ of endowment (shtar hekdesh) conforms to Israel’s Trust Law (1979).
Inheritance and estate management: appointing an executor of the estate
When you write your will, it is advisable to name an administrator called the estate executor (menahel izavon in Hebrew). They execute the instructions in your will and oversee the transfer of ownership to your chosen heirs. A judge may appoint one and set their fee if you do not name an executor in your will.
The estate executor deducts the funerary expenses, administrative fees, and outstanding debts from the estate before distributing it (regardless of whether the deceased person made a will).
Sometimes the executor has no choice but to sell property from the estate to cover the relevant costs. Nonetheless, the heirs can purchase the properties before the executor offers them to other bidders.
The Inheritance Registrar in Israel
Though you are not required to register your will with a state institution, I advise you to deposit your will with the Israeli Registrar for the Matters of Succession. This will help prevent your will from being misplaced or challenged as inauthentic. If you hire an experienced Israeli probate lawyer they will help phrase your will so that it is legally valid and unambiguous. The attorney will also help deposit the will with the registrar.
Inheritance tax in Israel – does Israel have an estate tax?
In the past, Israel had imposed an inheritance tax on bequeathed assets. The Knesset, the Parliament of Israel, abolished that tax in 1981. Currently, Israel does not impose direct taxation on inheritances or gifts. However, if the heirs ever sell the inherited property, they must pay a capital gains tax. The authorities calculate the tax according to the monetary appreciation of the value since the date the deceased owner acquired it (rather than the date the heirs received the estate). The continuity principle in Israeli inheritance law effectively constitutes a hidden and indirect inheritance tax on certain assets.
Learn more
I hope this post on inheritance and estate management in Israel was helpful to you. I encourage you to explore our website for more articles on inheritance law.
If you have any questions or require an Israeli probate attorney specializing, I look forward to hearing from you. Our law firm, Decker, Pex, Levi, has branches in Jerusalem and Tel Aviv. Call us at 03-3724722 or email us at [email protected].
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