Public Endowment in Israel – how and why establish an endowment in your will?
A public endowment / charitable trust (“Hekdesh Tziburi” in Hebrew).
Is established when a person wishes dispose of his estate to promote:
– public goals
– or charities
and perpetuate their memory as the endowment’s benefactor.
The dedicator / donor may determine in advance what specific goals the endowment will serve. In addition, the donor determines who will manage the endowment according to the agreed goals and instructions (the trustees). The law firm of Cohen, Decker, Pex, Brosh, specializes in estate management and proper drafting of wills and testaments. This article by Advocate Michael Decker, will explain the registration and management of a public endowment.
What are the laws and regulations governing endowments?
A charitable trust has the legal function of regulating and supervising endowments made by private individuals who wish to dispose of their assets and / or estate (or a certain part thereof) in order to establish an institution for carrying out charitable and humanitarian public purposes.
Registration of Public Endowments in Israel:
A public endowment is registered with the Registrar of Endowments. The Registrar operates within the Ministry of Justice and regulates the philanthropic activity of private donors. Regulation involves properly registering endowments and supervising the activities of the trustees.
Operation of the endowment after the death of the donor.
Many donors wish to register an endowment which will take place after their death, using funds from their estate. Such an endowment is registered in the donor’s last will and testament. The will is subject to Israeli inheritance law, and must be written in accordance to it. In addition to the provisions set forth in the Inheritance Law, the will must include the aforementioned elements in the text of the writ of endowment.
Such an endowment must include: a certified copy of the will and writ of probate, a certified copy of an order to appoint an estate manager, a copy of the estate disposition details, and a copy of the estate manager’s final report.
Management of a Public Endowment:
Conserving the endowment assets –
A trustee must preserve, manage and develop the trust assets while acting to achieve the objectives of the trust.
In fulfilling his functions, the trustee must act with due rigor and diligence as a reasonable person would be expected to act under the circumstances.
Separation between the assets of the charitable trust and the assets of the Trustee –
The Trustee must open a special trust bank account for the endowment.
The account will be opened on behalf of the trustees, with a notice specifying that the account is for the purposes of the endowment.
Account Management –
The Trustee must maintain an organized bookkeeping system for the public endowment in the accepted accounting format for non-profit institutions.
Reporting to the Registrar of Endowments:
A trustee of a public endowment must submit an annual financial and business report to the Registrar, detailing the financial, administrative and other activities performed by the Trustee during the past year.
After the donor is no longer among the living, a public endowment is preferable to an amuta in order to fulfill the donation objectives.
The whole purpose of registering a public endowment is to ensure that the state has an effective authority for the purpose of monitoring and regulating the endowment, ensuring that the will of the deceased will be realized in full. For example, the verdict of Family Court case 105510-07, Yellin v.
The Custodian General of Tel Aviv, wherein the deceased did not wish to use his estate to create an endowment or a trust. In fact, the testator established a non-profit association (Amuta) during his lifetime. His testament clearly intended that his estate should be managed by the association and used to further its aims.
However, the court ruled that the proper way to manage the funds of such an estate is in the form of an endowment.
In addition, the court ruled that registration of an endowment is in fact congruent with the wishes of the testator, taking the long view.
None of us know in advance how long we have left. Therefore, the registration of the public endowment in one’s last will and testament is something that should be done sooner rather than later. Contact Cohen, Decker, Pex, Brosh for help in establishing an Amuta or a public endowment in Israel.
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