Inheritance and Estate in Israel

25 Apr

 

1. Introduction

The Israeli Succession Law 1965 (hereafter: the Succession Law) and the Succession Regulations 1998 are the main legislation governing the rights of successors and beneficiaries and the assets of deceased in Israel.

The inheritance proceedings in Israel are considerably different from those dictated in the United States. Hence, when there are no complications and all parties consent to execute and distribute the estate, the procedures could be faster and usually less expensive from those accustomed in the U.S.

In the article below we will list the legal procedures relevant for successors or beneficiaries and illuminate some general aspects dealt with in cases of foreign residents having estates and inheritance rights in Israel.

2. Private international law: place of litigation and conflict of laws

Litigation in Israel: According to the Succession Law, the courts in Israel are authorized to judge in matters of inheritance of every person who resided in Israel at the time of death or a person who left property in Israel.

The choice of law is also set forth in the Succession Law: the Israeli court will apply the succession laws of the residence of the deceased at the time of death. This is the basic rule where there is a conflict of laws.

There are three exceptions to the basic domicile rule:

a. certain assets that fall under section 138 of the Succession Law will be subject to the laws of their location: if the lex situs expressly excludes the application of any foreign law on these assets. In these specific cases, the Israeli court will apply the foreign laws presented to it by an appropriate legal report.

b. the capacity to make a will – the laws applicable when dealing with questions of capacity are those of the place of domicile of testator at the time of making the will.

c. the form of the will – a will with international aspects is valid if it is valid by the Israeli law, by the law of the country where it was written, by the law of residence, ordinary place of domicile or citizenship of the testator at the time of signing the will or at the time of death, and if the will is concerned with real estate – also by the laws of the state where the real estate is located (lex situs).

Three other exceptions exclude the applicability of a foreign law in the following specific cases:

a. if the foreign laws refer to a different foreign law: the referral is then ignored, and the court will apply the internal law of the first country; unless the referral is to the Israeli law.

b. a foreign law that discriminates by form of race, religion, gender or nationality or where it contradicts the Israeli public policy.

c. a foreign law that grants intestate inheritance rights to individuals who are not related to the deceased by blood, marriage or adoption, unless the foreign law recognizes inheritance rights as conferred by the Israeli law.

3. Probate and inheritance proceedings

We distinguish between two different situations:

a. Will – when the deceased left a will containing assets in Israel – the probate proceedings are initiated with filing a probate application for the competent authority in Israel: The Inheritance Registrar in the General Legal Guardian (executor) office of the ministry of justice.

If the testator was a foreign resident, the request should be submitted to the bureau in which jurisdiction the assets are located. Whenever the deceased was an Israeli resident, the appropriate bureau will be the one closest to the deceased’s residence.

It is necessary to complete the application, pay the registrar fees, sign an affidavit, and include the original copy of the will, death certificate and power of attorney. Whenever the deceased did not pass away in Israel or was not an Israeli resident, it is necessary to include additional documents, such as proof of assets and a foreign legal opinion.

The applicant is required to inform all the beneficiaries about the application and include the notifications and registered mail confirmations thereof.

Should one or more of the beneficiaries are interested to waive their rights in favor of the other beneficiaries, it is possible to do so, by filling a waiver form attached to the application. In such case, the beneficiary who waived his rights is seen as if he was not a part of the will from the outset (for the purpose of estate distribution). It is possible to waive part of the share rather than whole of it, however, a waiver in favor of a specific person is not permitted, unless it is a waiver in favor of the deceased spouse, children or siblings.

The request is then published in a daily newspaper, and a 14 days period is allocated for objections by interested parties.

A copy of the request is submitted to the Attorney General. Upon receiving the Attorney General’s positive response (within 45 days), and after the 14 days period of objections is over, a probate order is then granted. A positive response from the Attorney General is usually worded: “no reason to interfere with procedures”.

This process usually takes about two months (in non complicated cases, and where no objections arise).

In some cases the file is transferred to the competent family court for further legal proceedings:

whenever the Attorney General seeks to be involved with the procedures;

if an objection is filed;

if the case involves the interests of minor, missing or sheltered individual;

in cases of oral will;

if the will is deficient or lacks information;

in inheritance proceedings, when a foreign law is applied;

when the inheritance registrar has decided to activate its discretion to do so.

 

A probate order, when granted, does not specify the assets of the estate: it simply declares the will as valid under the Israeli law.

b. No will – if the deceased left no will, the heirs by law are advised to submit an application for inheritance order to the Inheritance Registrar (the same authority mentioned in section “a” above).

The application proceedings for an inheritance order are governed by the Succession Regulations, and much of the information in section “a” above applies to the succession proceedings as well.

It is necessary to complete the application, pay the registrar fees, sign an affidavit, and include a death certificate and power of attorney. Some counties require an original death certificate. If there is no death certificate, the heirs are obliged to submit a proof of death application. Whenever the deceased was a non resident, it is necessary to include additional documents, such as proof of assets and a foreign legal opinion.

The application includes applicant details, the deceased information and details about relatives and assets.

In addition, the applicant is required to inform all the legal heirs about the application and include the notifications and registered mail confirmations. The rules and regulations related to publications, Attorney General intervention and family court proceedings are similar to the probate application, mentioned above.

An inheritance order specifies who are the legal heirs and what are their respective share in the estate. Like a probate order, it does not include any specifications regarding the assets of the estate.

4. Executor of the estate

Section 78 of the Succession Law determines the court’s authority to appoint an administrator or executor for the estate (hereafter: “executor”).

Although it is not obliged by law, most foreign residents choose to apply for an appointment of executor in order to ensure that the estate is managed legally and efficiently.

A petition for appointment is submitted to the Inheritance Registrar in the following cases: when it is mutually agreed or when the appointment is of a person who is specified in the will. If there is no consent of all beneficiaries by will or successors by law, as the case may be, the application for appointment is submitted to the authorized Family Court.

The application for appointment of an Executor should be completed, signed with an affidavit, and include the executor’s letter of consent and the beneficiaries or successors consent. The affidavit should clearly specify the reasons for appointment. Several heirs or heirs outside of Israel are usually a good enough cause for such appointment.

The executors duties by law are: to gather the estate’s assets, to manage the estate, to pay the estate’s obligations and debts, to distribute the assets and to take all legal steps towards the execution of an approved will or an inheritance order (the Succession Law, section 82).

The executor must obtain the approval of the family court for any real estate property transactions and other actions, as specified by the court in the letter of appointment. The court may, at its own discretion, or as a result of an application by an interested party, instruct the executor in any matter related to the executor’s duties.

Within 60 days after appointment, the executor is obliged to submit to the General Guardian a list of the estate’s assets and debts verified by the executor’s own affidavit as well as annual financial reports. The specifications about the financial reports in all estate matters are set forth in the Succession Regulations.

Should the executor wishes to resign, the court must approve the resignation and set a date for it to be valid. Moreover, the court is authorized to dismiss an executor if his duties were not properly fulfilled or if the court believes there is a reason for such dismissal.

If more than one executor is appointed, they must act in mutual consent. Otherwise, they have to appeal to the family court for instructions.

The executor must invite all of the deceased creditors or debtors to inform him of their claims; the invitation is publicly advertised and a period of three months is allocated by law for the executor to wait for debtor claims. It is usually not allowed to distribute the estate’s assets before the passage of time allocated for debtor claims.

Distribution: only after clearing of all debs, will the estate be distributed. However, in certain cases the court may approve partial distribution before debt payment and even before the end of the time allocated for debtors claims.

The estate assets are distributed upon the successors mutual agreement or – without such agreement – by a court order (section 111). The executor is obliged to submit a “distribution plan” to the family court.

Within 30 days after final distribution, the executor’s duty is to file to the court the “distribution list”, verified by the executor’s own affidavit.

5. Summary

We have illustrated above some pragmatic issues that are addressed by the Israeli Law in relation to estate execution and practical distribution of deceased assets (from the point of view of the successors).

An executor may be beneficial for the successors in cases that involve, for instance, several successors who reside in different countries; when procedures are paused for lack of mutual agreement; where one of the successors or beneficiaries is unknown or not found, and the distribution process is thus put on hold; etc.

Israeli lawyers and/or other local professionals could be recruited for the mission and act as executors.

As vast as the executor’s roles may be, they are carefully structured by the Israeli Law: the family court supervises the executor’s actions on behalf of the estate. The executor is limited to work in the range specifically dictated by the law, and to routinely report to the court and apply for court’s approval for many actions.

It should be noted, however, that the lawyers in Israel (representing one or several successors) may assist all interested parties with reaching an understanding, so it could be possible to execute the estate by means of a mutual agreement, and without an appointment of an executor. The proceedings taken by heirs in mutual consent are also specified in the Succession Law (sections 121-125). Most of the rules related to clearing of debt and distribution apply to estate management by heirs without an executor.

 

Dganit Toren, Adv. (Israel), L.L.M

D. Toren Law Offices A civil and commercial Israeli law firm providing comprehensive business and legal solutions, tailored to meet the needs of clients in the United States and in Israel.Call us with any question: Tel:  1-818-986-7800 http://www.torenlaw.com/

 

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