Managing Estate - עמיהוד בורוכוב, משרד עורכי דין

I looked after my older sister after her husband died and she became ill. She was very well established , but she did not make a will and her children inherited what she had.I am a spinster of modest means and live in a rented apartment. I overheard my nephews and nieces talking amongst themselves. They agreed to let me have a small apartment my late sister owned because I had been “so good to her”. They later told me about this. A long time has passed now and I have heard no more. Is there oral agreement binding ?

Inheritance •Managing Estate

No – an oral agreement to voluntarily forfeit rights under a will is not binding ! An undertaking to transfer property rights must be in writing, otherwise it has no legal effect. Where transfer of title to real estate has not been effected, then the principles of the 1968 Gift Law apply – and , according to these, “ an undertaking to make a gift” of real estate must be in writing.

Incidentally, as long as the estate has not been distributed, under the Inheritance Law of 1965 it is possible for an heir to give up his/her share of part of the deceased’s estate in favour of a limited circle of the deceased’s relatives, including siblings. Thus a deceased’s children could give up their right to the apartment in favour of their aunt, the deceased’s sister, by notifying the Inheritance Registrar or Court in writing.

In both situations described, there is no possibility of enforcing an oral undertaking or promise regarding the real estate.

My widowed sister died recently leaving an apartment and several bank accounts. She made a will leaving her apartment to me and her only child. She bequeathed her bank accounts to several cousins living abroad. The will was written a long time ago and their full addresses were not given, just the countries, and sometimes the towns, in which they lived. Can the Israeli beneficiaries inherit the money in Israel because we don’t know where or how to contact the beneficiaries abroad ?

Inheritance •Managing Estate

No ! They have a right to be informed of their potential inheritance and to receive anything due to them if the will is enforced .Efforts must be made as early as possible to find out the addresses of the beneficiaries so they can be included in the application for probate (order enforcing the will and allowing distribution of the estate) and served with a copy of it . If this is not done before application for probate is filed, the inheritance register will give instructions about tracing the foreign beneficiaries and/or alternative ways of serving them with the application for probate.

The Israeli beneficiaries have no right to the money in Israel if the foreign relatives, or their descendants are alive. It is possible that an executor will be appointed who will open an account on trust for the relatives until they can be traced.

How is the Israeli estate of a foreign resident to be administered by the foreign executor when the deceased has left no will and no children , but there are many potential beneficiaries, some of whom are unknown , and according to a foreign pre-marital agreement the deceased’s property automatically belonged to his wife, who died after him ?

Inheritance •Managing Estate

In such a case there can be no short cuts, but that efforts be made by the executor to draw up a list of potential beneficiaries of the late husband. They must be served with any documents which may affect their potential rights to the husband’s Israeli estate – such as an application for a probate order relating to the late wife’s estate, which, on the basis of their foreign pre -marital agreement, would include the deceased husband’ s Israeli estate.

Alternatively, an application can be made for the appointment of an executor to manage the late husband’s estate – and he should deal with tracing the potential beneficiaries so that their viewpoint can be established, and they can decide whether to challenge any application to distribute the late wife’s estate, which includes property belonging to her late husband.

My husband died a few months ago, leaving heavy debts due to the failure of his business. All that is left are two funds from when he was in the armed services. One started to pay out during his lifetime and the other was due to be paid out after his death. His creditors are trying to get their debts paid from his estate – can they touch these funds ?

Inheritance •Managing Estate

The answer to this question depends on the conditions set between the deceased and the fund. In principle the courts have held that money from pension funds and life insurance policies are not funds that are subject to the Inheritance Law of 1965 , and do not form part of the deceased’s estate. Having said this, if it is conditioned that in the event of death the estate will be the beneficiary then the Inheritance Law will regard the fund or policy as part of the estate. If the funds are not part of the estate the deceased’s creditors have no chance in getting their debts covered from them. If they are part of the estate the creditor’s may be able to recover their debts from them. It does not matter if the money from the fund/policy was paid during the deceased’s lifetime or afterwards.

My father died recently. I was surprised to learn that he was heavily in debt and that many creditors were chasing after him. I also discovered that he had a life insurance policy and that I was listed as the sole beneficiary . I have now found out that the creditors know about the existence of the policy and are trying to get their money from it. Can they ?

Inheritance •Managing Estate

No ! The 1965 Inheritance Law states that money paid as a result of someone’s death according to an insurance contract is not included in his estate, unless it is conditioned otherwise. In the Philosoff Supreme Court case the question arose as to whether the money is included in the estate if the policy states it should be paid to the heirs according to law or according to the will. It was held that in this case they inherit as beneficiaries under the policy not as heirs .

Accordingly, the money from the father’s life insurance policy is not part of his estate and his creditors cannot get their debts paid from it.

My mother passed away a few months ago. I am one of three surviving children. In her life insurance policy she named me as the sole beneficiary although in her will she left her property to all three of us in equal parts. My sister applied to court to get what she claims is her third of the life insurance. Does she have a chance of succeeding ?

Inheritance •Managing Estate

No ! The 1965 Inheritance Law states that money paid following the death of someone according to an insurance contract is not included in his estate and the act does not apply to it. Accordingly, where an life insurance policy of someone who dies gives instructions about the division of its funds that differ from those in the Inheritance Law or in the deceased’s will, the ones in the policy will be the ones that count.

Does inheritance tax have to be paid on the estate of a deceased person domiciled in Israel ? Do beneficiaries or heirs abroad have to pay tax on what they inherit from the deceased’s estate ?

Inheritance •Managing Estate

Inheritance tax does not exist in Israel today ; it was abolished many years ago. In recent years there have been attempts to reintroduce it but these have not materialized. Thus, at present, where a person subject to Israeli taxation laws dies , no tax will be due on his/her estate according to Israeli law. However, a beneficiary /heir domiciled abroad will be subject to taxation on what he/she inherits according to the laws of their own particular country.

How is the estate of a deceased managed if it is discovered that there is not enough in it to pay off the debts ?

Inheritance •Managing Estate

The Inheritance Law of 1965 obliges the executor of the estate, or the heirs if there is no executor, to make an application for an order to manage the estate according to the laws of bankruptcy, if it becomes clear that it is insufficient to meet the debts.

I inherited an apartment under my aunt’s will. There are large debts due on the estate because my aunt incurred heavy care and medical costs over a long period before her death. Could my inheritance be at risk because of these debts, or is it ‘saved’ because it is real estate, rather than money ?

Inheritance •Managing Estate

Although when a testator bequeaths particular property to someone in a will there is an assumption that the person should receive it in its entirety, this is so only when there are sufficient funds in the residual estate to cover the debts after the beneficiaries’ shares have been put aside. Where this is not the case, the beneficiaries will have to bear the burden of the debts, according to their relative inheritance. It does not matter whether they inherit rights, real estate or moveable property.

Is a beneficiary’s share under a will affected if after the testator’s death large debts are due from the estate to cover medical and care costs towards the end of his life ?

Inheritance •Managing Estate

Possibly. Whether a beneficiary’s share under a will is affected by the existence of large debts due from the estate depends on whether there are enough funds in the residual estate ( what the deceased did not bequeath as parts in his will) to cover them. If there are sufficient funds in the residual estate , then the beneficiary’s’ share will be unaffected. If there are insufficient funds there, then the liability for the debt will be born proportionately by the beneficiaries , according to their relative parts in the will .