The property of a deceased individual is called his or her Estate. The Succession Law governs a person’s estate in Israel after their passing. A person’s estate includes their property at the time of death, as well as any rights, actions and obligations. The estate and the heirs to the estate may not absolve themselves of any actions performed by the deceased before his or her death. For instance, if a woman sold her car to another person before her death, the estate is entitled to the agreed upon compensation, but may not withdraw from the sale.
The estate of a deceased individual in Israel is meted out according to a person’s will (if a will exists), after a probate order has been issued, or according to the dispositive stipulations of the Succession Law in Israel (if there is no will or it has been found to be invalid), after an inheritance/probate order has been issued. In many cases, the estate is distributed, in some cases an estate manager is required. This procedure is common where there are debts attached to the estate or where objections to the probate or inheritance order have been submitted.
Issues regarding inheritance and estate distribution are complex, important and delicate. Distribution of an estate in Israel after a probate order, especially when it is substantial or when it is disputed or accompanied by debts, will profoundly impact heirs, both financially and emotionally. That is why it is recommended to contact an Israeli law firm specializing in probate, inheritance matters and estate management. A skilled lawyer will help minimize the difficult processes related to the management and distribution of the estate, in a fair, neutral and responsible way. Seeking professional legal advice is doubly important when an estate manager is required.
The estate manager will assemble all of the deceased’s assets (the estate), pay off any outstanding debts attached to the estate, and dispense the remainder of the estate among the heirs. According to section 97 of Israeli Succession Law, the estate manager is entitled to do “all that is needed to fulfill his duty” [all translations in this article are unofficial], apart from certain actions which require special permission by a court. The expenses incurred during this process are placed on the estate itself, including the estate manager’s salary.
It is important to note that these debts and expenses take precedence over the heirs’ right to the estate in Israel. Thus, if the estate has been distributed before all known debts have been paid, all heirs will be responsible for those debts in their entirety. before the probate order and distribution of the estate in Israel, heirs are not responsible for debts beyond the property of the estate itself.
An estate manager will take the following actions, among others, upon assuming his/her role:
– Open a separate bank account for managing the estate.
– Chronicle and track all income and expenses of the estate.
– Pay all outstanding debts and expenses of the estate.
– Distribute the remainder of the estate among the heirs, after debts and expenses have been paid
– Take legal action against an heir or any person who has caused harm to the estate.
– File a deposition to a court detailing the distribution of the estate (including the value of the property given to each heir at the time of distribution) within thirty days after the distribution of the estate.
The estate manager can be any person named by the deceased in his will, or any person named by a court of law (if the deceased hasn’t named anyone, or for other reasons as deemed fit by the court). Once an estate manager is appointed, the heirs may not conduct any transactions regarding the estate without the estate manager’s or the probate court’s express permission.
If there is a binding will, the estate in Israel will be distributed accordingly. However, when there is no will (whether because it doesn’t exist or is found to be invalid), or if the court has determined that there are special reasons to deviate from the will, an estate manager may suggest a different agreement to the heirs by which the estate will be distributed. Such an agreement requires the express consent of all the heirs. If the heirs cannot agree on the distribution of the estate, it will be distributed according to a court order.
Another important aspect not to be overlooked is the tax implications of estate distribution in Israel. Most western countries impose some sort of inheritance tax. These countries also usually impose some form of tax on gifts, in order to prevent the possibility of tax evasion through the gifting of property. In Israel, an inheritance tax was imposed in 1949, one of the first laws passed, signifying its perceived importance. However, the law was annulled in 1981, and has not been renewed since. There have been attempts to reinstate some sort of inheritance tax in recent years, but so far none has come to pass.
As stated, there is no inheritance tax or estate tax in Israel at the current time. However, many Israeli citizens hold dual citizenship, which exposes them to the tax laws of other countries. For instance, there are over 300,000 Israeli citizens residing in Israel who are also American citizens, and are therefore subject to tax by both countries.
Furthermore, the estate tax in the United States may be applied even to Israelis who aren’t citizens or residents of the United States, if they own property in the United States which exceeds the value of 60,000 U.S. Dollars (this amount may change with time). Such property may include real estate in the United States, trust funds and even shares of American companies. These regulations change on a frequent basis, and thus it is of the highest importance to consult an experienced attorney before choosing any of these steps, in order to ensure the safeguarding of one’s property.