This section gives a brief introduction about how inheritance cases are dealt with – and the estate managed.
What Happens To Deceased's Property – Introduction
Question:
What happens to someone’s property when they die according to Israeli law ? Does it matter if they made a will or not ?
Answer:
If the deceased left a will and this is valid and an order is given to enforce it the estate will be distributed according to it unless there are objections, in which case the issue will be opened up . If there is no will or the will is declared invalid the property a person leaves when they die (their estate) will be divided up according to the principles set down in the 1965 Inheritance Law.
Ordinary Power of Attorney – Useless After Death
Question:
Will a power of attorney given by a deceased during his lifetime still be effective in relation to his property after his death ?
Answer:
No ! An ordinary power of attorney loses its legal force upon the death of the person making it. Only an irrevocable power of attorney, which deals with the rights of a third party, remains legally valid after the person making it has passed away.
Inheritance of Bank Account - Power of Attorney and Joint Ownership
Question:
My father is in his late seventies. He made a will several years ago leaving his property to myself and my brother. I now run his affairs for him and have a power of attorney on his bank account. He does not have a legal guardian. When he dies will I have access to his bank account to cover funeral costs and other debts ?
Answer:
No! Such a power of attorney is automatically cancelled upon death . Accordingly a family member with a power of attorney on the deceased’s bank account will not have access to funds upon his death. If, however, the elderly parent appoints the family member as a joint account holder then access to the funds will continue after death.
Which Court or Body Deals With Inheritance ?
Question:
Which body or court in Israel deals with the estate of someone who has died ?
Answer:
Recently the whole procedure dealing with Inheritance has been streamlined and more straightforward cases are dealt with by the new Inheritance Registrar while more complicated cases are dealt with by the Family Court or the appropriate religious court if all those involved agree.
Types of Legal Proceedings : Inheritance
Question:
What kinds of actions/procedures need to be dealt with regarding someone’s property when they die ?
Answer:
Before the estate can be distributed an order must be obtained to enforce the will if there is one or to divide it according to the principles of the Inheritance Law if there is no will, or it only deals with some of the property. In addition, there may be need to appoint an executor to execute the will or divide the estate according to the order. From time to time the inheritance registrar, or family court or the religious court will give the executor instructions and for certain procedures the executor must ask it for instructions. In addition, an application may need to be made for maintenance from the estate. Sometimes a temporary executor is needed to deal with urgent issues.
If objection is filed to an application to the for an order to enforce a will or to distribute the estate, before the Inherirance Registrar, this is also a legal procedure, and the case will then be automatically transferred to the family court.
Rabbinical Court Can Deal With Estate Case
Question:
Our family is Observant and we would prefer that the rabbinical court deal with questions of my late father’s estate. Is this possible ?
Answer:
Yes, as long as all parties affected by the matter agree the Inheritance Law of 1965 allows the religious courts to deal with such issues. If everyone agrees then you can apply to the rabbinical court directly without applying to the Inheritance Registrar first.
Beneficiary Abroad – Estate in Israel
Question:
I live in the United States. My great aunt , who lived in Israel, died recently. She was a very wealthy widow. I heard that she made a will several years ago which she deposited in court, and that I and two other relatives were beneficiaries. They are both alive but old and in poor health and will not do anything active about claiming on the will. Can I do anything about my possible inheritance without travelling to Israel ?
Answer:
Yes. A relative living abroad can sign a power of attorney at an Israeli Consulate overseas appointing a lawyer in Israel to act on his behalf regarding a possible inheritance in Israel. Once the lawyer in Israel has received the power of attorney he can act to check via the Inheritance Register whether the deceased deposited a will. A national register is kept of deposited wills. If the will is found, then the lawyer can apply for probate (an order enforcing the will) on behalf of the beneficiary abroad.
Inheritance - Executor of Estate
Question:
Who deals with the administration of the estate when someone dies ? Is it possible to object to this person’s appointment ?
Answer:
The law concerning the appointment of an executor ( someone who deals with the administration of the deceased’s estate) was clarified in 2001 when the Tel Aviv Family Court dealt with the objection of two neices to the appointment of someone affiliated to Tel Aviv University to administer their late uncle’s estate. They also objected to the will in question.
It said the Inheritance Law recognizes two situations regarding the appointment of an executor. The first is where there are instructions regarding this in a will and the second where there is no will or the will does not mention an executor.
In the first situation, the court will appoint the person instructed to be the executor in the will, even if the beneficiaries or a third party object, unless it gives special, written reasons for not doing so.
In the second situation the court will appoint someone if all the interested parties give their written agreement to the appointment. Otherwise, the court will appoint a neutral person as it sees fit.
Where the court has discretion not to appoint someone according to the instructions of a will, it must be careful to avoid a person with vested or personal interests that could conflict with the fulfillment of his role. However, just because objection has been made to the will this is no reason to automatically refrain from appointing the person according to the instructions of the will. The court oversees the whole process of the administration of the estate anyway, it said, overruling the neices’ objections about the appointment.
Powers To Appoint Executor
Question:
Who has the power to appoint an executor for the deceased’s estate ?
Answer:
Under the Inheritance act the Inheritance Registrar and the family court. If all the interested parties agree in writing a religious court can,too.
No Free Hand For Executor of Will
Question:
What is the role of the executor of a will ?
Answer:
A person appointed as executor of the will is supposed to execute the will as it is written so that it reflects the wishes of the testator. He does not have discretion to do as he pleases, but only within limits defined in the will. If a provision in the will is unclear, or if he has any problems in interpreting or executing the will he can ask the court for instructions. Certain actions may even require court approval.
Court’s Powers To Pay Executor of Estate
Question:
My brother and I were appointed as executors of our late mother’s estate. We are not interested in being paid for administering the estate. Can the court still order that we be paid if we do nothing active about it ?
Answer:
Yes ! The 1965 Inheritance Act empowers the court with discretion to set a fee for the executor’s services in administering the estate. From the wording of the act the court can set such a fee even if the executor did not request it.
Firing Executor of Estate
Question:
Can an executor of an estate be fired ? If so, by whom , and in what circumstances ?
Answer
Yes, dismissal is one of several ways in which the role of an executor of an estate may end according the Inheritance Act . The court may dismiss him/her if he/she failed to do their job properly or if it sees another reason for dismissal. It can act on its own initiative or at the request of an interested party.
In December 2001 an interested party in an estate case applied to the Haifa Family Court for the dismissal of the executor of the estate who had been correctly appointed. She claimed that the executor, a lawyer, was not neutral as she was the permanent lawyer of one of the respondents towards whom she was partial. The executor, so the interested party claimed, held a large sum of money from the estate, and refused to give reasons for failing to distribute it, responding only to instructions from the respondent.
The application was rejected by the court, which stressed that the interested party had failed to prove that the executor was biased, and that all his actions were subject to its scrutiny anyway. Although the executor must distribute the estate within a reasonable time, it has discretion about the timing , and as long as it is not proved that he is acting wrongly, there is no reason for the court to interfere, it said.
Executor Also Beneficiary – Distinction Between Inheritance And Fee
Question:
I was appointed executor of my late father’s estate. He was a wealthy man, with much property. My sister and I are his sole beneficiaries. I am just about to finish my administrative duties regarding the estate and planned to apply to the court for payment to cover my services. Can I request a high fee because of the large amount of work involved ?
Answer:
No ! In the late 1960’s the Supreme Court held that a distinction should be made between a person’s share of an inheritance, which is free of tax, and his fee as an executor of the estate, which is taxable as it is income arising from a job or post . Accordingly, tax considerations should be weighed up before an application is made to the court for a fee for services as executor of an estate. Furthermore, the level of the fee set does not depend on what the executor himself asks for – but on the amount of work actually involved, and is at the court’s discretion, up to a maximum figure set in the regulations.
Executor & Agreement With Other Beneficiary - Conflict of Interest
Question:
Is it permissible for an executor who is also a beneficiary of a will to enter into negotiations with another beneficiary which results in the latter signing an agreement to accept less than the testator bequeathed ?
Answer:
No – where the executor is also a beneficiary there is a clear conflict of interests between his role to execute the will and his interest to gain under it as a beneficiary. Where there is a problem in executing the will for some reason, then the executor should ask the court for instructions , and in any event, if an agreement is reached whereby the other beneficiary accepts a lesser sum , it would need court approval.
Inheritance - Taxation of Executor’s Fee
Question:
My grandmother died recently and I was appointed executor of her estate. At the end of my duties as executor I was set a fee for my services by the court. I have now received a notice from the income tax authorities to say that this money would be taxed. This seems unfair. Do I have any chance of challenging this demand ?
Answer:
No ! The Supreme Court held in the late sixties that the money an executor receives for administering the estate is liable for taxation under the Income Tax Ordinance as it is derived from a job or post. This is so even if the executor did not ask or expect a fee for the services and it was totally dependent on the discretion of some outside source eg the court. It cannot be regarded as a payment in the form of a gift which would not be taxable, it was held.
Court’s Instructions To Executor Re Payment of Estate’s Debts
Question:
I have been appointed executor of my uncle’s estate. I have no background in finance or law and do not know how to pay the debts due because there is not enough money left in the estate to cover them after the beneficiaries’ shares have been put aside. What should I do ?
Answer:
Where an executor of the estate is not sure how to pay off debts , he should apply to court for instructions about this. Basically, where there are insufficient funds in the residual estate to cover the debts after the beneficiaries shares have been put aside, the beneficiaries will have to bear the burden of the debts , according to their relative inheritance. It does not matter whether they inherit financial rights , real estate or moveable property.
Charity Wins Battle Against Cheating Executor
Question:
Is it possible to take successful action against an executor of a will who tricks a beneficiary into signing an agreement to accept a smaller inheritance ?
Answer:
Yes, especially where the executor is also a beneficiary , so that his role involves a conflict of interests, and the offended beneficiary is a charity or social cause, and the bequest is in memory of the deceased or his family. These points were made by Jerusalem Family Court when it accepted a plea by the children’s charity, Ilan, to cancel an agreement, it had entered into with the executor of the will, who together with his wife and children, were the only other beneficiaries under the estate. The court held that the executor of the will had acted in bad faith, and was subject to a conflict of interest. It said it was clear that he had misled the charity’s representative and as a result she had mistakenly signed the agreement which was contrary to the deceased’s wishes.
It relieved the executor of his duties in relation to that part of the will, and increased the amount of money the charity should receive, ordering that the defendant should pay interest on the unpaid difference.
Effect of Debts On Inheritance
Question:
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 ?
Answer
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 .
Inheritance – Apartment and Estate Debts
Question :
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 ?
Answer:
The question of whether an apartment bequeathed to a beneficiary under a will is at risk where heavy debts are due on the deceased’s estate was considered by Tel Aviv Family Court in December 2002. The court held that 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.
Managing Estate of Bankruptee
Question:
How is the estate of a deceased managed if it is discovered that there is not enough in it to pay off the debts ?
Answer:
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.
Inheritance - No Tax
Question:
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 ?
Answer:
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 materialised. 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.
Life Insurance and Inheritance Law
Question:
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 ?
Answer:
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.
Life Insurance Policy – Beneficiary’s Property and Not Estate’s
Question:
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 ?
Answer:
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.
Life Insurance as Part of Estate
Question:
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 ?
Answer:
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.
Estate Administration - Foreigner Without Children
Question:
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 ?
Answer:
The Tel Aviv Family Court held in December 2002 that 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.
It rejected a request to recognise and enforce the foreign pre-marital agreement, giving it the validity of a judgment in Israel ‘over the heads’ of potential beneficiaries of the late husband’s estate.
Israeli Estate - Beneficiaries in Israel and Overseas
Question:
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 ?
Answer:
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.
Oral Agreement By Heirs To Include Third Party – Not Binding
Question:
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 ?
Answer:
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.
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