By Amos Hacmun of Heskia – Hacmun Law Firm, Tel Aviv, Israel
- Introduction
Israeli Inheritance Law, primarily defined by the Succession Law of 1965, establishes the legal framework for the distribution of assets following a person’s death. This legislation extends its reach to individuals who, while not residing in Israel at the time of their passing, held property or assets within the country’s borders. Consequently, beneficiaries who are not Israeli residents but are entitled to inherit from such estates must navigate the Israeli legal system to secure their rightful inheritance. A fundamental instrument in this process, particularly when the deceased did not leave a valid will, is the inheritance decree, officially termed a Succession Order. This judicial order, issued by the Israeli Registrar of Inheritance Affairs or the Family Court, serves as a formal declaration of the legal heirs and specifies their respective shares of the deceased’s estate. The inheritance decree is indispensable for non-resident heirs as it provides the necessary legal standing to claim and manage the inherited assets located in Israel, which can include bank accounts, real estate, and various other forms of property. Without this official confirmation of their rights, these heirs would lack the legal authority to engage with Israeli financial and legal institutions concerning the estate.
- Jurisdiction and Initial Considerations
The jurisdiction of Israeli courts in inheritance matters is determined by the deceased’s residency at the time of death or the location of their assets. For individuals who were not residents of Israel, the presence of assets within the country is the primary factor that brings the estate under the purview of Israeli Courts. Therefore, for non-resident deceased individuals with property in Israel, the legal process for inheritance will be governed by Israeli law. An initial and critical step for any potential heir is to ascertain whether the deceased had executed a valid will. The existence of a will dictates the subsequent legal path. If a valid will is found, the process involves applying for a probate order, which serves to validate the will’s authenticity and enforce its instructions regarding the distribution of assets. Conversely, if the deceased did not leave a will, the distribution of their estate will be governed by the rules defined in Israeli law, and in this scenario, an inheritance decree (Succession Order) is the necessary legal instrument. It is also advisable to investigate whether the deceased had deposited a will with the Israeli Registrar for the Matters of Succession before applying for an inheritance decree. The determination of whether a will exists is therefore a fundamental first step for beneficiaries seeking to inherit assets in Israel.
- Obtaining an Inheritance Decree (No Will – Intestate Succession)
When a non-resident deceased individual has left assets in Israel without a valid will, the process to claim the inheritance begins with submitting an application for a Succession Order to the Registrar of Inheritance Affairs. The application form can be completed either online or it can be filled out manually.
A set of documents must accompany the application, especially when the deceased was not an Israeli resident. The application form itself must be duly signed by the applicant or his legal representative. Furthermore, if the deceased did not possess an Israeli identification number, an original or a duly verified copy of their death certificate is mandatory. If the death occurred outside of Israel and the deceased did have an Israeli ID, the fact of death must first be officially recorded in the Population Registry of Israel before the inheritance application can proceed. In situations where obtaining a death certificate is not feasible, a formal application to prove the death through alternative means must be submitted. The application must also be accompanied by confirmation of payment for the requisite application and publication fees. To ensure all potential heirs are informed of the proceedings, the applicant must provide sufficient evidence that a legal notification has been sent to them. If the applicant is represented by a legal professional, an original or a certified copy of the Power of Attorney granting the lawyer the authority to act on their behalf must be included with the application. Copies of the passports or national identification cards of all the heirs are necessary to verify their identities and their relationship to the deceased. In some instances, an Affidavit of Heirship, which is a document signed by witnesses confirming the identities and relationships of the heirs, may also be required. Crucially, the application must include documentation that substantiates the deceased’s ownership of assets within Israel, such as official land registry extracts for real estate holdings or bank statements for financial accounts. Given that the deceased was a non-resident, all official documents originating from outside of Israel must typically undergo a process of authentication. This generally involves obtaining a notarization in the country where the document was issued, followed by an apostille stamp. An apostille is an international certification that verifies the authenticity of public documents for use in foreign countries that are signatories to the Hague Convention. If the country of origin is not a signatory, authentication by the Israeli consulate in that country is usually required. Translations of these foreign documents into Hebrew may also be necessary and might also need to be notarized and apostilled. Finally, the application must be supported by a legal opinion of a legal expert in the laws of the last place of resident of the deceased. The legal opinion will have to lay down the facts and determine the legal succession according to the laws of the jurisdiction in which the deceased had his last place of residency.
- Obtaining a Probate Order (With a Will – Testate Succession)
When a non-resident deceased individual has left a valid will that includes assets located in Israel, the process for the heirs to gain legal recognition of their inheritance rights involves applying for a Probate Order. Similar to the application for an inheritance decree, this process is initiated by submitting an application to the Registrar of Inheritance Affairs.
A primary document required for this application is the original will of the deceased. If the original will is not available, a formal request to prove a last will by copy explaining the reasons for its absence, along with a copy of the will, must be submitted. This request would also typically need to include proof of payment of a government levy associated with such a request. Just as in cases of intestate succession, an original or a duly verified copy of the deceased’s death certificate is also a prerequisite. To ensure transparency and fairness, proof must be provided that all beneficiaries named in the will have been formally notified of the probate application. This notification process is similar to that required for an inheritance decree. Evidence of payment for the necessary application and publication fees must also be submitted. If the applicant is represented by an attorney, a Power of Attorney authorizing the representation is required. Copies of identification documents, such as passports, for all heirs or beneficiaries are necessary to verify their identities. A critical requirement when dealing with a will executed outside of Israel is often the provision of a legal expert opinion on the relevant foreign law. This opinion, prepared by a legal professional knowledgeable in the laws of the country where the will was made, should confirm the will’s legal validity under that jurisdiction assuming that said jurisdiction was also the last place of residency of the deceased. In case the last will was made in another jurisdiction then an addition legal opinion may be required. This step is essential for the Israeli court to recognize the foreign will. Furthermore, the will itself and any supporting documents that originated outside of Israel must be properly authenticated. As already mentioned, this typically involves obtaining an apostille from the competent authority in the country of origin or, if that country is not a signatory to the Hague Convention, through legalization by the Israeli consulate in that country.
- Key Legal Aspects of Israeli Inheritance Law
The Israeli international private law rules apply the laws of the last place of residency of the deceased. For that purposed the previously mentioned legal opinion is material since the foreign law must be proven to the Israeli court.
Israeli law generally recognizes the validity of wills that were created outside of Israel, provided that these wills were duly made under the foreign laws applicable to the specific case. This is verified by a legal opinion served with the application and which need to confirm to the Israeli court that the will was properly executed and is legally binding in its place of origin.
- The Role of Legal Representation
Navigating the intricacies of Israeli inheritance law, especially when dealing with cross-border estates and non-resident beneficiaries, can be a complex undertaking. Engaging an experienced Israeli inheritance lawyer can provide significant benefits and is recommended. A lawyer specializing in this area can offer invaluable guidance throughout the entire process of applying for both inheritance decrees and probate orders, ensuring that all legal requirements are meet and that all necessary documentation is correctly prepared and authenticated. This includes assisting with the often complex process of obtaining required documents such as death certificates and proof of the deceased’s assets in Israel, as well as ensuring that foreign documents are properly notarized and bear the necessary apostille or consular legalization. In cases involving foreign wills, an Israeli lawyer can facilitate the acquisition of the required legal expert opinions on foreign law and present a compelling case for probate to the Israeli court. Furthermore, a lawyer can act as a crucial intermediary in communications with the Israeli Registrar of Inheritance Affairs and other relevant authorities, helping to overcome potential language barriers and navigate unfamiliar procedural hurdles. In the event of any objections or disputes arising in connection with the inheritance, legal representation is essential to protect the heirs’ interests. In some situations, a lawyer can also serve as or provide advice to the estate manager (executor), overseeing the administration and distribution of the estate’s assets.
- Post-Application Procedures
Once an application for either an inheritance or a probate order is submitted to the Registrar of Inheritance Affairs and is deemed to be complete, the details of the application are typically published in the official government gazette, known as “Reshumot,” and also in a widely read daily newspaper in Israel. This public notification serves to inform any potential creditors or other interested parties about the inheritance proceedings and provides them with an opportunity to file an objection within a specified period of time. This requirement for publication ensures transparency in the process and allows for any legitimate claims or concerns regarding the estate to be brought forward. Non-resident heirs should be aware of this step and understand the possibility of objections being raised during this period.
The application and all accompanying documentation undergo a thorough review by the Registrar of Inheritance Affairs who may ask for additional information and clarifications as well as whether the General guardian office at the Ministry of Justice has an interest to intervene in the proceedings. Once all documents are available, the file is being forwarded to the relevant court for further process.
Any interested party has the right to file an objection to the granting of an inheritance or probate order. Such objections must be submitted in writing to the Registrar within the stipulated timeframe and before the order has been officially issued. Common reasons for filing an objection can include disputes over the validity of a will, disagreements regarding the identity of the legal heirs, or challenges to their respective shares of the estate. If the application is ultimately approved, and no valid objections are sustained, the court will issue the official Inheritance Decree (in cases of intestacy) or the Probate Order (when a valid will exists). This order is nowadays typically issued in a digital format and is sent to the email address provided by the applicant or their legal representative. Importantly, if the deceased had an Israeli identification number, the order is also usually transmitted electronically to relevant government ministries, as well as to banks and insurance companies within Israel, which facilitates the process of transferring the assets to the rightful heirs.
- Important Considerations for Non-Resident Beneficiaries
Beyond the Israeli legal procedures, non-resident heirs must also be mindful of the legal and tax implications of inheriting assets in Israel according to the laws of their own country of residence. They may be obligated to report the inheritance to their local tax authorities and could be subject to inheritance or other taxes in their home country, even though Israel currently does not impose an inheritance tax.
- Costs, Fees and Timeline
Obtaining an inheritance decree or probate order in Israel involves several types of fees. There are statutory application fees payable to the Israeli Registrar of Inheritance Affairs for the initial filing of the request, as well as fees associated with the mandatory publication of the application in official records and newspapers. The specific amounts of these fees can vary and are subject to change. If a non-resident heir decides to retain the services of an Israeli lawyer, which is strongly advised, they will also incur legal fees. The total cost of legal representation will depend on the complexity of the inheritance case and the specific fee arrangement agreed upon with the attorney. Additional costs that will apply are the cost of the legal opinion by the legal expert as well as the cost of translation of documents and their proper legalization by notarization and apostille. The timeline for obtaining an inheritance decree or probate order in Israel can fluctuate based on various factors. These include the completeness and accuracy of the initial application, the promptness with which the applicant responds to any requests for additional information, the absence of any objections from interested parties, and the current processing times at the Registrar’s office and courts. Generally, once a complete application has been submitted, including the period for public notification, an order is typically issued within approximately 40 to 90 days. However, if there are complexities or if objections are raised, the entire process will take considerably longer.
- Tax Implications and Planning
A significant aspect to consider is the tax treatment of inherited assets in Israel. Importantly, Israel abolished its inheritance tax and currently does not levy any tax on the inheritance of assets, regardless of the residency or citizenship of either the deceased or the beneficiaries. This absence of inheritance tax in Israel can be a considerable advantage for non-resident heirs. However, if the inherited assets, particularly real estate, are subsequently sold by the heirs, they will probably be liable for capital gains tax in Israel. The calculation of this tax is typically based on the difference between the selling price and the value of the asset at the time it was originally acquired by the deceased, a principle known as “continuity”. Therefore, non-resident heirs who are considering selling inherited property in Israel should be aware of these potential capital gains tax obligations. It is crucial to understand how the tax is calculated and what the current applicable rates are for effective financial planning. Furthermore, despite Israel’s lack of inheritance tax, non-resident beneficiaries may still be subject to inheritance, estate, or other taxes in their own country of residence on the value of the assets they inherit from Israel.
Finally, there is also the possibility to optimize the applicable tax by reaching an agreed division of assets through an Estate Division Agreement which may allocate assets differently between the heirs as would have been by the applicable law or last will.
Given the potential for tax obligations in their country of residence, it is strongly recommended that non-resident heirs seek professional tax advice in their own jurisdiction to fully understand their tax responsibilities related to the Israeli inheritance. Tax laws can vary significantly between countries, and ensuring compliance with all applicable regulations is essential.
If you have questions or wish to obtain legal advice, please feel free to contact us at main@hh-law.co.il