The First Question: Was There a Will?
Where there is a will that is to be given effect in Israel, an application is generally made for a Probate Order. Where there is no will, an Inheritance Order generally identifies the heirs and their shares under Israeli succession law. Obtaining the order establishes the succession rights, but it is often only the first step where the estate includes Israeli real estate.
What If the Will Was Made Outside Israel?
A will made outside Israel can raise additional documentary and legal questions. Depending on the circumstances, the process may involve the original will, foreign probate documents, a death certificate, authentication of foreign documents and questions concerning the law applicable to the succession. Where advice on foreign law is required, I work with the appropriate lawyer or professional in the relevant jurisdiction while handling the Israeli aspects of the matter.
Do I Need to Come to Israel?
Not necessarily. Many inheritance matters involving overseas heirs can be coordinated while the heirs remain abroad. Documents may need to be signed and authenticated in a particular way depending on the document, the country and the authority that will rely on it. Identifying those requirements at the beginning can avoid having documents executed abroad in a form that cannot later be used in Israel.
Obtaining the Order Is Not the Same as Registering the Property
After the Probate Order or Inheritance Order is obtained, the next question is what should happen to the property. Rights may be registered in the Land Registry, administered through the Israel Land Authority, a housing company or another registering body. An incomplete condominium registration or an older chain of title may also need to be addressed.
Several Heirs – What Happens to the Property?
If several heirs inherit the same property, they may ultimately hold it together according to their respective inheritance rights. That may be appropriate, but it may not reflect what the family actually wants. One heir may want the apartment, others may prefer cash, or different heirs may prefer different assets in the estate. Those questions are worth considering before automatically registering every estate asset in all heirs’ names.
Estate Distribution Agreements Can Be Important
Israeli real estate tax law provides a specific framework for a qualifying first distribution of estate assets among the heirs. This can be relevant where the estate contains several assets and the heirs do not want each of them to receive the same percentage of every asset. Whether a particular arrangement qualifies depends on the structure of the estate, the history of the distribution and, importantly, the source of any balancing payments.
Do We Have to Register the Property in the Heirs’ Names Before Selling It?
Not every case requires the same sequence. If the ultimate intention is to sell, it is worth considering whether an intermediate registration is necessary and what documents will be required for the eventual sale. The answer can depend on how the property is registered, the inheritance documentation and the requirements of the relevant registering authority.
What If One Heir Wants the Property and the Others Want Money?
Registering the property in all heirs’ names and then having one heir acquire the others’ shares may have different legal and tax consequences from a qualifying first distribution of the estate. Where the estate contains cash or other assets, the desired result should therefore be considered before the distribution is completed.
Inherited Land Can Require a Different Approach
An heir may receive an undivided interest in land rather than an apartment. The registered percentage may relate to the entire parcel, and there may be a co-ownership agreement, planning process or organised group of landowners. Understanding what has been inherited may therefore require reviewing the planning and contractual position as well as the title.
Is There Inheritance Tax in Israel?
Israel does not currently impose a general inheritance or estate tax merely because a person inherits property. A later sale can, however, raise Israeli real estate tax questions, and the tax position may depend on the history of the property and, in some cases, circumstances relating to the deceased. The detailed sale-tax analysis is addressed in the Capital Gains Tax guide.
Selling Inherited Property in Israel
Before marketing inherited property, it is useful to establish who is legally entitled to sell, whether the required inheritance or probate order has been obtained, how the property is registered, whether all heirs agree, whether there are mortgages or registration issues, the expected tax position and how the proceeds will ultimately be transferred.
Israeli Bank Accounts and Sale Proceeds
Banks may require documents relating to the inheritance, identification of the heirs, tax matters and the source of funds. The precise requirements depend on the institutions and circumstances. For overseas heirs, it is sensible to consider the banking and transfer process before completion of a property sale rather than only after the funds have reached an Israeli account.
One Process, Not Several Unconnected Problems
An overseas inheritance involving Israeli property can touch succession law, foreign documents, land registration, co-ownership, taxation and ultimately a property transaction. The better starting question is what the heirs ultimately want to achieve with the Israeli property.
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This guide provides general information only and does not constitute legal, tax, banking or financial advice. The position in a particular matter depends on its facts, the applicable law and the requirements of the relevant authorities and institutions.