Family wealth management in Israel rests on a delicate legal mix: inheritance law, marital property laws, legal capacity and guardianship (including enduring powers of attorney), corporate law, real estate taxation, and trusts.
When details are overlooked, the price can be high. Below is a classic “minefield map,” together with the safest way to avoid each pitfall.
“We’ll sort it out within the family” – No Will
The mistake: Assuming that the legal division of assets will be “fair enough.”
The law: In the absence of a will, assets are automatically distributed under the Israeli Inheritance Law — the spouse receives half of the estate, and the remaining half is divided equally among the children. A common-law partner may also be recognized as an heir if certain conditions are met.
The right approach: Draft a customized will (and, if applicable, a prenuptial agreement). Define in advance who receives what, protect the family home, and avoid forced co-ownership or rushed sales.
Example: A house was sold 20% below market value just to “cash out” between siblings — a will granting the widow a right of residence and an internal buy-out mechanism would have prevented it.
Postponing the Inevitable – No Enduring Power of Attorney
The mistake: Relying on the appointment of a guardian “if something happens.”
The law: Without a duly executed and registered Enduring Power of Attorney (EPOA) prepared by a qualified lawyer and filed with the Administrator General, family members must apply the court for guardianship — a formal, public, and often burdensome process. A court-appointed guardian will need approval for every transaction or business decision.
The right approach: Appoint one or more proxies for personal, financial, and medical matters, with clear advance instructions. This ensures business continuity, asset protection, and personal dignity.
“We’re in love” – No Prenuptial Agreement (or Invalid Approval)
The mistake: Failing to define ownership of existing or future assets.
The law: A prenuptial agreement must receive formal approval: by the Family Court or a religious court.
The right approach: Clearly define what is separate and what is joint; protect family or business assets; prevent claims of implied sharing in value increases.
Example: An apartment gifted to a daughter by her parents was “absorbed” into joint ownership after years of mixed payments and in case of divorce, 50% given to the spouse. A prenuptial agreement would have preserved her separate ownership.
The Silent Partnership – No Shareholders’ Agreement or Updated Articles of Association
The mistake: A family holds a company without defined control and exit mechanisms.
The law: In the absence of a shareholders’ agreement and coordinated articles, events like death, divorce, or dispute can cause paralysis, forced sale, or loss of control.
The right approach: Define voting rights, buy-sell / tag-along / drag-along mechanisms, valuation methods, and rights of first refusal — and synchronize these with wills, trusts, and enduring powers of attorney.
Case in point: A common-law partner inherited key shares → took control → changed management → the business was sold externally. A proper agreement would have prevented it.
“A gift is simple” – Transfers Without Documentation or Tax Planning
The mistake: Transferring real estate or money to a child “verbally” or by simple bank transfer.
The law: A real estate gift without proper transfer documentation and registration is risky. In addition, the recipient may owe purchase tax, and future capital gains tax may apply.
The right approach: Draft a formal gift agreement, check tax implications in advance, complete registration, and consider protective conditions — for example, restricting resale for several years to avoid unwanted tax exposure.
“It’s registered… sort of” – Incomplete or Incorrect Property Records
The mistake: Ownership records not updated; warnings or liens not deleted; discrepancies between the permit, Land Registry, and the actual situation.
The law: Registration in the Land Registry, Israel Land Authority, or housing company determines ownership rights against third parties. Discrepancies can harm marketability, financing, and even expose the owners to lawsuits.
The right approach: Verify rights and zoning, correct registration, delete encumbrances or warnings, align floor plans, and — before any deal — confirm the property’s identity by the “triple check” (permit–registry–reality).
“We’ll think about the tax later” – Ignoring Real Estate Taxation
The mistake: Executing transfers or sales without reviewing purchase tax and capital gains tax implications or potential exemptions, deferrals, and timing.
The law: Each type of transaction — transfer among relatives, inheritance of a single residence, or sale of investment property — has distinct tax rules.
The right approach: Plan the legal and tax route in advance — who receives, when, and through which platform (will, gift, trust, company) — to minimize taxes lawfully.
Assets Abroad – No Cross-Border Planning
The mistake: Ignoring foreign probate procedures, inheritance or estate taxes abroad, and apostille/translation requirements.
The law: Assets located in another country are often subject to local inheritance laws; in Israel, probate or succession orders are still required, sometimes alongside proceedings abroad.
The right approach: Plan ahead — prepare local or dual wills, coordinate taxation, and structure ownership properly (for example, via a local company or trust, with proper advice).
Our firm communicates fluently in the international legal and financial language and collaborates with law offices worldwide to ensure your rights are fully protected wherever your assets are located.
“We’ll manage by agreement” – No Family Covenant or Internal Rules
The mistake: Families with shared assets or businesses operate without a clear decision-making framework.
The law: Although not legally required, a family covenant or internal charter can define decision-making mechanisms, roles for the next generation, and policies for distributions or investments.
The right approach: Create a family agreement outlining vision, succession rules, dividend/investment policy, and dispute-resolution mechanisms — synchronized with corporate documents and wills.
Family Loans – No Promissory Note or Security
The mistake: “Loans” between parents and children made verbally or by bank transfer only.
The law: Without written proof, repayment claims weaken; in inheritance or divorce proceedings, it becomes a factual dispute.
The right approach: Prepare a loan agreement or promissory note, set interest and repayment schedules, secure collateral if needed (mortgage or guarantee), and maintain clear accounting records.
Beneficiary Designations Not Aligned with the Will
The mistake: Naming an insurance or pension beneficiary that contradicts the will.
The law: A beneficiary designation may override a general clause in the will upon payout.
The right approach: Review designations annually and synchronize them with your estate planning documents (wills, trusts, and agreements).
In Conclusion
Israeli law provides all the tools needed to preserve your family wealth — but the responsibility to use them wisely is yours.
Accurate and well-crafted legal documents, validated by the relevant authorities, combined with tax planning and coordination between all instruments, create the best possible insurance policy — for your assets, your relationships, and your family’s peace of mind.
The information above is provided for general knowledge only and does not constitute legal advice.
