A client recently inquired how—from an estate-planning perspective—purchasers from overseas should structure the acquisition of a second home in Israel. Attorney Michael Sacofsky, who specializes in real estate transactional law as well as trust and estates law, explained what the purchaser should do to protect their assets.
U.S. Ownership Structure
In the United States, properties are often owned by a husband and wife in “joint tenancy with rights of survivorship,” meaning each person has equal ownership rights, and upon the death of one spouse, the surviving spouse is generally entitled to full ownership of the property. Many of our clients automatically believe that this law is the same in Israel, but that is not the case.
Israel Ownership Structure
When a husband and wife purchase a property in Israel using a standard purchase agreement structure, ownership gets registered in equal shares with each spouse being a 50% owner. Upon the death of one spouse, their 50% ownership would be divided in accordance with their Last Will and Testament.
However, if there is no valid will, the deceased spouse’s 50% ownership gets divided as follows: The surviving spouse will receive half of the deceased person’s ownership and the children would receive the other half (this percentage can change when the person dies without children and in some other scenarios). Thus, in the absence of a valid will or other contractual or prenuptial agreement, the grieving spouse may be in a situation where he/she will have to seek permission of the children, or some other lawful heirs of the deceased spouse, to continue living in their home.
Draft a Will!
This unfortunate situation can be avoided through the drafting of a will that would allow the surviving spouse to remain in their home by bequeathing the deceased person’s proportionate home ownership initially to his/her spouse, and upon the surviving spouse’s death, to their children or other beneficiaries.
Even Better, Draft Two Wills!
To make the Israeli probate process quicker and less problematic, Mr. Sacofsky generally advises clients to prepare two wills, which operate in the following complementary manner: The primary will would state that it applies to all of the deceased’s worldwide assets except for Israel, and the Israeli will would state that it only applies to the deceased’s Israeli assets. The Israeli court system will then follow the Israeli will’s directives regarding dividing the assets to the beneficiaries.
Michael Sacofsky is one of the exceptional lawyers whom I recommend to overseas purchasers. If this article inspires any follow-up questions, feel free to contact him at [email protected]
This article is meant for informational purposes only. Please contact an attorney should you require legal counsel.
Gedaliah Borvick is the founder of My Israel Home ( www.myisraelhome.com ), a real estate agency focused on helping people from abroad buy and sell homes in Israel. To sign up for his monthly market updates, contact him at [email protected]