Israeli Inheritance Distribution Agreement

You may be pleasantly surprised to learn that as the beneficiary of an Israeli inheritance under a valid uncontested Will, you can create a distribution agreement with the other beneficiaries of the Israeli inheritance, and control how you receive the Israeli estate.

Let’s look at an example. A father passed away leaving three apartments in Tel Aviv in equal shares to his three children. Instead of each child getting one-third of three different apartments, the beneficiaries can draw up an agreement to modify the distribution of the estate and agree that each one receives one apartment in full. There can be various reasons to draw up an Israeli inheritance distribution agreement, but often it is for practical, logistical, or tax reasons.

An estate distribution agreement is drawn up on the basis of Section 111(c) of the Israeli Inheritance Law and it allows the beneficiaries to deviate from the distribution provisions stipulated in the Will. Through this agreement, the beneficiaries can change the distribution of the Israeli estate, in the manner that suits them, even if the result is quite different from the instructions set forth by the deceased in his/her Will.

It’s important to note that all the beneficiaries have to agree to an agreement modifying a Will. Beneficiaries that enjoy a cooperative relationship can divide the estate between them as they wish, by agreement, often making the sale of Israeli inherited properties more streamlined.

To be clear, if the Will excludes a family member, the beneficiaries cannot wave a magic wand and include that family member in the new distribution of the estate. Only named beneficiaries can enter into a distribution agreement.

According to Section 122 of the Israeli Inheritance Law there is no requirement for Israeli Family Court approval, if all the beneficiaries agree to the Israeli estate distribution agreement, although Court approval might be appropriate in certain situations.

Since there can be both Israeli and foreign tax consequences to selling inherited Israeli property, beneficiaries should consult with our office and with tax advisors, both in Israel and in their home countries, before entering into an Israeli inheritance distribution agreement or filing for Israeli probate.