• How might one be best advised to proceed in the case of a person deceased abroad who was resident in Israel?
• What provisions should a foreign resident make with property assets in Israel – and what will happen if the person has signed a Will abroad but not in Israel?
• What is the status of a person’s financial and movable assets?
These are all questions that many will address when they decide to make provisions for the future and they may be resolved most effectively by consulting an expert lawyer specializing in International Inheritance Law.
Applicable Legal System: The underlying principle in International Law is that the applicable legal system governing inheritance and succession will be that of the deceased’s ultimate place of residence, irrespective of the place of death, the heirs’ country of residence or the location of the assets. In this manner, someone whose principal domicile is in UK would be liable to the enforcement of UK Law in respect of all said person’s assets. Moreover, in theory, this would be applicable anywhere in the world, insofar as it concerns UK Civil Law, i.e., the legal devolution of an estate (definition of legal heirs). In certain circumstances, in Property Law, the legal system of the country where the asset is located will take precedence over the law of the country of residence. This holds true for instance in France and for the principle of renvoi, which allows the French judge to adjudicate according to the law of the country where the immovable assets are located for the purpose of establishing said asset’s legal status and the related inheritance regime.
The Purpose of a Will: Generally speaking, a legal Will, wherever it may have been drawn up, will be valid if it was prepared in compliance of the laws pertaining in the country where it was created. Therefore, a Will made in due form in USA, i.e., will be valid, enforceable and may be submitted to an Israeli instance. As Wills are completely unrestricted in Israel, a person may therefore bequeath whatever he or she wishes to whomever he or she wishes. However, in cases where foreign law takes precedence due to place of residence, the enforceability of said Will in Israel is constrained by the provisions of the statutory restrictions applicable under the foreign law.
International Inheritance and Succession cases: In the case where someone is deceased and leaves assets in a country other than that of his or her residence, the process of Probate commences in the country of residence and is continued for purposes of enforcement in the country where said assets are situated, in accordance with the law prevailing in the country of residence. In this manner, if a foreign resident owns an apartment in Israel, it is advisable for legatees first to settle inheritance affairs in the residence country, in order to establish the status of heirship within the applicable legal jurisdiction – and only then address the process in Israel. They will need to consult an Israeli lawyer to prove the devolution of succession in an Israeli court, by availing themselves of the legal services of an acknowledged legal expert in the foreign country’s law. The Israeli instances will, in fact, also enforce the foreign laws of succession because the law of the deceased’s country of domicile takes precedence.
Taxation: Every country has its own laws – and bilateral or multilateral tax agreements are extremely rare. While the law of the last place of domicile is primary for a Civil Law case – namely, for purposes of determination of legal heirs – taxation legislation may operate in a completely different manner. In France, for example, the scope of Tax Law is very broad, imposing taxation even in situations where French Civil Law is not the prevailing law. The opposite side of the coin is that because Israeli law does not currently apply any laws of succession, there is no dual taxation and no inheritance taxation at all in successions relating only to Israel.
In conclusion, in order to benefit from complete freedom in writing a Will and enjoy exemption from death duties, it is clearly an advantage to be an Israeli resident, have all one’s legatees living in Israel and hold all one’s assets there!
Ms. Yael Hagege Maruani
Attorney at Law, Notary, and Member of the Israel Bar
Tel.: +972-(0)3-523 9944
NB: This circular is intended for general information purposes only and does not constitute a personal legal consultation.