Title: Inheritance Planning – Why It Is Important and What to Focus on

Subtitle: Many of us will take care at some point in our lives of writing a will for the orderly transfer of the property we have accumulated. However, according to attorney Rachel Shachar, who deals with family law, we must also plan the inheritance in advance – which takes into account the heirs’ and the testator’s interests – and incorporate them in the will. Such planning may prevent disputes between heirs, uncertainty in the division of property, and even help in a certain way.

Every person accumulates some property during his/her life, whether it is real estate, money, investments or valuables. Since our time in the world is limited and no one knows what a day will bring, it is very important to plan in advance how our property will be divided after we die. It is not mandatory, but when the deceased does not leave a will before his/her death, it is the Law of Inheritance that will determine the manner of division of the estate of the deceased person among his/her relatives. In cases where the person is interested in dividing his/her property differently than stipulated in the Inheritance Law, a will must be written which will ensure that the property will be divided according to his/her will.

For example, a person may choose to exclude a descendant from his/her property, to bequeath a larger share of the property to another child, to bequeath his/her property to a third party who is not a relative and even to an institution, or to submit the receipt of the property to certain conditions. “Writing a will must come with proper planning of inheritance – that is, combining the interests of the testator with the interests of the heirs,” says family law attorney and notary Rachel Shachar, who has been dealing with wills and inheritances for many years, specializing in dealing with inheritance orders and inheritance disputes. In a conversation with her, Adv. Shachar explains the benefits that will arise from proper planning of an inheritance and what should be emphasized when approaching the issue.

According to Adv. Shachar, proper planning of an inheritance is very important in terms of taxation: “According to section 4 of the Real Estate Tax Law, registering an apartment in the heir’s name is not considered a real estate transaction and is exempt from tax liability. Sell ​​it, then the sale and division of the property will be considered a tax event. The way to avoid paying such a tax is to make an agreement between heirs even before the will is executed, and to reach an agreement between them of transferring funds from one to another in exchange for transferring the right to the property to one of the heirs. Therefore, it is advisable to consult with an inheritance lawyer who is knowledgeable about issues of real estate taxation before writing a will.”

Proper planning of an inheritance may even prevent disputes between heirs. According to Adv. Shachar, “there are cases in which people write a will and do not refer to the manner in which the property is to be sold. For example, there may be a situation of brothers inheriting an apartment – two want to sell it immediately, while others prefer to wait with the sale claiming that real estate prices are only rising. This is one of the most common inheritance disputes I have encountered and the way to resolve it is by writing a will that goes down to the details.”

In this context, she adds that in order to avoid disputes it is important to also detail the reasons for the division of inheritance in the way the testator chose – “If one decides to exclude a particular relative from the will one should specify what the reason is, and if priority is given to another relative, the reason should be stated”.

Adv. Shachar also draws attention to those who own properties outside of Israel. “It will be difficult to find out if he/she did not specify them precisely in the will. It is also important to add that inheritance law in Israel is different from inheritance law in foreign countries. Therefore, it is advisable to consult an inheritance lawyer in Israel who works in cooperation with a lawyer in the foreign country where the testator has assets. “

Along with writing a clear and detailed will, Adv. Shachar recommends avoiding drafting a will that is too complex to try to anticipate the future: some try in this way to prevent a situation where the inheritance will pass to their children’s brides, but create a will that is very difficult to implement in practice. It should be remembered: as more generations pass, the implementation of the will becomes more complicated – and this will lead to the administrator of the estate charging a higher fee due to its complexity. I recommend putting the children in the will and trusting them to make a smart division of property for future generations. “

It is also possible to make an intergenerational transfer of property

Property transfer does not have to be done only after a person dies, but can occur later in life. This process is called intergenerational transfer and is mainly suitable for people with a capital of over NIS 20 million, according to Adv. Shachar. “An example of a successful intergenerational transfer in my opinion is that of the Strauss family,” she says. “Michael Strauss transferred the Strauss Complex to his daughter, Ofra, and made sure to create compensation mechanisms for his other children during his lifetime.”

“An intergenerational transfer allows a person to see the execution of the inheritance while alive and thus prevent disputes between the heirs “, explains recommended wills attorney Shachar and adds that it is important to note that if the testator decides to inherit an apartment while he/she is alive, a warning note should be included in the Land Registry, stating that the testator can live in the apartment until the day he/she dies. Thus, the gift will take effect only after the testator has passed away; And in the case of an intergenerational transfer of a business, a mechanism can be established according to which the business owner will continue to enjoy the profits of the business until the day of his/her death. Proper planning of intergenerational transfer will prevent tax accidents and save a lot of money for the heirs,” she notes.

In conclusion, Adv. Shachar says that the most important thing is to settle the issue of the will with the heirs while we are still alive: “We need to talk to the heirs and explain to them about the decisions behind the will, in order to solve the problems in time. After our death, the unresolved problems will only intensify. We do not want to deal with the fact that we will all die one day, writing a will does not hasten death but only makes for order the day it happens. “

“Awareness of the will issue has risen over the years,” she adds. “I notice a trend of 50-year-olds turning to me for a will, alongside high-tech executives who want to bequeath their property to their parents in case they die prematurely. Proper planning of the inheritance gives a person peace of mind and knowledge that the property will be properly divided and avoid future disputes.”

What is written in the article does not constitute a legal recommendation and is not intended to guide the public or serve as legal advice, nor is it a substitute for individual or other legal advice appropriate to the needs of each person.