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I. Israeli Law of Succession
Inheritance in Israel is governed by the Succession Law of 1965. The Law enables any legally competent person to bequeath his estate after his death in accordance with his last will and testament. The laws do not impose any limitations upon the right to bequeath and a testator is therefore at liberty to bequeath his estate to whomever he wishes. This liberty has no bounds since there are no forced heirship rules in Israel.
Nonetheless, the Law gives a surviving spouse, children and other dependants a degree of protection by granting them a right to receive maintenance payments from the estate of the deceased, subject to certain limitations.
The Succession Law applies to all persons who, at the time of their death, were domiciled in Israel or who left assets in Israel.
Upon the death of the deceased, his estate passes to his heirs either by law (intestate succession) or by will (testate succession).
A. Intestate Succession
If the deceased did not leave a valid will, or if there are assets which were not bequeathed under the provisions of the will left by the deceased, or if the provisions made by the will are invalid, then the distribution of the estate of the deceased is governed by the rules of intestate succession.
The persons who are eligible to be heirs by law are the following:
The lawfully married spouse of the deceased at the time of his death.
-A common law spouse may be also be regarded as the deceased?s married wife if the couple lived together in a common household and neither of them was married;
-The children of the deceased and their issue (including illegitimate and adopted children and their issue), the parents of the deceased and their issue, the grandparents of the deceased and their issue;
-The state of Israel; in the absence of any other heirs.
The state is obligated by law to dedicate the estate for the purpose of education, science, health or welfare. The Minister of Finance, however, is entitled to make certain payments out of the estate to any person who was dependent on the deceased, or to a person upon whom the deceased was dependent or a relative of the deceased who is not an heir by law.
The Succession Law provides that children of the deceased and their issue take precedence over the parents of the deceased, and the parents of the deceased and their issue take precedence over the grandparents of the deceased.
Heirs of the same class, namely children, parents or grandparents, are entitled to receive the share in the estate due to such class of heirs, in equal shares between themselves.
B. Testate Succession
An individual is entitled to make a will if he is over the age of 18 and has not been declared by a court to be a legally incompetent person. At the time of drafting the will, the testator must be capable of understanding the nature and the legal consequences which ensue from it.
A testator can make a will in any one of the following forms:
-in the testator's handwriting;
-in the presence of two witnesses;
-in the presence of an "authority" (e.g., court);
-orally (special procedures apply to verification of the will).
A testator is entitled to revoke a will made by him at any time. Revocation may be in any one of the forms required for the making of a valid will or by destruction of the will revoked. The revocation must be unambiguous and, therefore, a will is only revoked by a later will if the later will expressly revokes the former will, or to the extent that any provisions in the later will contradict provisions in the earlier will. Subsequent revocation of the later will does not revive any provisions in the former will which had been revoked by the later will.
The rights of the heirs or beneficiaries are declared by way of an inheritance order if the deceased did not leave a will, or by a probate order in the case of succession by will. Where the will does not include assets which the deceased possessed at the time of death, then the courts may grant an inheritance and a probate order in one document.
The order is not a constitutive order creating the rights of the heirs and/or beneficiaries, but is merely a declarative order stating what the succession rights are.
An inheritance order declares who are the heirs by law and what is the share of the estate to which each heir by law is entitled, whereas a probate order declares that the will of the deceased is valid and specifies any provisions of the will which were found to be invalid. If an executor is appointed, this will be stated in the inheritance or the probate order.
C. Jurisdiction of Israeli Authorities in International Cases
The competent authorities in Israel, namely the Registrar of Inheritance Affairs or the Family Courts have jurisdiction to deal with the estate of every person who, at the time of his death, was domiciled in Israel or who left assets in Israel.
In the context of inheritance, domicile is widely defined as "the place of the centre of life" of the deceased.
The proper law which will apply is the law of the place of the centre of life of the deceased at the time of his death, subject to certain exceptions.
In cases of foreign wills, Israel does not recognise foreign courts' probate or inheritance orders and a petition for an inheritance or probate order, as the case may be, must be filed with the competent court in Israel. Such a probate or inheritance order may be dealt with according to the provisions of the foreign law in the framework of the rules of private international law.
In order to establish jurisdiction in Israel, evidence of the existence of assets of the estate in Israel must be provided with the petition for an inheritance or probate order; for example, there must be a Land Registry extract evidencing the ownership of real property, or a confirmation by a local bank as to the existence of a bank account in Israel, etc.
An expert opinion regarding the validity of the foreign will and its execution must be annexed to a petition relating to the estate of a deceased who was not domiciled in Israel at the time of death.
The inheritance or probate order will normally bear a comment restricting the application thereof to assets in Israel.
Israeli estate practitioners normally recommend to separate Israeli assets from the foreign assets by making a specific will relating to the Israeli assets only. Provision is then made in the Israeli will for the testator to change his foreign will without affecting his Israeli will, unless specifically stated otherwise.
II. Related Taxes
There is no inheritance tax or death duty in Israel. In addition, there is no gift tax in respect of gifts made during the testator's lifetime or as a result of the testator's death. In this context the country of residence, domicile or nationality is not relevant; nor is the country where any assets of the estate may be situated of any relevance.
However, the fact that Israel does not levy inheritance tax on the estate may not be a conclusive fact that no tax will be paid by the heirs after the distribution of the estate. Subsequent transfers of the assets between heirs may give rise to various local taxes, such as capital gains tax or real estate registration tax. Another example is the case where an executor is appointed by the court who decides to sell the assets of the estate and distribute the proceeds to the heirs. This may also trigger capital gains or income tax. If the estate consists of, inter alia, a residential apartment, it may be advisable to first transfer the apartment to the heirs (tax free) who may then sell it. This way the heirs may be able to enjoy the several tax exemptions available for residential properties.
III. Conclusion
Having analysed the Israeli succession laws and inheritance tax issues, we can conclude that Israel provides a convenient succession environment: Freedom of testation (no "forced heirship") accompanied by no inheritance tax provides the testator with reasonable certainty that his estate will pass to his heirs according to his wishes and at full value.
However, we have also noted that certain taxes may become payable after the distribution of the estate and may thereby diminish the value of the estate.
Testators possessing assets in Israel and in other jurisdictions are advised to consult local estate practitioners in order to plan the proper execution of their estate and a tax efficient distribution of their assets.

Alon Kaplan and Jimmy Chotoveli
Alon Kaplan Law Firm, Israel

The authors of this article have used, inter alia, the following sources: Chapter entitled "Israel", by Alon Kaplan and Jeffrey Cohen, "Tolley's International Succession Laws", Issue 2, October 2002; "Israeli Business Law - An Essential Guide", Editor: Alon Kaplan, Kluwer 1996 and 1999; ISBN 9041103236
Alon Kaplan, LLM, practices as an Advocate in Tel Aviv. Mr. Kaplan is also a member of the New York Bar and practices law in Germany as a Rechtsbeistand. Mr. Kaplan is Chairman of the Israeli Branch of the Society of Trusts and Estate Practitioners (STEP) and a Council member of STEP .He is Editor of "Trusts in Prime Jurisdiction", Kluwer 2000, ISBN 9041198156 and "Israeli Business Law - An Essential Guide", Kluwer 1996 and 1999. (General Editor Alon Kaplan) ISBN 9041103236 Email: alon@kaplex.com
. Jimmy Chotoveli, LLB, MSc, is currently doing his Articles at Alon Kaplan Law Firm, Tel Aviv, Israel. Email: jimmy@kaplex.com .