Passing on wealth in Israel, 2026: no inheritance tax, the Succession Law, the US-Israel family, and the part the law can't carry

• Israel has had no inheritance or estate tax since the Estate Tax Law was repealed on 1 April 1981; heirs step into the deceased's cost basis and pay capital gains tax, generally 25%, on a later sale.

• The Succession Law 5725-1965 governs; an inheritance order (intestacy) or probate order (will) is issued by the Registrar of Inheritance Affairs, or by a rabbinical court if all parties consent, usually within two to four months.

• A US citizen or green-card holder living in Israel is subject to US estate tax on worldwide assets above the US exemption of US$15 million; Israel's absence of tax does not shelter them, and the US-Israel tax treaty does not cover estate tax.

No. Israel abolished it in 1981 and has not reintroduced it, despite proposals in nearly every Knesset since. Property passes to heirs without tax at death; the deceased's cost basis and purchase date carry to the heir, so the gain is taxed when the heir sells. Purchase tax does not apply to an inheritance, and an inherited apartment can be sold free of land appreciation tax under the inherited-apartment exemption where the deceased owned only one residential apartment and would themselves have qualified. Gifts in life to relatives are also tax-free, which is why Israeli families transfer apartments to children while alive and why the children then face the deceased's basis, not the market value, when they sell.

With a will, the heirs apply for a probate order; without one, an inheritance order, which distributes under the statute: the spouse takes the household chattels and the car, and half of the estate if there are children (two-thirds if there are only parents or siblings), with the children sharing the rest equally; a spouse married more than three years who lived in the family home takes it in full where the deceased left parents or siblings but no children. There is no forced heirship: a will can leave the estate to anyone, subject to maintenance claims from the estate by a spouse, minor children and dependent parents. Wills can be handwritten, witnessed by two people, made before a notary or a court, or, for a person facing death, oral before two witnesses. Rabbinical courts have jurisdiction only with the consent of all concerned, and in practice a single objecting heir sends the matter to the Registrar. Applications are filed online, published, and open to objection for two weeks.

Israel's largest planning problem is imported. A US citizen or green-card holder living in Israel is inside the US estate and gift tax on everything they own anywhere, above the US exemption (US$15 million per person from 2026). Israeli apartments, pension and provident funds, and company shares all count, at their US-dollar value. The 1975 US-Israel treaty covers income tax only. Where the surviving spouse is not a US citizen, the unlimited marital deduction is unavailable and a qualified domestic trust is needed to defer the tax. American heirs of Israeli parents face US reporting (Form 3520 for large foreign inheritances); Israeli heirs of American parents face the US estate tax return. Every such family needs a lawyer who works on both sides; most find out at the second death that they needed one at the first. Cross-border families works the case.

Israel taxes trusts under rules introduced in 2006 and tightened in 2014: a trust with an Israeli-resident settlor is generally treated as an Israeli resident and taxed on its worldwide income; a "relatives trust" settled by a foreign relative for Israeli beneficiaries pays 25% on distributions to the beneficiaries or 30% on its income, at the trustee's election; a foreign-resident trust with no Israeli settlor or beneficiary is outside the net. Trusts are used less than in the common-law world, and a trust created abroad by a family now in Israel, or with a child who has moved there, needs a fresh look and an annual filing.

Pension funds, provident funds (kupot gemel), advanced study funds and life policies pass to the beneficiaries nominated with the fund, outside the estate and outside the orders; a will does not override the nomination unless the fund was told of the will while the member was alive. Widows' and orphans' pensions from the new pension funds are paid as annuities under the fund's rules. The nomination forms are where Israeli estates most often go wrong, particularly after a divorce.

Amendment 18 to the Legal Capacity and Guardianship Law, in force since 2017, created the enduring power of attorney, signed before a trained lawyer and deposited with the Administrator General; it covers property, personal and medical matters as the person chooses and takes effect on the conditions they set. Before it, guardianship through the Family Court was the only route, and it remains the route for anyone who did not sign in time. Israel's privacy law protects the living; the Supreme Court recognised a right of publicity as property in 2004 (McDonald v Alonial), and district courts have treated it as passing to the heirs, without a statute saying so.

Cross-border structures for the US-Israel family, the ten-year exemption for new immigrants and returning residents on foreign-source income and gains, holding companies for real estate, the 2024 reporting rules for new immigrants' foreign assets from 2026, and planning for children who live abroad and will be taxed where they live. High-net-worth estate planning.

The American passport in the drawer. One US citizen in the family puts the whole of that person's estate inside a foreign tax the family has never heard of, at 40% above the exemption, with a return due nine months after death.

An Israeli inheritance lawyer; for any family with a US connection, one who works with a US estate attorney. Bring citizenships and residency history with the asset record.