Inheritance according to Residential Housing Law

Often, a person passes away without prior thought as to what will happen to the apartment in which he lives with his spouse and/or children once he passes away. In the case where a person dies without having left a will, his assets will be transferred to his heirs in accordance with the Inheritance Law 1965.

In the case where the deceased left a will, one must apply to the Inheritance Registrar at the Ministry of Justice and issue an inheritance order.

The law determines what will happen to the property of the deceased, and in this context, also the apartment in which he lived. The heirs of an individual that passes away without having left a will are in fact “heirs according to law” and in order to exercise their rights, they will have to issue an inheritance order from the Inheritance Register at the Ministry of Justice or the Family Court. The law also defines the rules, percentages and priorities in the division of property to descendants and relatives.

In the case of an apartment, the law attributes many rights to the surviving spouse of the deceased. In this case, heirs according to law will first be the spouse of the deceased and his children and only then, his descendants. Only in the case where no heirs are found by law, and where the deceased did not leave a will that would determine where or how his property would be divided, does the state seize the property, including the residential apartment.

It is therefore advisable to write a will at some point in life as a means of protecting one’s spouse from the possibility of having to sell the apartment, as well as a means of protection from heirs according to law.

Inheritance Law

The spouse of a deceased person will receive an inheritance provided that they lived together with the deceased for at least 3 years before their death. The spouse will receive half of the apartment and another quarter owned by the deceased, while the remaining quarter will be divided between the testator’s children. Suppose a man dies and leaves behind a wife and three children. In this case, 75% of the estate is awarded to the spouse while the remaining 25% is divided equally between the children.

In addition, the widow inherits the possessions and vehicles that the joint household fully owned, including furniture, appliances, and the like. The law allows the widow many rights in order to maintain the standard of living to which she was accustomed before the death of her spouse. At the same time, it is important to understand that the objects that become her property are only objects that were used by both spouses jointly, and not objects that were used for the personal use of either party, for example, a watch.

Section 55 of the Inheritance Law defines the status of a publicly known partner of the deceased. By law, a partner who is not married to the testator but has lived together with them for at least 3 years is considered the same, in terms of inheritance, as a married spouse.

If the couple does not have children, the spouse will receive two-thirds of the estate, while the remaining one third will be divided equally between the deceased’s brother and their children (nephews) or with the parents’ parents (grandparents).

If there is no spouse, the Inheritance Act defines three inheritance ‘branches’, in order of priority: the testator’s children and their descendants, his parents and siblings (brothers and sisters), and grandparents.

The law defines the division in order of priority as determined according to the level of blood relation. We move to the next ‘branch’ only if no heir is found in the ‘branch’ above. Thus, if there are any heirs on the first ‘branch’ – descendants or descendants of descendants (grandchildren, great-grandchildren, etc.) the estate will be divided among them in full, even if the testator has relatives from the second ‘branch’ such as parents or siblings. The estate will be divided first among the children of the testator and only if they are not alive, among his grandchildren.

What if one of the testator’s children is no longer alive? In such a case, if the child has descendants behind, they will be entitled to share their father’s inheritance equally.

If there are no heirs in the first ‘branch’, that is, in the case of a person who dies and has no children, his estate will be divided among the relatives in the second ‘branch’ – his parents, if they are alive, and his siblings. The estate will be equally divided, first of all, between the parents of the testator. If they are no longer alive, the estate will be divided between brothers and sisters (when they precede the nephews).

Just as in the first ‘branch’, if one of the siblings has died but has children themselves, the children will be entitled to divide his share equally.

If none of the relatives mentioned above exist, the estate will be distributed to relatives on the third ‘branch’ – grandparents and uncles, cousins, etc. Here too, the estate will be divided first between grandparents, and if there are no living grandparents, then between uncles, and then cousins. If there is no living uncle, his children will be entitled to an equal share.

Only in cases where there are no heirs according to law, on all the ‘branches’ listed, can the state – on a one-time basis – grant part of the estate to a relative who is not an heir according to law, but was close to the testator at the time of death (Section 17).

Ultimately, if none of the above examples listed above exist, the Inheritance Law permits the state to confiscate the estate and its assets are transferred to the Custodian General in the Ministry of Justice.

Residential Rights in the Will

Section 6 (b) of the Inheritance Law allows for the abandonment of a spouse, child, or sibling of the testator: “He who has abandoned his share in the estate, is seen to the extent that he abandoned his share as if he were not an heir in the first place; there is no abandonment for the benefit of another person, but only for the benefit of the testator’s spouse, child or sibling.”

The children of the deceased can sign an affidavit of abandonment from all acquisition of the estate in order to transfer the apartment back to the spouse of the deceased. However, even though a widow or widower is entitled to 75% of the value of the apartment, a court will not be able to prevent its sale if the children who own the remaining 25% are required to do so if they file a claim for liquidation and sale of the property. That being said, the Court can arrange for the spouse to stay in a rental condition (about a quarter of the apartment) and delay the sale of the actual residential apartment until the spouse finds a proper living arrangement.

For example, in April 2021, the Family Court in Tel Aviv rejected a son’s claim for his father’s widow to pay him NIS 4,000 in rent after the father passed away, for an apartment where the couple lived together for 25 years. However, the Court accepted the lawsuit to dissolve the partnership, stating that the apartment would be sold in a way that would allow the widow to live in it for the rest of her life.

Once the deceased’s will was fulfilled, 90% was transferred to the son, while the widow was left with 10% of the apartment. Judge Anat Heller-Karish ruled in her judgment that the widow had proved that the son had given her an irrevocable right to use the apartment. According to the judge, it was proven that in his will, the father intended to grant the defendant a right of residence in the old apartment for the rest of her life. After his children promised that they would allow her to live in the new apartment, he agreed to transfer the old apartment to his daughter.

Heller-Karish wrote that the father’s sister testified that when her brother was on his deathbed, he said that his children had promised him that they would not throw his wife out of the house after he died. “Beyond that, even the circumstances indicate that the defendant was granted a non-refundable right of residence free of charge. Among other things, she lived with the deceased in the apartment for about 25 years and during that entire period was not required to pay rent to the plaintiff.”

The judge added that the son’s attempt to waive his obligation and revoke the permission granted to the defendant to live in the apartment without consideration, now, after the rights relating to the new apartment had passed to his sister and after the deceased had died, was an act of bad faith and ordered him to pay NIS 20,000.

In another case, in March 2017, the Supreme Court denied a request for permission to appeal by 12 nephews of a widow who had inherited her share of her shared apartment with her husband who had long since passed away. However, the husband included his son in his will as heir after heir, meaning the son was to inherit the apartment once she passed away. Instead, after her spouse passed, the widow inherited another apartment in Tel Aviv, and sold the apartment the son was supposed to inherit. In her will, she bequeathed the apartment to her 12 nephews, since she had no children. The son asked that the Court determine that he owns 43.4% of the new apartment, in exchange for the apartment he was supposed to inherit, which was sold by the widow before her death (Ltd. 9085-16) and this was accepted by the District Court.

Judge Elyakim Rubinstein wrote in his ruling that “the deceased – the first heir – moved to the Bavli apartment, and then sold the Nordau apartment. In doing so, she acted with what she received as her own inheritance, which is enshrined in the provision of section 42 (b) of the Inheritance Law, and the deceased did not instruct otherwise in a clear and explicit manner. If we asked the deceased – at the time of writing the will – his opinion regarding the giving over of his wife’s residence and its implications for his son’s share, the other heir – what would he say? The deceased is no longer among us; we must do our best to track his judgment. It seems – and of course this is a hypothesis – that he thought it would not be fair if his second wife, as much as she may have wanted to exchange the Nordau apartment for one reason or another, were to buy a property that would be equal to that of the Nordau apartment in value, but would dispossess his son. Moreover, when we come to estimate the deceased’s opinion in the ‘heir-after-heir’ will regarding the Nordau apartment, it seems that he did not in fact assume, at the time at which he wrote the will, that the deceased would sell the Nordau apartment. It can be assumed, therefore, that if he had anticipated this, he would have ensured that in this situation, his son’s share in half the apartment would not be deducted, and he would still receive it [as an inheritance], whether in value or in part of another apartment to be purchased. In these circumstances, it seems, therefore, that the will of the deceased, who essentially sought to allow his partner to live in the Nordau apartment for the rest of her life regardless of his son, should be respected, hence his injunction that [only] after her passing will his son will have the right to exercise his share. As stated in Bauman’s rule, according to the doctrine of tracing, which is intended to prevent the acquisition of wealth through law, a second heir will inherit property acquired by the first heir if it has been proven that the other property is a substitute for property bequeathed by the heir, and that the second heir was to receive it. According to the tests applied by the District Court, including the similarity in properties and value, and the proximity in time between purchasing the Bavli apartment and selling the Nordau apartment, it ruled that the respondent is entitled to 43.4% of the value of the Bavli apartment, is was, in the circumstances, a kind of “incarnation” of the Nordau apartment. In these circumstances, there must be clear reasons for the will of the deceased – and no such reasons were found. I hoped for a compromise out of a desire for peace, and respect to the deceased. Since it was not answered, there is no escape from not granting the request.”

Inherited apartments: In 1985, an amendment was made to the Inheritance Law, known as Amendment No. 7. After the amendment, the law grants the right to the surviving spouse to inherit the residential apartment when a number of cumulative conditions are met:

  • The heirs with the spouse are brothers, nephews or grandparents
  • The apartment is included in the estate, even partially
  • The duration of the couple’s marriage was at least three years prior to death
  • The spouse lived with the deceased on the eve of his death

It is important to understand that there is a big difference between selling an inherited apartment and selling an apartment in a real estate transaction, with the difference being the taxation, for example, an exemption from appreciation tax. While with funds received from the sale of an inherited property, there is no tax, when it comes to the sale of an inheritance after the division of the estate, taxes will apply like any other real estate transaction. Additionally, if the testator was exempt from appreciation tax in his lifetime, his heirs will probably also be entitled. For tax reasons, it is also worthwhile to make sure that all the balance payments come from the inheritance itself and not from funds that exist outside of the inheritance.

Accordingly, disputes over an inherited apartment are very common. In some situations, some of the heirs may want to manage the property or continue living in it. In other cases, it is possible to appoint an executor and divide the rent proportionally among the heirs. However, if all the heirs are not able to reach an agreement between them, the decisions will be made by the court.

The appointment of an administrator of the estate must be made with the consent of all the heirs or with the consent of the Family Court. The role of the administrator of the estate is to take care of the distribution of assets and its management in a way that will safeguard all the heirs.

It is important to know that the spouse of the deceased may, in addition to the 75% of the estate, also demand the full rights of the residence, the ketubah money, and in some circumstances even to receive alimony from the estate, depending on the circumstances.

Inheritance of an apartment after the death of a spouse is one of the classic causes for family disputes and requires close guidance, mediation and expert legal advice by an attorney who specializes in inheritance and family law. We therefore highly recommended that you seek appropriate legal advice. At our firm, you will find a selection of lawyers who specialize in inheritance and family law. Together, we can build a joint action plan where you will receive appropriate guidance and instructions, as well as recommendations and professional legal representation.

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