IsraelLawWhen a family member leaves you an inheritance through an Israeli will, you may expect a straightforward transfer of assets. But many Israeli testators choose to route their bequests through a trust structure, particularly when beneficiaries live abroad, are minors, or when the testator wants to impose conditions on how and when assets are distributed. For foreign nationals and diaspora families, understanding how an Israeli inheritance trust works can be the difference between a smooth administration and years of costly confusion.
What follows covers what an Israeli inheritance trust actually is, how it differs from common law trusts you may be familiar with, what the trustee is legally required to do, and what steps a foreign beneficiary should take to protect and eventually receive their share of the estate.
1. What Is an Inheritance Trust Under Israeli Law?
Israeli law recognizes trusts under two primary statutes: the Succession Law, 1965 (Chok HaYerusha, Tashkav-He), which governs inheritances and testamentary provisions, and the Trusts Law, 1979 (Chok HaNe'emanut, Tashlat-Tet), which sets out the general legal framework for all trust relationships in Israel.
Unlike in common law jurisdictions such as the United Kingdom, the United States, Canada, or Australia, Israel does not have a court of equity, and trusts here do not arise from centuries of equitable doctrine. Instead, Israeli trusts are creatures of statute: they exist and operate only within the framework Parliament has explicitly authorized. This matters for foreign beneficiaries because concepts you may take for granted in your home country's trust law may not translate directly to the Israeli context.
When a trust is created through a will, it is typically called a testamentary trust (ne'emanut tzava'ait). An inheritance trust commonly serves one or more of the following purposes:
- Protecting assets for minor children or grandchildren until they reach a specified age
- Managing assets for a beneficiary with diminished legal capacity
- Distributing an estate in stages rather than in a single lump sum
- Preserving family assets across generations, especially when beneficiaries live in multiple countries
- Ensuring that a surviving spouse has income during their lifetime, with the remaining assets passing to children on the spouse's death
An inheritance trust under an Israeli will is distinct from a foreign trust that happens to hold Israeli assets — that scenario carries a separate tax and reporting framework. If you are the Israeli-resident beneficiary of a foreign trust, see our guide on Foreign Trust Taxation in Israel.
2. Creating a Trust by Will: The Legal Framework
Section 42 of the Succession Law, 1965 is the core statutory provision. It explicitly authorizes a testator to direct, in their will, that all or part of the estate be held by a trustee for the benefit of named beneficiaries, and to specify the conditions under which the trust is to be managed and the assets distributed. Without this statutory authorization, the arrangement would not constitute a legally recognized trust.
For a testamentary trust to be valid, the will itself must satisfy Israeli formalities. Israel recognizes four types of valid will: a holographic will (entirely handwritten and signed by the testator), a witnessed will (typed or printed, signed by the testator before two witnesses), a notarial will, and a verbal will under limited circumstances. See our detailed guide on Israeli Will Requirements for the full rules.
Beyond the will's formal validity, a testamentary trust typically needs to specify:
- The trustee's identity, or criteria by which a trustee is to be appointed if the named individual cannot serve
- The beneficiaries' identities, described precisely enough that they can be identified without ambiguity
- The trust's duration, whether a fixed term or tied to an event (a beneficiary reaching a specified age, completing studies, marrying, etc.)
- Conditions for distribution, including whether capital and income are distributed together or separately
If the testator named a corporate trustee or a law firm, that entity continues in the role regardless of personnel changes. If a named individual trustee predeceases the testator or cannot serve for any reason, the Family Affairs Court (Beit Mishpat LeInyanei Mishpacha) may appoint a substitute on application by any interested party.
A related but distinct mechanism is the "heir after heir" provision (yirshen achar yorshen), authorized by the Succession Law. This clause names a secondary beneficiary who receives the inheritance if the primary beneficiary dies before the estate is fully distributed. The heir-after-heir provision does not create a trust in the technical sense — the primary beneficiary owns the assets outright — but it has similar estate-planning effects. See our separate guide on Heir After Heir Clauses in Israeli Wills.
3. The Trustee's Role and Duties
The Trusts Law, 1979 imposes strict fiduciary obligations on anyone acting as an Israeli trustee. These carry real legal weight, and a trustee who violates them is personally liable to the beneficiaries.
The first obligation is to keep trust assets completely separate from the trustee's own property. Commingling, even briefly, is a serious breach and can expose the trustee to personal liability for any losses that follow.
Loyalty comes next. The trustee must act solely in the beneficiaries' interests. Any transaction where the trustee has a personal stake — selling trust property to themselves, or hiring their own firm to serve the trust — requires either explicit authorization in the will or court approval.
On request, the trustee must provide a full accounting of the trust's assets, income, expenditure, and distributions. For foreign beneficiaries who cannot attend meetings in person, this right to accounting is particularly useful. If the trustee refuses, an Israeli court can compel them.
Trust assets must also be managed prudently: keeping insurance on physical assets current, investing surplus cash in reasonable instruments, collecting rent or other income without delay. The standard is what a reasonable trustee in the same circumstances would do.
Finally, the trustee must follow the will's instructions. If circumstances make strict compliance impossible or harmful — a property becomes unsaleable, a specified investment no longer exists — the trustee can apply to the Family Affairs Court for authorization to deviate from the original terms.
If a trustee breaches any of these duties, Israeli courts can remove them, order compensation to the beneficiaries, and appoint a replacement. Foreign beneficiaries have standing to bring such claims, though local legal representation is essential.
4. How Foreign Beneficiaries Access Trust Assets
Receiving distributions from an Israeli inheritance trust involves several sequential steps, and the entire process — from the testator's death to first distribution — can easily span twelve to eighteen months or more.
The process starts with a succession order (tzav yerusha). Before any trust assets can be distributed, the will must be formally validated through the Israeli probate process. An application is filed with the Registrar of Inheritance (HaRasham LeInyanei Yerusha). If uncontested, the Registrar issues an order confirming the will's validity and identifying who inherits under it. Contested matters, or cases involving foreign elements, go to the Family Affairs Court. For the full walkthrough, see our guide on The Probate Process in Israel.
Once the succession order is issued, the trustee's authority is formally established. If the will named a trustee who cannot serve, the beneficiaries must apply to the Family Affairs Court for an appointment before the trust can operate.
The trustee will then need to verify your identity and beneficiary status. They typically request:
- A certified copy of your passport
- Proof of current address (a recent utility bill, bank statement, or government-issued document)
- An apostille-authenticated copy of your birth certificate or other document establishing your relationship to the testator if that relationship is the basis of your beneficiary status
- In some cases, a notarized declaration confirming your identity and address
The apostille requirements depend on whether your country is a signatory to the Hague Apostille Convention. If it is not, an alternative authentication route through the Israeli consulate in your country may be required.
Get a copy of the relevant will provisions in translation and ask your Israeli attorney to explain the terms: when distributions happen, under what conditions, what documentation triggers them, and what happens if you predecease the trust's termination.
Israeli law does not restrict outward transfers of inheritance distributions, but Israeli banks require documentation for significant cross-border transfers. The trustee arranges the transfer from the Israeli trust account; the receiving bank in your country may need its own confirmation of the inheritance source. Build time for this into any financial planning that depends on these assets.
5. Tax Considerations for Foreign Beneficiaries
Israel does not impose an inheritance tax on the receipt of an estate or on trust distributions from an Israeli estate. This applies equally to foreign beneficiaries: merely being named as a trust beneficiary under an Israeli will, and receiving distributions from that trust, does not in itself create an Israeli tax liability.
The situation is different when the trust holds income-producing assets. Income earned inside the trust is taxed before it reaches you:
- Rental income from Israeli real estate is subject to Israeli income tax at the trustee level. Withholding may also apply on distributions to foreign beneficiaries, at rates that depend on any double-taxation treaty between Israel and your country of residence.
- If the trustee sells Israeli real estate or company shares during the trust's lifetime, Israeli capital gains tax rules apply to that transaction inside the trust.
- Investment income earned by trust assets at Israeli financial institutions may be subject to Israeli withholding tax before distribution.
These trust-level tax obligations are generally the trustee's responsibility to manage and report. Foreign beneficiaries should ask the trustee to confirm whether any withholding has been applied to distributions and to provide tax certificates they can use in their home country.
Separately, most foreign jurisdictions have their own rules on how inherited assets — including trust distributions — are treated for income tax or capital gains purposes. This is a matter for a tax advisor in your country of residence, not Israeli tax law. The full framework for Israeli taxation of foreign trusts is covered in our companion guide on Foreign Trust Taxation in Israel.
6. Practical Steps When You Are Named as a Trust Beneficiary
When you learn you are a beneficiary of an Israeli inheritance trust, a few early moves matter.
Locate the will. Request a certified copy from the Israeli attorney or notary who drafted it, or from the Registrar of Inheritance once probate has begun. If you do not know whether a will was filed, the Registrar maintains a central will registry that any interested party can query.
Contact the trustee in writing. Introduce yourself, provide basic identity information, and ask for a written summary of the trust's terms, duration, and expected distribution timeline. Keep all correspondence — you may need it later.
Engage an Israeli probate attorney. The process is conducted almost entirely in Hebrew, and the procedural requirements for a succession order application are specific. An attorney familiar with cross-border estates can file on your behalf, correspond with the trustee, and register your interests before any distributions are made.
Prepare documentation before it is requested. Contact the Israeli consulate or embassy in your country to understand apostille and notarization requirements. Having certified identity documents ready when the trustee asks for them avoids weeks of delay.
Understand the distribution terms clearly. Some trusts pay out income annually while preserving capital; others distribute capital at a specified age or event; some give the trustee discretion over timing and amounts. The difference matters for any financial planning that depends on these assets.
Expect realistic timelines. An uncontested Israeli probate application typically takes several months. Add the trust's own operational period — distributions from a trust established for a minor child may still be years away even when probate goes smoothly.
Check home-country reporting obligations. Some countries require residents to report foreign trust interests or foreign inheritances above a certain value. The United States imposes FBAR and Form 3520 reporting for certain foreign trust interests. This is a matter for a tax professional in your country.