Abstract This article is based on a paper which was prepared for presentation at The International Academy of Estate and Trust Lawyers conference, Chicago, May 2017. Marriage in Israel Marriages are governed by the Rabbinical Courts Jurisdiction Law (Marriage and Divorce) 1953 providing that the jurisdiction for marriages and divorce of resident or citizen Jews is solely with the Rabbinical Courts. Legislation does not provide for civil marriages. Personal status not solely relating to marriage and divorce such as maintenance payments or inheritances are not subject to the sole jurisdiction of the Rabbinical Courts but may be heard therein if the parties consent. Marriages of other religions are subject to the individuals’ personal status and the relevant courts based on their religion such as Druze or Sha'aria Courts. As a result, certain individuals cannot marry in Israel such as spouses of different religions, same-sex couples or certain restricted marriages under religious rules. Notwithstanding, as a general rule, civil marriages under the laws of foreign jurisdictions may be recognized in Israel by the family courts. In 2010, the Spousal Covenant Law (the ‘Spousal Covenant Law’) for individuals with no religion was legislated. This law allows an unmarried man and woman, residents of Israel, over 18 years of age, who have no religion, to be registered as a married couple. The Spousal Covenant Law does not apply to same-sex couples or couples of different religions. Upon an administrative registration procedure with the relevant Registrar, publication of the application and a due diligence procedure by the relevant religious courts, those satisfying the conditions of the Spousal Covenant Law may be registered as married. Marital property regime Spouses property law 1973 General rule—balancing of resources The Spouses Property Law 1973 (the ‘Spouses Property Law’) is the legislation governing financial arrangements and marital assets for marriages entered into after 1974 based on the community property regime. The Spouses Property Law provides that assets accumulated during the marriage are considered joint property irrespective of the legal registration of said assets1 and each of the spouses may claim a balancing of resources; ie the separation of assets in equal shares between the spouses upon divorce. The spouse’s financial relations are subject to the laws of their jurisdiction of residence at the time of their marriage although an agreement may alter said financial relations based on the spouses’ jurisdiction of residence at the time of executing a nuptial agreement.2 Exceptions—gifts, inheritances and assets owned before the marriage Exceptions to the balancing of resources rule are gifts or inheritances to one spouse during the marriage or assets owned by one spouse prior to the marriage as well as certain payments from the National Health Fund (Social Security) or compensations due to injuries. Case law Notwithstanding, a court decision3 held an exception to the separation of assets owned by one of the spouses prior to the marriage.4 The case concerned a couple married for over 30 years from 1978. The husband owned land purchased prior to the marriage which, upon their divorce, he claimed as separate property under section 5(a) of the Spouses Property Law.5 The court held that the property was marital property subject to the balancing of resources requirement thereby entitling the wife to 50 per cent thereof, including the house. Even though it was owned by the husband prior to the marriage, the couple jointly invested funds and efforts in building and renovating the property which was then used as their residential property over the years. Precedents reflect the courts’ position that a specific asset may be community property despite the fact that it is registered only in the name of one spouse. The burden of proof is generally lower if a property is used as the common household’s residential home. Certain criteria may be helpful in determinations whether an asset exempt from the community property regime may yet be considered community property is set forth below6: The period of the marriage; the longer the marriage the lower the burden of proof to establish community property. The type of assets; ie residential properties where the burden of proof as community property is low versus business assets requiring a high burden of proof to establish community property. Common children. First or second relationships; the burden of proof is higher for second relationships. Relationship of the parties; ie harmony and intimacy, the quality of the couple’s relationship. Joint effort and financial investment; ie joint bank accounts, joint investments such as where a spouse invested efforts and finances in property registered only in the other spouse’s name. Use of specific assets; ie where property was acquired by one spouse prior to a marriage but used during the marriage as the spouses’ residential home. Similar criteria may be applicable if an asset exempt from the community property regime was sold and another asset purchased instead. Specific assets Pensions On 6 February 2015 the Law for Distribution of Pensions of couples came into force. Its purpose7 is to regulate the distribution of pension payments between spouses since pension payments are community property unless the spouses agree to some other arrangement. Business assets Business assets are generally excluded from section 5(a) of the Spouses Property Law. However, in certain situations a business asset can be considered community property: Where the increase in the value of an asset is due to an investment of efforts and/or finances of a spouse. Where there is evidence that the increase in value of an asset is the result of a spouse’s personal investment and not an appreciation in its value. The increase in value has to be related directly to the investment of the spouse, ie if the assets were sold during the marriage and the funds were invested, the revenue would have been less than the increase in value. Nuptial agreements The Spouses Property Law8 governs nuptial agreements between spouses which may alter the provisions Spouses Property Law. A prenuptial agreement may be executed before a notary9 or before the family court. A postnuptial agreement requires court proceedings before a family court judge and confirmation by the court of the agreement. Both the notary and the court must confirm that both spouses are entering into the nuptial agreement of their own free will, not under duress or undue influence and with full understanding of the provisions thereof. Common law spouses may enter into a cohabitation agreement, preferably, to be confirmed by the family court setting out the individuals’ financial affairs in the event of their separation. Common law spouses—Yeduim BeZibur (translated as ‘known to the public’) The religious restrictions on marriages have resulted in individuals increasingly seeking alternatives to religious marriages. There is no definition of common law spouse under the Spouses Property Law. Different legislation is valid to address common law spouses in specific areas of the law. For example, the Succession Law 196510 (the ‘Succession Law’) defines a common law spouse as ‘an unmarried male and female residing in a common household…’ for the limited purpose of succession upon the demise of one of the common law spouses, discussed in greater detail further below. Case law determines the distribution of assets upon the termination of a relationship of common law spouses. The distribution of assets upon the separation of a common law marriage is a complex process subject to specific facts of the manner in which the spouses managed their finances during their management of a common household and their agreement as to the ownership of assets. Generally, the burden of proof as to joint ownership is higher for second or third relationships as there may be reasons for the common law relationship and the failure to marry.11 Case law has established that the answer as to whether common law spouses intended community property or sharing in one another’s financial affairs lies in a subjective test as to the parties’ intentions ie the way the relevant individuals viewed their relationship.12 A recent landmark decision13 in the area of common law spouses was held in the family court in Tel Aviv. The matter involved common law spouses who resided in a common household for 18 years and had three common children. They entered into a cohabitation agreement whereby they agreed to a complete separation of assets. Upon their separation, the female claimed the agreement was invalid due to deception, duress, and exploitation. The court held that not only did the female fail to prove her claims, the couple managed their finances in complete separation throughout their mutual life to the extent of handwritten lists and notes maintained evidencing the expenses (type of purchase and amounts), including the smallest expenses incurred by the female for which she received refunds. The family court held that a common household was not sufficient to evidence an intention for the joint ownership of assets and/or financial affairs. The parties’ subjective intent, including reasons for the failure to marry, and the specific facts under which the financial affairs of the common household managed are crucial to a finding of joint ownership. Surviving spouse—succession Inheritance in Israel is governed by the Succession Law 1965 (the ‘Succession Law’). The Succession Law applies to all persons who, at the time of their death, were Israeli residents or who were non-residents of Israel owning assets in Israel. Rights of a surviving spouse under the Succession law A surviving spouse is entitled to receive the decedent’s tangible personal property, including a motor vehicle, which customarily, or in the particular circumstances, belongs to the common household. If the couple did not maintain a common household, for example, if they were not cohabiting at the time of death, the surviving spouse is not entitled to the household tangible personal property which then forms part of the general estate and is divided between the legal heirs as detailed below. In addition to the household tangible personal property, the surviving spouse is entitled to a share of the estate, depending on the surviving heirs’ family relationship with the decedent: If the decedent is survived by children or their issue or if the decedent is survived by parents, the share of the surviving spouse is one-half. If the decedent is survived by siblings or their issue or by grandparents, the share of the surviving spouse is two-thirds and if, the surviving spouse and the decedent were married to one another for at least three years prior to the death and if they lived together in a residence which, in whole or in part, is an asset of the estate, the surviving spouse is entitled to all of the rights of the decedent in such residence and two-thirds of the remainder of the estate.14 Definition ‘common law spouses’ As mentioned above, the Succession Law15 defines a common law spouse: If a woman and a man live together in a common household without being married to each other, and one of them dies and at the date of death no one was married to someone else, the surviving partner inherits the deceased's estate according to the intestate provisions of the Succession Law, provided that the deceased did not leave a last will, as if they were married to each other. The definition for common law spouses according to section 55 is limited to the Succession Law and is different for other laws (ie Spouses Property Law): Section 55 does not imply the criteria that family and friends need to be convinced that a couple lives together as a couple/a family. This is due to the fact that section 55 does not specifically mention the term ‘common law spouses’ and the literal Hebrew translation of this term is ‘to be known in public’ ie the couple needs to be known as common law spouses in public. Therefore, the difference in interpretation of section 55 versus other laws is ‘how the couple views themselves’ and is subjective, not objective. The Succession Law thereby grants common law spouses rights similar to those of married spouses for inheritance purposes. Criteria according to Case Law Court cases have held certain criteria as establishing common law spouses on the date of a spouse’s demise, such as: Living together as a couple/family in a common household, including two components:16 An intimate relationship: the sharing of a common household is insufficient for unmarried cohabitants. Rather, it is necessary to establish intimacy, affection and love, loyalty and trust in a way evidencing that the spouses chose to share their life and destiny in a certain way; and The sharing of a common household naturally, in most circumstances, leads to sharing a joint household. That is, it is not sufficient to share a common household for personal comfort like flat mates, or a caregiver with a caretaker.17 These criteria do not determine whether a couple shared finances. That is, a couple may qualify as common law spouses under the Succession Law,18 but may decide to maintain separate assets and finances, thereby the balancing of resources under the Spouses Property Law will not apply. Case law has recognized common law spouses where the couple did not share a common household19 where the court considered the subjective view of the individuals as to their relationship, the reasons for the failure to marry and other criteria such as their age, education, world views, habits, profession, socio economic status, health. The facts included a decedent who died intestate in 2003, unmarried but in a relationship for eight years prior to his death. The court held that the couple lived a relationship of friendship, intimacy, commitment, dedication, affection, love concern, and appreciation for each other. One reason, why the couple did not share a common household was that the decedent felt responsible for his unmarried children who often stayed in his apartment and stated that he would not feel comfortable to stay with his common law spouse in the same apartment while his children were present. His common law spouse purchased her apartment intentionally next to his apartment and they both shared keys to both apartments. They slept together at noon and sometimes at night. They spent most of their time together, celebrated their birthdays’ together, family events, trips and holidays, and had an intimate relationship. The facts that the couple lived in separate apartments and had separate financial affairs did not change the fact that they ‘lived as a couple’ and ‘shared a common household’. Same-sex couples As for cohabiting same-sex couples, in the landmark case of A M v Attorney-General,20 the Nazareth Court held that such couples may indeed qualify as each other’s intestate legal heirs as heterosexual couples. Last will and testament Whether for married couples or common law spouses, a nuptial agreement or a cohabitation agreement is valid for circumstances of divorce or separation. A determination of succession rights, as governed by the Succession Law, must be in accordance with the execution of a last will and testament. No life time agreement is valid upon an individual’s demise without a last will and testament. A relevant case concerned an unmarried couple who cohabited for 10 years and entered into a written agreement of ‘cohabiting and sharing their household’ containing the following clause: ‘The parties hereby declare that the apartment of spouse xx is the designated residential apartment of the couple and the other spouse is relieved from any rental payments with the right to reside in the apartment even after the death of spouse xx until his demise.21 Family members challenged the surviving spouses’ right under section 55 of the Succession Law and claimed that the fact that the decedent granted the spouse a right to reside in the apartment did not mean that his wish was to bequeath the apartment to his spouse. Judge Tirkel held that the right to inherit according to section 55 may not be denied in the absence of a last will and a common law spouse would be entitled to inherit under the Succession Law. The judge further noted that in the event that the decedent in this case had wished to bequeath the apartment to certain individuals, he should have executed a last will. Lyat Eyal is admitted to practise law in Israel and in New York State. Lyat’s private client practice involves advising clients on cross-border estate planning issues, trust structures, and pre-immigration planning, as well as probate administration. Lyat is a member of Society of Trust and Estate Practitioners (STEP), the New York State Bar Association International Section and Trusts and Estates Section. Lyat is an Academician at the International Academy of Estate and Trust Law and a Fellow of the American College of Trust and Estate Counsel. Lyat publishes regularly in distinguished professional publications and speaks at seminars and conferences internationally. Susanna Von Bassewitz, Aronson Ronkin-Noor Eyal Law Firm, specializes in international private clients and estate planning and gained vast experience in Foreign Account Tax Compliance Act and Common Reporting Standard matters. She has a MLaw UZH (Master of Law University of Zürich), is a member of the Israeli Bar Association and the STEP. Footnotes 1. The Spouses Property Law, s 9. 2. ibids 15. 3. DM v TSM )2017) Tel Aviv District Court (10884-03-16). 4. ‘A court may, upon a request by one of the spouses, under circumstances warranting so … act in accordance with one or more of the steps below in the balancing of resources: (1) include additional assets as separate assets not to be included in the balancing of the resources between the spouses; (2) determine that the balancing of the resources, or any parts thereof, will not be equal but based on other shares determined, among other facts, upon future assets, including the spouses' potential earning capabilities; (3) determine that the balancing of the resources, or any parts thereof, will not be based on the value of the assets on the date of the balancing but based on the value of the assets at an earlier date.’ 5. ‘Upon the termination of a marriage or upon the demise of one of the spouses, each spouse is entitled to half of the assets of both spouses except assets owned by one spouse prior to the marriage or gifts or inheritances received by one of the spouses during the marriage …’ 6. Ariel Dro, Asset Distribution in Divorce Proceedings, 14. 7. The Law for Distribution of Pensions of couples, s 1. 8. ss 1 and 2. 9. s 2 (c) (1) of the Spouses Property Law. 10. s 55. 11. Anonymous v the Rabbinical Court of Appeals 4178/04 (2006). 12. Anonymous v Anonymous 3497/09. 13. Anonymous 9731-08-13. 14. Succession Law, s 11 (a)(2). 15. ibid s 55. 16. Caro Nasis v Corina Uster 621/69. 17. <http://www.bendror-law.co.il/2013-07-15-07-45-46/2013-07-15-07-48-29> accessed 14 November 2017. 18. s 55. 19. Anonymous 3497/09. 20. Civil Appeal 3245/03. 21. Balu v N Posesh 1717/98. © The Author (2017). Published by Oxford University Press. All rights reserved.
Trusts & Trustees – Oxford University Press
Published: Feb 1, 2018
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