How Canadian Second Heirs Recovered a Jerusalem Flat Signed Away by Their Stepfather

Result: A Jerusalem apartment worth NIS 4,150,000 registered to two Canadian second heirs after their stepfather's deed of gift was cancelled · Timeline: 11 months from first call to registration · Challenge: First heir tried to redirect the flat before dying · Authority: Jerusalem Family Court and the Jerusalem Land Registry (Tabu) · Financial Impact: NIS 4,150,000

Background

A brother in Toronto and a sister in Ottawa were the children of a woman who had left Jerusalem in 1979, married again in Canada, and died in Toronto in October 2016. She owned a three-room apartment in Baka that she had bought in 1998 and had never sold. Her Israeli will, signed in Hebrew before two witnesses in 2011, gave the apartment to her second husband and directed that on his death it would pass to her two children from her first marriage. That is a successive-heir arrangement, and it is one of the few tools in Israeli law that lets a testator provide for a surviving spouse without disinheriting the children of an earlier marriage.

The husband stayed in the flat. The Israeli will was proved, the apartment was registered in his sole name in 2017, and for eight years nothing happened. Neither sibling had been to Israel since the funeral. Their contact with their stepfather faded to a card at Rosh Hashanah, then stopped.

He died in February 2025 at 86. In April, the brother ordered a Land Registry extract, mostly out of curiosity about what he would eventually have to do. The extract showed the apartment still registered to his stepfather, and it showed a caveat registered in 2023 in favour of a woman with a different surname. She was the stepfather's daughter from his own first marriage, and she was already at the registry office trying to complete a transfer.

The Challenge

The mechanism in the mother's will was the heir-after-heir arrangement (yoresh acharei yoresh, יורש אחרי יורש) under Section 42 of the Succession Law 1965. The first heir inherits outright. The second heir takes whatever the first heir has left when the first heir dies, or on an earlier date or event named in the will. Section 42(b) is deliberately generous to the first heir: he may deal with what he received as his own, which means he may live in it, let it, sell it, spend the proceeds, and in principle give it away. The one thing Section 42(b) denies him is the power to derogate from the second heirs' right by his own will. If he leaves the property to somebody else in a will of his own, that direction has no effect.

Every experienced practitioner knows what follows from that asymmetry. A first heir who wants his own family to have the asset does not write a will. He signs a deed of gift instead, because a lifetime gift looks like an exercise of the very freedom Section 42(b) grants him. That is exactly what had been done here, and it had been done with some care. The 2023 deed transferred the apartment to the daughter, it registered a caveat in her favour under Section 126 of the Land Law 1969, and the stepfather reserved to himself a right of residence for life. Then came the clause that undid it: registration of ownership was to be completed only after the donor's death, and the daughter undertook not to apply to the registry before then.

There was a second problem, and it was ours as much as anybody's. Nobody had asked the Land Registry to record the will's direction when the husband was registered in 2017. The register showed him as an unqualified owner. To anyone searching the title, including a purchaser or a lender, the Section 42 arrangement was invisible.

In Practice: Under Section 42(b) of the Succession Law 1965 the first heir may dispose of the inherited property during his lifetime, but cannot defeat the second heirs by will. Section 8(b) of the same Law voids a gift made on the footing that it will vest in the recipient after the donor's death unless it was made as a will. A claim to that effect is filed in the Family Court, which has jurisdiction over succession matters under Section 151 of the Succession Law 1965. On a NIS 4,150,000 apartment the Jerusalem Family Court fee was about NIS 550, and our application for an interim injunction restraining registration was granted nine days after filing.

What We Did

The first move was speed, not law. A caveat in the daughter's favour had sat on the title since 2023, and once ownership is actually transferred and registered the second heirs are arguing against a registered owner rather than an applicant. We filed in the Jerusalem Family Court within eleven days of the brother's call, with an urgent application for a temporary injunction restraining the Land Registry from completing any transfer, and we registered a caveat noting the siblings' claim. The injunction came through on the ninth day. From that point the file was a legal argument rather than a race.

The argument itself ran on Section 8(b) of the Succession Law 1965, not on Section 42. Section 8(b) provides that a gift a person makes on the basis that it will be given to the recipient after his death is of no effect unless it was made by will in the form the Succession Law requires. Israeli law has only two routes by which property passes on death, a will or the statutory rules, and Section 8(b) exists to stop people from building a third out of contract documents. The 2023 deed of gift wore the clothes of a lifetime transaction, but it did nothing during the donor's life. He kept possession, he kept the right of residence, the daughter was contractually barred from registering, and the whole arrangement was designed to bite at the moment of death. On those facts it was a testamentary disposition, and a testamentary disposition by the first heir is precisely what Section 42(b) strips of effect.

Assembling the evidence took longer than making the argument. We obtained the notary's retained file for the 2023 deed, which is always worth demanding rather than relying on the copy the other side produces, and it contained the undertaking not to register during the donor's lifetime in the donor's own hand. We obtained the 2017 will execution order (tzav kiyum tzava'a) and the registration file from the Jerusalem Land Registry, which showed that the will itself had been lodged with the transfer application, so the registry had the Section 42 direction on its file even though it had never noted it on the register. We obtained the stepfather's medical records for 2023, which were less useful than expected and were not ultimately relied on.

The Canadian side of the file was straightforward and, for once, cheap. Both siblings signed powers of attorney and affidavits before a notary public in their own provinces, and those documents were apostilled by their provincial competent authorities rather than sent for consular legalisation, because the Hague Apostille Convention entered into force for Canada on 11 January 2024. Ontario, Quebec, Alberta, British Columbia and Saskatchewan issue apostilles for documents notarised in those provinces; everything else goes to Global Affairs Canada. The change removed roughly three weeks and a trip to the Israeli consulate from a step that used to be the slowest part of a file like this. Hebrew translations were done in Israel and certified by an Israeli notary.

The daughter's counsel filed a defence in August 2025 arguing that a gift is a gift and that Section 42(b) permits it. He was right about Section 42(b) and wrong about what had actually been signed. After the pre-trial hearing in October the court indicated fairly plainly how it read the registration clause, and the matter settled by consent judgment in November 2025: the deed of gift and the caveat were cancelled, each side bore its own costs, and the daughter retained a modest personal chattel bequest her father had left her separately.

In Practice: The second heirs do not inherit from the first heir's estate. They take under the original testator's will, so registration is completed on the strength of the will execution order issued years earlier by the Inheritance Registrar (Rasham HaYerushot), which for an uncontested Israeli will costs NIS 507 to apply for online plus NIS 66 for the statutory newspaper notice and issues in roughly three to six weeks. In this file the 2017 order was produced again in 2026 and the Jerusalem Land Registry completed the transfer to the two Canadians in four weeks once the consent judgment was lodged.

The Outcome

The apartment, valued for the file at NIS 4,150,000, was registered in the two siblings' names in March 2026, eleven months after the brother pulled the Land Registry extract. Israeli legal fees came to NIS 68,000 including the injunction application, which against the value at stake is not the interesting number. The interesting number is what would have happened had he not checked: once the daughter was registered as owner and had sold to a purchaser relying on the register, the siblings' claim would have run into the good-faith purchaser protections of Section 10 of the Land Law 1969, and the realistic outcome would have been a damages claim against a deceased man's estate rather than a flat in Baka.

Two Israeli tax points fell out of it, both favourable and both counter-intuitive. Israel has levied no estate or inheritance tax since 1981, so nothing was payable on the transfer itself, and inheritance is not a sale under Section 4 of the Real Estate Taxation Law 1963, so no betterment tax and no purchase tax arose. More usefully, because the siblings take under their mother's will and not through their stepfather, Section 26 of the same Law gives them her acquisition date and her 1998 cost when they eventually sell. That is a materially worse starting point than a 2025 step-up would have been, and it is the sort of thing better known before a sale than after it.

The Canadian consequences sat with the siblings, not with the estate. Neither of them owes Canadian tax on an inheritance, but each now holds a specified foreign property, and once the cost amount of their interest passes CAD 100,000 the Canada Revenue Agency requires an annual Form T1135 Foreign Income Verification Statement. Their adjusted cost base for Canadian purposes is the fair market value at the date their interest vested, which on these facts is their stepfather's death in February 2025 rather than their mother's death in 2016, and the Canadian and Israeli cost bases therefore differ by twenty-seven years of Jerusalem property inflation. Any Israeli betterment tax paid on a future sale should be creditable in Canada, but only against Canadian tax on the same gain, and the mismatch in base means the two figures will not line up. Their accountant in Toronto was told all of this in writing in March 2026, which is the right time to raise it. Our guide to the validity of foreign wills in Israel covers the position where the will itself was made abroad rather than in Israel.

Key Takeaways

What this case illustrates for non-residents in similar situations:

1. Ask the Land Registry to record the successive-heir direction when the first heir is registered. It is a one-line request made with the transfer application, it costs nothing, and its absence is what allowed a caveat in favour of a stranger to sit unnoticed on this title for two years.
2. Order a Land Registry extract on the first heir's death, and preferably every couple of years before it. An extract is cheap, it can be ordered online from abroad, and it is the only document that shows what has actually been done to the property rather than what should have been done.
3. Section 42(b) does not stop a lifetime gift, so do not build your case on it. The attack on a deathbed transfer runs through Section 8(b) of the Succession Law 1965 and turns on whether the document did anything at all before the donor died.
4. Demand the notary's retained file, not the copy the other side hands over. The clause that decided this case, the undertaking not to register until after death, was in the retained file and nowhere else.
5. A testator who wants the children to receive the asset intact must say so in the will. Section 42(b) is a default, and the default favours the first heir; a restriction on selling or gifting has to be written in, as our answer on naming a second heir in an Israeli will sets out.

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Facing a Similar Situation?

If you are named as a second heir under an Israeli will, or you are drafting one and want the arrangement to survive contact with a surviving spouse's own family, the protective steps are all taken years before the dispute: a restriction in the will, a note on the register, and an occasional look at the title.

Contact us for a confidential consultation about your Israeli legal matter.