How US Grandchildren Inherited a Haifa Estate Through Their Late Father

Result: An NIS 2.28M intestate estate distributed to US-based heirs, with the two minor grandchildren's combined one-third share of NIS 760,000 secured in a Family Court-supervised guardianship account · Timeline: About 11 months from first filing to distribution · Challenge: Two heirs were minors living abroad in an estate with no will · Authority: Inheritance Registrar and the Family Court, with the Administrator General served · Financial Impact: NIS 760,000 preserved and protected for the minors

Background

A family in the United States contacted us after the death of their father, a widower who had lived alone in a two-bedroom apartment in the Carmel neighbourhood of Haifa. He left no will. His estate was simple on paper: the apartment, worth about NIS 2.1 million, and a shekel current account holding roughly NIS 180,000. What was not simple was the family tree. He had three children. Two were adults, one living in New Jersey and one still in Israel. The third, a son, had died two years before his father in a road accident in the United States, and that son had left two children of his own, aged nine and thirteen, who lived with their mother outside Philadelphia. Nobody in the family had dealt with an Israeli estate before, and the American branch assumed, wrongly, that because there was no will the apartment would simply pass to the two surviving adult children.

The Challenge

Israeli intestate succession does not work that way, and the difference is the whole case. When a person dies without a will, the Succession Law 1965 decides who inherits. The deceased's spouse had already died, so under Section 10 the estate passed to his children in equal shares, one third each. The son who died first does not drop out of the calculation. Section 14 of the Succession Law 1965 applies the principle of representation: where a child of the deceased died before the parent but left descendants, those descendants step into their parent's place and split the share that their parent would have taken. So the two grandchildren in Pennsylvania did not inherit nothing. Between them they inherited their late father's full one third, one sixth of the estate each, and they inherited it as minors.

That single fact changed the entire procedure. A succession order (צו ירושה, tzav yerusha) for an ordinary adult family is issued by the Inheritance Registrar (Rasham HaYerushot) at the Ministry of Justice, and it is largely an administrative filing. Once a minor is one of the heirs, the Registrar cannot sign the order alone. Under Section 67A of the Succession Law 1965 the file is transferred to the Family Court, and the Administrator General (Apotropos HaKlali), the state body charged with protecting those who cannot protect themselves, is served and given the chance to review the distribution before anything is granted. For a family abroad this meant the estate went from what they hoped would be a form-filling exercise into a court matter with a state watchdog looking over it, all while none of the heirs, and neither of the children, could sit in an Israeli courtroom.

In Practice: Under Section 14 of the Succession Law 1965, the two grandchildren inherited by representation the one-third share their late father would have received, which on this NIS 2.28M estate came to NIS 760,000 between them. Because they were minors, the Inheritance Registrar (Rasham HaYerushot) could not issue the succession order, and under Section 67A the file was transferred to the Haifa Family Court with the Administrator General (Apotropos HaKlali) served to safeguard the minors' interests, a step that added roughly three months to the timeline compared with an all-adult estate.

What We Did

We started by mapping the heirs precisely, because the whole application would rise or fall on documenting the family tree to an Israeli standard. That meant gathering the deceased's Israeli records, the death certificate of the son who had predeceased him, and the birth certificates of the two grandchildren proving the chain from grandfather to father to child. The American vital records had to be apostilled under the Hague Convention and then translated into Hebrew by a notary, because the Family Court and the Administrator General would not act on English-language documents or on the family's word about who was related to whom.

The mother of the two children agreed to act, and here we had to be careful about a distinction the family had not appreciated. Being a parent does not automatically make you the recognised guardian of your child's Israeli inheritance. We applied to have her recognised as the children's guardian for the purpose of the Israeli estate, supported by proof that she was the surviving parent and natural guardian under the law of their home state, again apostilled and translated. The two adult heirs signed powers of attorney in front of a notary in the United States, apostilled, authorising us to file, appear, and correspond on their behalf, so that not one of them needed to fly to Israel.

We filed the succession application, and once the file moved to the Family Court we served the Administrator General with the full picture: the asset schedule, the family tree, the guardianship proof, and our proposed distribution of one third to each adult child and one sixth to each grandchild. The Administrator General's role at this stage is not to obstruct but to confirm that the minors are not being written out or short-changed, and a clean, fully documented file is what moves it quickly. The court issued the succession order naming all four heirs and recording the minors' shares.

Then came the second legal hurdle, the one that catches families who think the succession order is the finish line. The family wanted to sell the apartment, split the cash, and be done, since none of them intended to live in Haifa. An adult heir can sell their share freely. A guardian cannot simply sell a minor's share of real property and hand over the proceeds. Section 20 of the Legal Capacity and Guardianship Law 1962 requires the guardian to obtain Family Court approval before dealing with a minor's immovable property, and the court will only approve a sale it is satisfied serves the child's interest and only on terms that protect the money afterwards.

In Practice: Under Section 20 of the Legal Capacity and Guardianship Law 1962, the mother could not sell the grandchildren's one-sixth shares of the Haifa apartment without prior approval from the Family Court. The court approved the sale on condition that each minor's share of the net proceeds, NIS 380,000 apiece before costs, was paid into a dedicated guardianship account under court supervision and not released to the guardian outright. Obtaining that approval and setting up the supervised accounts took about seven weeks and legal fees of roughly NIS 12,000.

We asked the court to approve the sale at market value, backed by a valuation, and to direct that the minors' portions be held in supervised guardianship accounts rather than released to the mother. That protects everyone. The children's inheritance is preserved until they reach eighteen, the guardian is shielded from any later accusation of mishandling the money, and the buyer of the apartment gets a clean title free of the risk that a minor could one day challenge the sale. With approval in hand, the apartment was sold, the bank account was released against the succession order, and the estate was distributed.

The Outcome

Eleven months after the first filing, the estate closed. The two adult children received their one-third shares in cash, wired to their accounts abroad after the sale completed and tax clearances were obtained. The two grandchildren's combined one third, NIS 760,000 before costs, was placed in court-supervised guardianship accounts, one for each child, where it will sit and earn interest until each of them turns eighteen and can claim it directly. The mother did not have to become an expert in Israeli succession law, and none of the four heirs set foot in Israel during the process.

On the United States side, we flagged for the family that a foreign inheritance of this size is a reporting matter, not a taxing one. There is no Israeli inheritance or estate tax, and the estate held no US-situs assets, so no US estate tax arose. But each US heir who receives more than USD 100,000 from a foreign estate has to report it to the Internal Revenue Service on Form 3520, an information return with real penalties for being skipped, and the guardian carries that duty for the minors. Getting that onto the family's radar early meant it was handled as routine paperwork rather than discovered late.

Key Takeaways

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

1. When there is no will, Israeli law decides the heirs, and it is not always who the family expects. Under Section 14 of the Succession Law 1965, the children of a child who died first inherit that parent's share by representation, so grandchildren can become direct heirs of an Israeli estate.
2. A minor heir turns an administrative filing into a court matter. Under Section 67A the file leaves the Inheritance Registrar for the Family Court, the Administrator General is served, and the timeline stretches. Build that in from the start rather than discovering it mid-process.
3. Being a parent is not the same as being the recognised guardian of the child's Israeli inheritance. Guardianship for the Israeli estate has to be established with apostilled, translated proof before a guardian can act.
4. Selling a minor's share of Israeli real property needs Family Court approval under Section 20 of the Legal Capacity and Guardianship Law 1962, and the court will ring-fence the proceeds. This is a feature, not an obstacle, and it protects the buyer's title as much as the child. Families weighing whether to sell should read our guide to administering an Israeli estate from abroad before they list the property.
5. A US heir receiving over USD 100,000 from an Israeli estate reports it on IRS Form 3520. There is no Israeli estate tax, but the US reporting duty is real and, for a minor, falls on the guardian.

---

Facing a Similar Situation?

If a relative has died in Israel without a will and the heirs include children, or grandchildren standing in for a parent who died first, the case is more involved than a straightforward succession order and the minors' shares must be handled with care from the outset.

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