Trusts and Israeli Assets: A Guide for US Families

A couple in Florida did everything their American attorney advised. They built a revocable living trust, retitled the house, the brokerage accounts, and the cars into it, and rested easy knowing their children would avoid the cost and delay of US probate. Tucked into their estate is a two-bedroom apartment in Netanya, bought decades ago and rented out ever since. They assume it travels with everything else inside the trust. It does not. When the time comes, their children will discover that the Israeli apartment sits entirely outside the machinery the trust was built to bypass.

This is one of the most common and most expensive misunderstandings in cross-border estate planning for Americans with Israeli assets. The trust that works flawlessly on US soil has almost no traction at the Israeli Land Registry. This guide explains why, what Israel offers instead, and the tool that actually solves the problem for most families. The tax treatment of a cross-border trust is a separate question, worked through in our guide to Israeli tax on foreign trusts; here the focus is succession and title.

Why the Trust Stops at the Border

A revocable living trust avoids US probate for one mechanical reason. During life the assets are titled in the trust, so on death they pass under the trust deed without a court. That works only where the local registry or institution accepts the trust as the owner and will act on the trust document.

Israel's registries do not. For Israeli real estate, title moves through the Land Registry (Tabu), and the Tabu transfers ownership on the strength of an Israeli succession order (צו ירושה, tzav yerusha) or, where there is a will, a will execution order (צו קיום צוואה, tzav kiyum tzava'a) naming the heirs. It has no mechanism to read, verify, or enforce a foreign trust instrument. Israeli banks behave the same way, releasing a deceased account holder's funds against an Israeli order rather than a Florida trust deed.

The conflict-of-laws rules point the same direction. Under Sections 137 to 138 of the Succession Law 5725-1965, succession is governed in principle by the law of the deceased's domicile, but Israeli immovable property is reserved to Israeli law, and Israeli practice routes the transfer of Israeli-situs assets through the Israeli succession process regardless of how the worldwide estate is organised abroad. The trust may decide who ultimately benefits. It does not move the Netanya apartment.

In Practice: Under the Succession Law 5725-1965, Israeli-situs assets transfer on an Israeli order, and a foreign trust deed cannot substitute for it at the Land Registry (Tabu) or an Israeli bank. Obtaining a will execution order from the Inheritance Registrar (Rasham HaYerushot) typically takes about three months when uncontested, and lawyer fees for a non-resident estate commonly run NIS 8,000 to NIS 20,000, on top of whatever the US trust administration costs. The order is required even where the US trust names exactly the same people as heirs.

The Funding Problem You Cannot Wish Away

American planners often reach for an obvious fix: if the trust only works over assets it holds, then put the Israeli apartment into the trust during life. On US property that "funding" step is routine. On Israeli property it usually is not.

The Land Registry does not register a foreign revocable trust as the owner of Israeli land the way a US county recorder retitles a house into a trust. A trust in the Anglo-American sense is not a person Israel enters on the nesach tabu. Attempting to move the apartment into the trust is treated as a transfer of the property, which can draw Israeli tax and a full set of formalities, and it often cannot be completed at the registry without local structuring in any event. So the neat solution collapses: you cannot simply drop the Tel Aviv flat into the Florida trust, and if you try, you may pay Israeli tax for the privilege of a transfer that does not achieve what you wanted.

What Israel Offers Instead: The Hekdesh

Israel does have its own trust and endowment law, and for the right family it is a genuine tool. The Trust Law 5739-1979 recognises trusts and provides for an endowment, the hekdesh.

A hekdesh is created deliberately and formally. Under Section 17 of the Trust Law 1979 it is established either by a deed of endowment (כתב הקדש, ktav hekdesh) signed before a notary, or by will. Where the endowment is public or charitable, the trustee must register it with the Registrar of Endowments (Rasham HaHekdeshot), part of the Corporations Authority at the Ministry of Justice. This is the vehicle Israeli families use to tie up assets for a charitable purpose, or to hold property across generations under Israeli law rather than foreign law.

In Practice: An Israeli endowment under Section 17 of the Trust Law 5739-1979 is created by a ktav hekdesh signed before a notary, whose fee for the first page is fixed at about NIS 251 under the Notaries (Fees) Regulations. Where the endowment is public, Section 26 requires the trustee to notify the Registrar of Endowments at the Ministry of Justice within three months. A hekdesh is a deliberate, formal structure suited to charitable or long-horizon holdings, not a quick substitute for organising a single apartment, which is why most families should weigh it against a simpler Israeli will before committing.

The honest advice is that a hekdesh is heavier than most cross-border families need. If the goal is to pass one apartment to two children cleanly, an endowment is usually more machinery than the job requires. Its place is where there is a genuine long-term or charitable purpose that Israeli law should govern.

The Tool Most Families Actually Need

For the great majority of Americans with Israeli assets, the clean answer is neither the US trust nor an Israeli endowment. It is a separate Israeli will that deals only with the Israeli assets, drafted to sit alongside the US plan without contradicting it.

A separate Israeli will lets the estate obtain a will execution order quickly, keeps the Israeli apartment out of any tug-of-war between US and Israeli documents, and avoids the ongoing compliance a cross-border structure carries. It has to be coordinated, not bolted on, because two wills that overlap or conflict are worse than one, and an Israeli will that accidentally revokes a US will, or vice versa, creates exactly the mess it was meant to prevent. We set out how to do this in the guide to a separate Israeli will for non-residents, and the administration itself can be run remotely, as explained in administering an Israeli estate from abroad.

Common Mistake: A US family assumes the revocable living trust covers the Israeli apartment and never makes an Israeli will. On death the children find the Tabu will not act on the trust deed, so they must still obtain an Israeli succession order under the Succession Law 1965, adding roughly three months and NIS 8,000 to NIS 20,000 in Israeli legal fees. Worse, where the US trust and Israeli intestacy point to different people or shares, the family faces a conflict that a coordinated Israeli will would have prevented entirely.

The US Side Does Not Disappear

None of this removes your American obligations. The trust still does its US job for US assets, and the IRS still expects its filings. A US person who receives a foreign inheritance above USD 100,000 generally reports it on Form 3520, and where an Israeli asset produces income before distribution there may be further US reporting. The Israeli order governs who takes title in Israel; it does not settle anything with the IRS.

The practical discipline is coordination. Your US estate attorney and your Israeli lawyer should each know what the other has drafted, so the Israeli will and the US trust cover different assets without colliding, and so the two sets of filings tell one consistent story to two tax authorities that now exchange information automatically.

Practical Checklist

• Do not assume your US living trust reaches Israeli real estate or bank accounts; it almost certainly does not.
• Confirm what an Israeli succession or will execution order will require for each Israeli asset, and budget the three-month timeline into any plan.
• Do not try to retitle an Israeli apartment into a US trust without Israeli advice, as it can trigger Israeli tax without achieving the goal.
• Consider an Israeli hekdesh only where there is a genuine charitable or long-horizon purpose, not to organise a single apartment.
• Put a separate, coordinated Israeli will in place for the Israeli assets, and make sure it does not conflict with your US documents.
• Keep your US reporting, including Form 3520 where relevant, aligned with the Israeli side so the paperwork is consistent.

Speak With an Israeli Attorney

The trust that protects your American estate can leave your Israeli apartment stranded, and the fix is far simpler and cheaper to put in place while you can than to untangle after death. We coordinate Israeli planning with your US living trust, draft a separate Israeli will for your Israeli-situs assets, and obtain the succession and will execution orders that the Land Registry and Israeli banks actually require.

Contact us for a confidential initial consultation.