“If all we have in Israel is one joint bank account, do we even need a Will?”
This question is commonly asked by Olim. The answer, in one word: YES.
Here’s why:
If you are from the United States, you are probably familiar with a Joint Account with Rights of Survivorship. In such accounts, when one owner of a jointly held bank or brokerage account passes away, the balance automatically goes to the surviving account owner. The entire account is available to the survivor immediately, without further proceedings and without the need to probate a Will.
What many Olim don’t realize is that Israeli bank accounts do not have this feature. When your banker in Israel tells you that you have a joint account with a survivorship clause, do not assume that this means the same as it does in the US. According to Israeli law, bank accounts cannot name beneficiaries who inherit the rest of the account upon the death of one of the owners. The surviving co-owner does not automatically become sole owner of the entire account.
How the Israeli Survivorship Clause Works
Israeli bank accounts have a feature called a סעיף אריכות ימים (survivorship clause or longevity clause). This feature is only available to joint account owners, such as spouses, life partners, or parents and children who are joint owners. However, this clause does not automatically transfer the entire account balance to the surviving account holder. It merely prevents the account from being frozen, pending probate, so the survivor can continue to pay regular living expenses. On a practical level, while the survivor would be able to keep paying regular bills from the account, they would not be able to withdraw all the funds or make any other major changes in the account.
A survivorship clause on a bank account won’t transfer all the funds to the surviving partner. In fact, it’s possible that the deceased’s Will bequeaths his/her rights in the account to another person, who is not the co-owner.
What happens if my account does not have this clause?
If an account owner dies without having this clause, the account will be frozen and the surviving account owner will be not be able to make any transfers or withdrawals from the account.
If your account is only in your name, the סעיף אריכות ימים option is not available and the funds will be frozen pending a probate/inheritance order. Giving a child or partner a power of attorney on the account will not prevent the bank from freezing the account upon the owner’s death. But before you rush to add someone as co-owner on your account, read about the pros and cons of doing so.
How do I know if I have a Survivorship Clause?
Today (and for many years now), most newly opened joint bank accounts in Israel include this survivorship clause as the default option. However, if you and your partner have a joint account that is decades old, you may have to ask your banker to add this feature to your account.
Simply contact your banker via your banking app (or any other method), and ask them to check whether your account has a סעיף אריכות ימים.
This is a very simple step that can save a lot of difficulty down the road.
Is there any Option to List Beneficiaries in Israel?
All of the above applies specifically to bank accounts. These rules do not apply to Israeli pensions and other retirement plans, such as Bituach Menahalim, Keren Hishtalmut, and Kupat Gemel (קרן השתלמות, ביטוח מנהלים and קופת גמל). Israeli law allows the owner of these instruments to name beneficiaries (מוטבים) directly on the account. These beneficiaries legally receive the balance of the funds upon the death of the principal owner.
In fact, an important part of estate planning is making sure the named beneficiaries on these financial vehicles reflect your genuine wishes as the account holder. You’ll also want to make sure there is no conflict between the beneficiaries listed on those accounts and the provisions of your Will (with EZwill we do so by having the Will explicitly defer to the designated beneficiaries).
Bottom Line
- In Israel, the funds held in your bank account will not automatically transfer to the account survivor when you pass away.
- You’ll want to make sure your joint accounts all have a סעיף אריכות ימים, but that is not enough. You need to have a Will as well, even if your only asset in Israel is one joint bank account (as is often the case for many Olim who make Aliyah after retirement).
- Lastly, you’ll want to make sure that the named beneficiaries on your various pension accounts and savings plans accurately reflect your current circumstances and wishes.