Issues facing United States citizens residing in Israel. Presented by Lyat Eyal, Adv., LLB, TEP

Transcription

1

2 Issues facing United States citizens residing in Israel Presented by Lyat Eyal, Adv., LLB, TEP

3 Example 1 Estate Planning Issues R is a United States citizen residing in Israel for the past 20 years. R owns significant assets gifted to her by her parents.

4 Example 1 Estate Planning Issues All of R's assets (other than her residence) and a bank account for her daily expenses, are located in the United States. R is married to an Israeli citizen and resident who has no connection to the US (other than through his marriage to R).

5 Example 1 Estate Planning Issues R wishes to begin her estate planning. Here are some of the issues she faces: Drafting a will: In Israel? In the US? R decides to establish a trust in 2011 in order to enjoy gift tax exemptions under US laws. What are the consequences in Israel?

6 Example 1 Estate Planning Issues As for the will: An option is to sign separate wills in each jurisdiction where assets are located, in this case, Israel and the US. This requires professionals from both jurisdictions to be involved in the planning and the document drafting.

7 Example 1 Estate Planning Issues With this option, the probate process is more efficient as Israel does not recognize foreign probate orders and requires the process to commence from the beginning with the Israeli Registrar.

8 Example 1 Estate Planning Issues With respect to the gifting trust, as it is an Israeli settlor trust, a file will need to be established for the trust in Israel and issues will need to be resolved, possibly by ruling, such as which country is the first to tax, will the other country give credit for taxes paid and what treaty provisions may be useful.

9 Example 2 Trusts & Estate Planning A is a US citizen residing in Los Angeles. A is married to a US citizen residing in Los Angeles and his daughters reside in Los Angeles as well. A owns plots of land in Petach Tikva in Israel. A's only connection to Israel is the ownership of the land.

10 Example 2 Trusts & Estate Planning A drafted a will and established a trust under the laws of California. The trustee of the trust is A's wife, R. A passes away. In his will A bequeaths all of his assets to the trust.

11 Example 2 Trusts & Estate Planning The first issue is obtaining a probate order from the Israeli Registrar and Family Court (as A is a foreign resident) for A's will. This may require many months, document translations of the will and trust agreement to Hebrew, obtaining original documentation from abroad and extensive discussions with the Administrator General & Public Trustee (Apotropus Klali). Once the order is granted, the Tabu is the next step.

12 Example 2 Trusts & Estate Planning The issue is how to register the land in the name of the trust in the Tabu (Land Registry Office) in Israel. As the trust is not a legal entity, the ownership is to be registered in the name of the trustee, R, and not the trust. The matter is not simple as the Tabu is not very familiar with trusts (especially not foreign ones).

13 Example 2 Trusts & Estate Planning A possible option for such issues is either to sign an Israeli will and have it admitted to probate in Israel or to take steps during one's lifetime to transfer the ownership, taking into consideration various issues such as taxes.

14 Example 3 Voluntary Disclosure A and A are a married couple. A and A made Aliyah to Israel fifteen years ago from the US. A and A settled a trust prior to their immigration to Israel in a foreign jurisdiction (neither Israel nor the US).

15 Example 3 Voluntary Disclosure A and A are employed in Israel and do not file tax returns in Israel. A and A file tax returns in the US. These tax returns have included the trust and the income derived from the assets it holds.

16 Example 4 Voluntary Disclosure A and A have not received any distributions from the trust during the years in which they have been Israeli residents. They may be able to consider submitting an application for the voluntary disclosure process in Israel.

17 Thank you Lyat Eyal, Adv, LLB, TEP MMG Kaplex Trust Company (1978) Ltd. Tel Aviv A member of the Morgan & Morgan Group mmg-trust-zurich.com Alon Kaplan Law Firm, founder of Kaplex Trust Company, is in association with the Morgan & Morgan Legal Group