Liat Keisary Yahalomi
Liat provides a wide range of legal services tailored to the exclusive needs of high-net-worth individuals, their families, trustees and guardians – whether living in Israel or abroad – private charities, closely-held businesses, and family-controlled companies.
In this context, Liat handles a variety of real-estate transactions, including the acquisition and disposition of luxury residential and commercial properties.
Liat advises Israeli and foreign individuals on tax planning and estate and trust administration, including probate, estate, and related court proceedings. She also oversees the negotiation and preparation of prenuptial, postnuptial, and cohabitation agreements.
She represents clients in the purchase of high-value items, such as second homes and artwork, as well as assists them in making donations to private/public institutions.
Liat was endorsed by the prestigious legal directory Chambers & Partners as a leading lawyer in Private Wealth Law (Chambers HNW 2019).
Interdisciplinary Center Herzliya, LL.B, B.A, 2005
Member of Israel Bar Association since 2007
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Essential Legal Tools for the Period between Life and Death
In 2017, the Legal Capacity and Guardianship Law was amended in Israel to enable individuals to draw up an enduring power of attorney that will come into effect if or when they become incapacitated. Guardianship and an enduring power of attorney are two legal tools that allow for the appointment of an individual to take care of another person’s affairs when that person is no longer capable of taking care of him or herself and of managing his or her affairs independently. In these instances, when a person becomes incapacitated, a guardian may be appointed or an enduring power of attorney that the person signed when he or she was still of sound mind may be activated. An enduring power of attorney has many advantages over the appointment of a guardian. In this article, I will review some of the key advantages.
As stated, the two abovementioned legal tools enable another person to be authorized to act on behalf of an individual who is no longer capable of taking care of him or herself. The amendment to the law enables individuals to draw up an enduring power of attorney, which will come into effect if or when the grantor becomes incapacitated. Up until the amendment, it was only possible to draw up a general power of attorney valid for only as long as the grantor was of sound mind. As soon as the grantor lost mental capacity, the power of attorney expired. Under these circumstances, the only option was to petition the court to obtain an appointment as a guardian.
One of the major advantages of an enduring power of attorney over guardianship is efficiency. The appointment of a guardian is a long and cumbersome process. A petition must be filed with the court, and the opinion of a psychiatrist or other relevant professional expert must be attached to the petition, attesting to the person’s lack of cognitive capacity and inability to independently manage his or her own affairs. (Such a person is called “a ward.”) During the hearing of the petition, the court will examine the suitability, qualifications, and capability of the person petitioning to be appointed as guardian; consider the positions of the ward’s family; and appoint an aid from the welfare office in the ward’s residential area. These proceedings require the investment of multiple resources (time, lawyer’s fee, and more).
As opposed to this, the activation of an enduring power of attorney is much quicker and easier. The grantor can define in advance under what conditions the power of attorney will come into effect, such as the presentation of an opinion in conformity with the Legal Capacity Law (the default) or any other condition the grantor chooses. When the conditions are fulfilled, and supporting evidence of this is presented, the process is concluded easily.
For example, individuals can decide that the family physician’s recommendation is sufficient. When this condition is fulfilled, the appointee goes to the offices of the Administrator General with the power of attorney and the family physician’s aforesaid recommendation, and the Administrator General validates the enduring power of attorney on the spot. This enables enormous savings in time and resources. The power of attorney comes into effect without requiring the court processes of examining the appointment, examining the qualifications and capability of the appointee, and considering the positions of the relatives, all because the grantor appointed his or her agent in advance in the enduring power of attorney.
Another element that makes the enduring power of attorney more efficient is that there is no need for supervision. Guardians are subject to supervision by the office of the Administrator General and must submit various reports according to that prescribed in the law. With an enduring power of attorney, the agent can be released from this obligation and the enduring power of attorney can state that no supervision by the Administrator General is needed (supervision that is often cumbersome, sometimes overly so). However, in both scenarios, when a guardian is appointed and when an agent is appointed, they must keep precise ledgers and records of all of the income and expenses of the ward/grantor.
It is important to note that the Administrator General’s supervision is needed to protect the interests of a person who was appointed a guardian. However, when an agent is appointed through an enduring power of attorney, these interests are usually protected by design, since, in most instances, the grantor usually chooses his or her agent based on a relationship of closeness and trust.
Additionally, in order to eliminate possible risks and ensure an alignment of interests, it is possible and even recommended that the enduring power of attorney also name an additional person who must be kept abreast and receive reports of the agent’s actions in real time or immediately thereafter, thereby ensuring a mechanism of close supervision.
An enduring power of attorney also enables individuals to pre-appoint a number of agents or an alternate agent, in case the original agent cannot continue to fulfill his or her role, as well as to define the interactions between the agents. This is far more efficient than the procedures involved in replacing a guardian, where there is no other option but to petition the court once again to appoint a replacement guardian, in which case the entire process of examining the suitability of the guardian must be repeated.
In terms of a person’s autonomy and control over his or her life, the appointment of a guardian is considered a more extreme course of action than drawing up an enduring power of attorney. This is because a guardian is delegated nearly absolute control over the ward’s person and property, and sometimes, if there is no close friend/relative who wishes to and agrees to be appointed as guardian, the court may appoint an NPO or a stranger as guardian.
On the other hand, with an enduring power of attorney, individuals can control the future course of their lives, can oversee how their affairs will be handled, and can protect their own interests. When drafting an enduring power of attorney, individuals can devote a lot of thought into mapping out their future in advance, customizing the document by defining a variety of mechanisms that meet their unique requirements according to their viewpoints and needs, in a way that guarantees all matters important to them are handled according to their wishes. Their enduring powers of attorney can refer to the volume of assets, as well as issue instructions with regard to future events, the giving of gifts and loans, moving to another residence or to assisted living, medical care, etc. The agent is obligated to follow the instructions in the power of attorney, to the extent that their fulfillment is possible under the circumstances. Please also note that an enduring power of attorney expires on the date the grantor passes away.
It is true that a guardian is also obligated to act in the best interests of his or her ward. However, a guardian is appointed only at the stage when the individual needing a guardian is already incapable of making his or her own decisions and expressing his or her wishes and position on any matter for which a decision must be made. These disadvantages are quite evident when a stranger is appointed as guardian.
Furthermore, an agent will receive a fee only if the enduring power of attorney defines a fee and the rate of the fee in advance. As opposed to this, a guardian may request a fee according to the rate prescribed in the law.
Another legal tool that the amendment to the law provides is “preliminary guidelines.” If individuals do not have a person whom they can appoint in an enduring power of attorney, they can draw up preliminary guidelines and petition the court to appoint a guardian according to the principles outlined in this document. The main advantage is that individuals can include instructions, requests, and wishes in the preliminary guidelines for the guardian to be selected by the court. The preliminary guidelines for a guardian can refer to the individual’s personal welfare; daily needs; place of residence; health and medical matters; physical, emotional, and social needs; and economic affairs, such as the handling of all assets, money, and liabilities. When a guardian must be appointed, the courts will be diligent about appointing someone suitable who is compatible and can fulfill the requirements and guidelines of the ward.
About Life and a Little Bit about Death
Inheritance disputes can potentially destroy the fabric of family relations. Naturally, the larger the estate left by the deceased, the more complicated and acrimonious the battle over inheritance. Family inheritance disputes have made headlines in Israel in recent years, such as the battle over the distribution of the late Shaoul Eisenberg’s estate, which dragged on for several years. The battle began when Shaoul Eisenberg’s son presented a photocopy of a Last Will that stated he was the heir of 80% of the estate, while four of his sisters would each receive 5% and his fifth sister would be disinherited. After a prolonged battle, the parties reached a settlement whereby four sisters each received 5%, and out of the remaining balance, the mother and the fifth daughter received 45% while the son received 55%.
Another inheritance battle, which ended up in court, involved the widow and children of the late Yuli Ofer. In his Last Will, Yuli Ofer bequeathed his holding of the Ofer Investment Company to his daughter Leora, while his son Doron received a small portion of his estate. This Last Will cancelled a previous Will that had been drawn up, in which he bequeathed his estate to his children in equal portions. And thus began a court battle, with Leora petitioning to uphold the later Will and Doron opposing it. In the end, the court ruled that Leora would receive 51% of the holdings of the company, while Doron would receive 15%.
These disputes are emotionally charged, which makes it even more difficult to reach a compromise, particularly when the person who was bequeathed the most in the estate had deep emotional ties with the deceased, or when the deceased disinherits a family member for emotional reasons. In these instances, considerations such as time and money will largely be disregarded, or, as the Israeli Supreme Court explained, “A Last Will is a unique document. It is a legal document, but this document has a soul. It is tantamount to the last personal letter, an expression of wishes, loves, emotions, and even a settling of scores, that flow from the depths of the heart of a person who is contemplating his own death and what will happen after he dies.”
How to prevent estate disputes in advance
A Last Will is the surest way to ensure that the estate is divided according to the deceased’s wishes. A Last Will is a written declaration and a legal document that regulates the division of a person’s property upon his death. A Last Will contains precise instructions about the distribution of the assets, includes conditions to executing the Will, and encompasses all property that a person owned at the time of his death, including his worldwide assets. (In such instances, it is recommended to prepare a specific Will for the assets in each foreign country.) On the other hand, a Last Will can be more general and specify merely overall guidelines for its execution. While there is no limit to the number of Wills a person can draw up, the Last Will is the valid one that will be executed, and it cancels all previous Wills.
It is recommended to provide as many details as possible about the assets included in the estate. This is particularly important when there are numerous assets. Heirs often opt to waive a part of the estate, draw up a redistribution of assets, or waive the entire estate. If all of the assets are not specified, an heir will be unable to waive a specific asset and will be required to waive the entire estate. Why is this important? Let’s say that a father bequeaths an apartment and a bank account in equal parts to his two children. One of his children already owns an apartment, while the other does not. If the assets are specified in the Last Well, one child will be able to specifically waive his or her rights to the apartment in favor of his or her sibling, or both siblings can draw up a new estate division agreement between themselves, thereby avoiding the registration and transfer proceedings in relation to half of the apartment, as well as additional tax payments. When many assets are involved, it is even more important to allow the heirs the possibility of dividing up the assets between themselves by mutual consent. In an instance where the estate includes assets, some of which are encumbered while others are not, if they are not specified in the Will, the heirs will face an “all or nothing” situation. When details are provided for all of the assets, then the heirs can accept the unencumbered assets and waive the encumbered ones.
Before signing a Last Will, it is recommended to obtain a full medical opinion that refers to the testator’s cognitive functioning, as well as a confirmation from a family doctor that recounts the testator’s medical history, in order to show that the testator is competent, clear-headed, and of sound mind and body. It is also recommended to film the signing of the Last Will, in order to prove that the testator is drawing up the Will freely and without coercion, and to try to reflect the testator’s considerations and state of mind in real time.
The importance of the aforementioned is magnified the older the testator is, or if the testator has decided to disinherit some of his heirs. When a testator intends to disinherit an heir, he or she should indicate the reasons for this and explain his or her motives. It is advisable to take into account that, in such instances, the disinherited heir usually files a claim with the family court. If a Last Will exists, there will be heirs that object to it, and if there is no Last Will, the dispute will be about the volume of the estate (for example, in relation to assets the deceased transferred before he died). No use can be made of the estate for the duration of the clarification of the claim and during any subsequent appeal.
How does a Last Will affect financial agreements?
The main judgment in this regard was handed down in the Ben Dror case (Family Case 32240/96), which ruled that in the event a Last Will contradicts a financial agreement, the provisions of the financial agreement take precedence. This is because the financial agreement was signed while the testator was still alive. In order to amend a financial agreement, both parties to the agreement must agree to the amendment. If the testator’s heirs were not a party to the agreement, they cannot object to it. In the event a financial agreement exists between spouses, it is recommended to draw up a Last Will so that the other party will be precluded from claiming rights to the estate by virtue of the Law of Succession.
In each of the instances specified above, it is recommended to consult an attorney specializing in succession laws and in the drawing up of Last Wills, in order to avoid any future disputes among family members, particularly if many assets are involved.
Article on Inheritance Disputes: "About Life and a Little about Death"
Adv. Liat Keisary, a partner in the Private Clients Department, published an article on the Calcalist Dun's 100 website about inheritance disputes, wills, and estates.