Lasting Power of Attorney – Payments from the Hereafter or from this World

Lasting Power of Attorney – Payments from the Hereafter or from this World

Yair Aloni, Adv.
October 7, 2019

Although inheritance may sometimes be some economic consolation, which is of course minimize compared to the huge personal pain, the heirs are often forced to deal with a cold reality in the most painful era, dealing with the deceased creditors or liabilities, neglection of which may result in debt collection, foreclosure, fines, interest and so on. Duly drafting in advance an lasting power of attorney by a lawyer with many years of commercial experience and background in escorting businesses may serve to prevent a lot of grief and financial losses that will be deducted from the assets left in the estate.

Under Israeli law, when a person dies, all assets are passed on to the heirs, whether by a will left behind or by law. Heirs are not liable for debts accrued during the deceased's life and to the extent that there are debts, these will be paid out of the assets left by the deceased (such as funds, real estate, etc.) even if these assets are not sufficient to cover the debts in full. However, in order for heirs to be entitled to receive their inheritance or to dispose of any of the deceased's assets, they must first move to probate the will, if a will was left behind, or move for an inheritance decree for distribution under law. This bureaucratic process often involves a long wait for the decree and may take several months. If a disagreement between the heirs exists, the process may end in a legal process that will take many years.

This situation is one of the main causes of frustration among heirs and may even cause complex legal complications when the deceased was conducting a business prior to his passing and, naturally, there are many financial liabilities to employees, tax authorities, lessor, etc., which often requires urgent application to the Court with a complex motion for the appointment of a temporary estate manager because failure to take immediate and urgent actions can cause serious damage. Usually with the passing of a person there is a difficulty to obtain vital information from entities and authorities regarding the obligations of the deceased because many (such as cellular companies, cables companies, insurers, local authorities with regard to property tax, water suppliers, etc.) will generally avoid, in the absence of appropriate legal authorization, providing information to third parties. This situation makes it difficult to trace the current financial liabilities of the deceased at the time after death. In addition, beyond the information gaps, there is another practical difficulty, as banks often freeze the use of the deceased's bank account in a way that does not allow for the transfer of funds or to carry out transactions in the account, until a decree of succession defines the manner of distribution of the inheritance. This stagnation, which may continue for months, is fertile ground for legal and economic accidents. For example, we encountered cases where freeze of the deceased’s bank account resulted in non-payment of lasting payment orders and consequently collection procedures that resulted in fines, interest rates and attorney fees. Beyond the damages caused by neglecting current accounts, financial liabilities of the deceased and exposure to claims against the estate, the aggravation for the heirs is also an issue to be considered. Allocating resources to handle day-to-day affairs in the most sensitive of times when the deceased's relatives are in the midst of a sad and personal process is not at all simple. The situation is even more complicated when it is also required to run a business that was controlled by the deceased, and the management is actually done "with hands tied behind the back".

Proper planning and foresight can prevent this situation by duly drafting an lasting power of attorney. A lasting power of attorney is an extremely important tool that enables the management of a person's routine even when the person is no longer able to understand, whether due to illness, dementia, accident or any other event. The lasting power of attorney allows the attorney to continue to manage the property of the deceased even during the first 90 days after the demise, all without need for Court involvement. The big advantage is in creating continuity that allows for lasting payments, managing property, payment of burial and grief expenses and even managing a leased property or business that requires lasting attention.

The continuing power of attorney may only be signed in front of a lawyer who was authorized by the Official Legal Guardian, but this certification does not require prior experience in the commercial, real estate, corporate or will and inheritance fields. Therefore, it is advisable not to be satisfied by a certificate of qualification but consult only a lawyer with many years of experience in such fields, who can thus ensure that the documents are tailor-made to the relevant circumstances and is not just based on a template.