To die for you ! Between Prenups and wills

To die for you ! Between Prenups and wills

Doron Afik, Esq.
January 23, 2023

A prenuptial agreement is an important tool for preventing future conflicts and certainly it is doubly important when it comes to parties who already have property and are entering a joint life without marriage. Sometimes, as part of a financial agreement, the parties seek to set not only what will happen during their life together, but also after their death, but can a prenuptial agreement limit a person's right to make a will or change it?

Israeli law generally provides for a resource balancing arrangement, according to which assets of spouses are considered to belong to both equally, regardless of how they were recorded. In order to avoid this, it is necessary to execute a prenuptial agreement. A prenuptial agreement between a married couple must be approved in Court in order for it to be valid (although in some cases the Courts held that when the parties acted according to an agreement that was not legally approved they may still be bound by it), however a prenuptial agreement concluded before the marriage may be verified by a notary in a specific process under which the notary verifies that the parties made the agreement by free will and they understand its meaning and results.

The Israeli Inheritance Law prohibits agreements regarding a person's inheritance or a waiver of a person's inheritance, which are made during the life of such person and sets that any gift that a person gives in order to be bestowed upon the recipient only after the death of the grantor, is not valid unless it was made in a will under the provisions of the law. This does not prevent a situation where a person who is supposed to be an heir undertakes to sell assets that such person believes to receive in the future, but prevents only agreements that bind a person and prevent him from creating a will or changing it. However, what happens when spouses sign a prenuptial agreement, which also determines what will happen to their property after their demise?

A matter discussed in the Supreme Court in April, 2021, dealt with of spouses who executed a prenuptial agreement in which it was recorded, among other things, that if the husband passes away before the wife, all income from rents of a certain real property of the husband will belong to the wife only. The Court held that spouses should be allowed to determine within the framework of a prenuptial agreement instructions regarding what will be done with their property after their demise.

Will any financial agreement prevail over a will? Not necessarily. Thus, for example, it is not certain that the Court will allow a prenuptial agreement in which it is determined that the spouse's rights are forfeited, as opposed to granting rights. As in other cases, it is very important to draw up a prenuptial agreement (and also a will) with a notary with experience in the field (even if it is a prenuptial agreement between common-law marriage people or between spouses of the same sex, which will then be approved in Court) because financial savings when executing the prenuptial agreement may cost huge sums in the future and therefore it is better to pay a little more when drafting it but know that the rights and assets are well protected.