Trust for Estate Planning
A trust (nemanut) allows the transfer of assets to a trustee who manages them for designated beneficiaries. In estate planning, trusts serve several purposes: controlling the timing and conditions of wealth transfer, protecting assets from beneficiaries' creditors, providing for minors or individuals who cannot manage assets independently, and facilitating international estate planning.
Tax Implications
For Israeli resident trusts, income is generally attributed to the settlor (creator) during their lifetime, and to the beneficiaries after the settlor's death. The trust itself does not pay tax – the tax is borne by the individual to whom the income is attributed. For foreign trusts (non-Israeli settlor), income from foreign sources may be exempt from Israeli tax.
Common Trust Uses in Estate Planning
- Trust for minor children – assets managed by trustee until children reach adulthood
- Special needs trust – ongoing support for disabled dependents
- Spendthrift trust – controlling distributions to beneficiaries who are not financially responsible
- International trust – managing assets across multiple jurisdictions
- Business succession trust – facilitating orderly transfer of business ownership
בסיס חוקי
- Trust Law 5739-1979
- Sections 75G-75T – Income Tax Ordinance (Trust taxation)
Important Note: The information on this website is for general informational purposes only and does not constitute professional tax advice. Consult a qualified tax advisor before making financial decisions.