Trusts and Family Wealth Management

Family wealth is an asset, but managing it is a profession. Without a smart legal structure, hard-earned capital is exposed to a range of threats: inheritance disputes that tear families apart, exposure to creditors, children's divorces, and above all — aggressive tax erosion. Many mistakenly believe that a trust is a tool reserved exclusively for international tycoons. In practice, in today's Israel, structuring assets through a trust is an essential tool for any affluent family seeking to ensure smooth intergenerational transfer, protect assets from external risks, and prevent unnecessary friction.

A trust allows a legal separation between ownership of assets and the enjoyment thereof. The "settlor" transfers assets to a "trustee," who holds and manages them for the benefit of the "beneficiaries." The Income Tax Ordinance (Chapter Four 2) establishes a specific tax regime for trusts, distinguishing between different types:

• Israeli Residents Trust: Fully subject to tax.

• Relatives Trust: Benefits from a unique reporting and taxation regime (subject to reforms that change from time to time).

• Foreign Residents Trust: May benefit from extensive exemptions, provided that the settlor and beneficiaries are not Israeli residents. The legal challenge is twofold: drafting the trust deed to legally protect the assets, and classifying the trust vis-à-vis the Tax Authority to prevent double taxation or over-taxation.

We don't just draft agreements; we design financial architecture. Our firm specializes in establishing trusts, advising trustees ("Protectors"), and regularizing foreign trusts with the Israel Tax Authority. We know how to navigate between stringent disclosure and reporting requirements and your need for privacy and control over how wealth is distributed to the next generation.