Provident funds, pension funds and life insurance of a deceased person in Israel — who the money belongs to, and what the will cannot change.

Succession · September 6, 2026 · 9 min read

The short answer

This money is not part of the estate. Section 147 of Israel's Succession Law provides that sums payable on a person's death under an insurance contract or membership of a provident fund or pension fund are not part of the estate — unless it was stipulated that they go to the estate. The consequences: the money is paid to the beneficiaries registered with the fund, without a succession or probate order, usually within weeks; the will does not change the beneficiaries by itself; and only where no beneficiaries are registered do the heirs, the order — and, in limited cases, a shortcut for small balances — come into the picture. The deceased's bank account behaves in exactly the opposite way, which is why the two should be handled in parallel, not in the same basket.

1. The rule — and what follows from it

Section 147 is short, and its consequences are wide. First, no order is needed: the institution pays the beneficiary on the basis of a death certificate, identification and confirmation of the receiving bank account. Second, the money is not available to the estate's creditors in the ordinary way — it does not enter the pool from which debts are paid under sections 103–104 of the Law, a point the Supreme Court recognised as early as the Rubinstein case (CA 155/80). Third, and this is the part that surprises people: the will does not govern this money. Someone who wrote "all my property to my daughter" and never updated the beneficiary form at the fund has, in practice, left the fund to the former spouse who has been registered there since 2004.

The section also allows the opposite — a stipulation that the money does go to the estate, for instance so that it is divided under the will or used to pay debts. That is a choice made in lifetime, on the beneficiary form, not something that happens by itself.

2. Not all products are equal — who gets what

The phrase "the deceased's provident fund" in fact covers four different products, and in each of them the person entitled is determined differently:

So the first question is not "what does the will say" but "which product is this, and what is registered on it". The institution answers that, usually within days, to anyone who presents a death certificate and proof of kinship.

3. The will versus the beneficiary form — the unsettled point

Section 36(b) of the Contracts (General Part) Law lets a saver change the beneficiary "by notice to the obligor or by a will of which notice was given to the obligor". Whether the notice of the will must reach the fund during the saver's lifetime has divided Israel's Supreme Court: in Fischer (CA 3807/90) and Milstein (CA 5027/90) the answer was yes; in Katz (CA 233/98) and Yaffe (CA 236/84) the view was expressed that a will reaching the fund after death but before distribution can change the beneficiary. The Family Courts go both ways and also examine the fund's own rules.

The institutions have resolved the uncertainty for themselves with a working rule that now appears on most of their websites: they pay according to the beneficiary form, unless they are given, before distribution, a will that is later than the last beneficiary form, refers expressly to the fund or policy (not "all my property"), and has been admitted to probate. A will that does not meet every one of those conditions will not change the fund's payment, and whoever believes they were entitled will have to litigate against the beneficiary who received the money — not against the fund.

The courts have at times gone further than that working rule. In the Estate of P. case (District Court, Tel Aviv, 39687-04-16, 2017) the mother disinherited her sons in a general will — "all my property" — without naming the funds, and on the funds' forms had ticked "heirs at law shall be the beneficiaries". The Family Court awarded the sons some NIS 6 million under section 147; the District Court reversed and awarded the money to the estate, on three alternative grounds: "heirs at law" on the form was read to include the heirs under the will; the will validly changed the beneficiaries, because the funds' own rules allow notice of a will before distribution; and, alternatively, the will was a "stipulation" within the tail of section 147. The practical lesson is not that a general will suffices — it is that where the form says "heirs at law" rather than naming people, the outcome turns on interpretation, the fund's rules and the circumstances, which is precisely the situation not to leave behind.

Two practical rules follow. For savers: if you want the will to control, update the beneficiary form at every fund and policy accordingly — it takes five minutes in the online account — and if you nevertheless rely on the will, name each fund and policy in it and deliver a copy to the institution in your lifetime. For heirs: check immediately, before the fund pays out, whether there is a will that might change the picture, and give written notice of it.

One more point, relevant to the many people who have signed a lasting power of attorney: the Legal Capacity and Guardianship Law provides expressly that an attorney may not designate beneficiaries for sums payable on the principal's death. Whoever wants the beneficiaries on their funds to be right has to do it themselves, while they are competent.

4. No beneficiaries — what to do

Where no beneficiaries were registered, or "the heirs at law" were registered, or the sole beneficiary died before the saver, the money is paid to the heirs — and for that a succession order or probate order is needed, exactly as for the bank account. The application is filed online with the Registrar of Inheritance and, in simple cases, is processed in about 40 days after the publication period. An heir abroad can apply through an Israeli lawyer; the affidavits are signed before an Israeli consul or a local notary with an apostille.

There is one exception, narrow and aimed at cases where the cost of an order exceeds the money in the fund. Under Capital Market Authority Institutional Bodies Circular 2017-9-8, the institution may pay without an order if all of the following hold: the balance does not exceed about NIS 8,000 (the figure is updated every 1 January by the consumer price index, and the institutions publish the current amount); at least three years have passed since the death; the applicants are the deceased's spouse, parent or child; they have signed a declaration that they are the heirs at law and an indemnity; and the institution has checked the Registrar's website that no order was issued and none was applied for. The route is not open to other heirs, and does not apply in a pension fund where there are survivors.

The bottom line on that route is simple: it is useful when the fund is the only asset. Where there is also a bank account, an apartment or a car, an order is needed anyway, and the three-year wait saves nothing.

5. Locating the money — "Har HaKesef" and "Har HaBituach"

Many families do not know where the deceased kept funds. The Capital Market Authority runs two free search engines: "Har HaKesef" for provident, study and pension funds and managers' insurance — active and inactive — and "Har HaBituach" for insurance policies, both accessed through Israel's national identification system. Both show which institutions hold money in the deceased's name, not the amounts. The next step is an application to each institution with the death certificate, a copy of the applicant's ID, a bank-account confirmation and, depending on the case, a beneficiary claim form or an order. The identification system requires an Israeli ID number and in practice an Israeli phone or a biometric ID card, so a family abroad will usually run the search through a relative in Israel or a lawyer. The deceased's bank accounts are located separately, through the Bank of Israel's "Har HaKesef 2" — see the article on the bank account.

A person who does not know whether they are registered as a beneficiary can simply ask: the institutions tell a first-degree relative, after identification, whether a beneficiary designation exists and who is on it — the one piece of information that determines whether an order is needed at all.

6. Tax — what the institutions and the Tax Authority publish

According to the publications of the fund managers and the Israel Tax Authority — and none of this replaces checking your own case with a tax adviser — the general picture is this:

• Savings ("tagmulim") money and the gains accrued on it up to the death are tax-free, provided it is withdrawn within three months of the death. New gains accruing after those three months are taxed at 25% of the real gain.
• Severance-pay money in the fund is taxed at the deceased's marginal rate, after the exemption the deceased was entitled to.
• For "Amendment 190" money (recognised annuity accounts): on death before age 75 — a complete exemption for the beneficiaries, principal and gains; on death after age 75 — the beneficiaries step into the deceased's shoes and pay 15% on the nominal gain of the second layer.
• An alternative to withdrawal: transferring the share to a new provident-fund account in the beneficiary's name — not a tax event, it preserves the tax deferral and allows a later conversion to an annuity. Beneficiaries over 60 can also consider an annuity.

For beneficiaries who are US persons there is a second layer entirely: the Israeli fund is a foreign account for US reporting purposes, and its treatment under US tax law is a separate question that Israeli institutions will not answer. The rules change and the numbers depend on the timing of the withdrawal, the type of money and the deceased's data; before withdrawing a significant sum — and certainly before choosing between withdrawal, transfer and annuity — take advice.

7. Beneficiaries and heirs abroad

Here section 147 becomes a real advantage. Where the beneficiary is registered, no Israeli succession order and no opinion on foreign law are needed: the institution pays on the basis of a death certificate — if issued abroad, certified with an apostille and sometimes translated — identification of the beneficiary, a claim form, and confirmation of a receiving bank account. Some institutions ask for the signature to be verified before an Israeli consul or a local notary with an apostille. A beneficiary who is a US citizen or resident may be asked to complete a Form W-9 — a US reporting requirement that Israeli institutions apply.

Two things worth knowing in advance: a probate or letters testamentary issued abroad do not replace an Israeli order where there are no beneficiaries and an order is required; and if the deceased was not resident in Israel at death, the application for an order goes to the Family Court rather than the Registrar. That route is the subject of a separate article.

8. What to do — in the first weeks

• Obtain the death certificate and list every fund and policy through "Har HaKesef" and "Har HaBituach".
• Ask each institution: which product is this, are beneficiaries registered and who are they, and which documents are required.
• Check whether there is a will, and if it refers expressly to a fund or policy — notify the institution in writing before it pays.
• Keep the three-month tax window in mind, and decide — with an adviser — between withdrawal, transfer to an account in the beneficiary's name, and an annuity.
• If there are no beneficiaries — apply to the Registrar of Inheritance for an order; consider the low-balance route only where there are no other assets.
• For a pension fund — contact the fund at once about the survivors' pension; entitlement does not depend on the will.
• For savers reading this in good health: open your online account and check who is registered as beneficiary. It is the only rule on this page that depends entirely on you.

Frequently asked questions

Is a deceased person's provident fund part of the inheritance in Israel?

As a rule no. Under section 147 of the Succession Law, sums payable on a person's death under an insurance contract or membership of a provident or pension fund are not part of the estate, unless it was stipulated that they go to the estate. They are paid to the beneficiaries registered with the fund, without a succession or probate order. Only where no beneficiaries were registered — or where 'the heirs at law' were registered — is the money paid to the heirs under an order.

The will says one thing and the beneficiary form at the fund says another — which prevails?

The question is not finally settled in Israeli case law. The working rule the institutions apply: they pay the registered beneficiaries unless, before distribution, they are given a will that is later than the beneficiary form, refers expressly to the fund or policy, and has been admitted to probate. A general will ('all my property') does not normally change the beneficiaries. Whoever wants the will to control should update the beneficiary form at the fund itself.

There are no beneficiaries on the fund — must we obtain a succession order?

As a rule yes. The exception: under Capital Market Authority circular 2017-9-8, the spouse, parent or child of the deceased may withdraw a low balance — about NIS 8,000, index-linked — without an order if at least three years have passed since the death, they have signed a declaration and an indemnity, and the fund has checked the Registrar of Inheritance's website that no order was issued or applied for.

How do I locate the provident funds and insurance policies of a relative who died?

Through the Capital Market Authority's free searches: 'Har HaKesef' for provident, study and pension funds and managers' insurance, and 'Har HaBituach' for insurance policies. Access is via Israel's national identification system, and the result shows which institutions hold money in the deceased's name — not the amounts. You then apply to each institution with the death certificate, identification, and either proof of entitlement as a beneficiary or an order.

Is tax payable on a provident fund I inherited in Israel?

According to the institutions' and the Tax Authority's publications, the savings component and the gains accrued up to the death are tax-free if withdrawn within three months of the death; gains accruing after that are taxed at 25% of the real gain. Severance-pay money in the fund is taxed at the deceased's marginal rate. For 'Amendment 190' money the exemption is complete if death occurred before age 75; after 75, 15% tax applies to the nominal gain. An alternative to withdrawal is transferring the money to a new account in the beneficiary's name, which is not a tax event. Check with a tax adviser.

I am a beneficiary living abroad — do I need an Israeli succession order?

Where you are registered as a beneficiary on the fund or policy, usually not. The institution pays the beneficiary on the basis of a death certificate (if foreign, apostilled and sometimes translated), identification, and confirmation of a receiving bank account. A beneficiary who is a US citizen or resident may be asked to complete a Form W-9. An Israeli order is needed only where no beneficiaries were registered.

Can the holder of a lasting power of attorney change the beneficiaries on a fund?

No. Israel's Legal Capacity and Guardianship Law provides expressly that an attorney under a lasting power of attorney may not designate beneficiaries for sums payable on the principal's death — provident funds, life insurance and the like. Only the person themselves, while competent, can do that — preferably on the institution's own form.

The above is general information only, current as of the date of publication, and does not constitute legal or tax advice or a substitute for advice on your specific circumstances. Bank and fund procedures change from time to time and should be confirmed with the institution. Consult a lawyer, and where relevant a tax adviser, before acting.

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