A trust for a child with a disability – how it works in Israel

Special Needs Planning · November 4, 2026 · 8 min read

The short answer

A trust (ne'emanut) lets parents and grandparents decide in advance who will hold money meant for a child with a disability, what the money will be used for, and who will oversee it. Under section 1 of the Trust Law, 5739-1979 (Hok HaNe'emanut), a trust is a relationship to property under which a trustee must hold or deal with it for the benefit of a beneficiary or for another purpose. The money does not pass to the child directly and does not become a sibling's property: it is held by a trustee, who must, subject to the terms of the trust, keep it separate from other assets (sections 3(c) and 11).

A trust can be created in a will, taking effect after death, or during lifetime – by an endowment deed (ktav hekdesh) signed before a notary, or by a contract with a trustee. Either way, what the trustee may and must do is written in the document and in the law, rather than resting on an unwritten family understanding.

1. What a trust is under Israeli law

A trust involves three roles: the person who creates it (the parent or grandparent), the trustee (ne'eman) who holds and manages the assets, and the beneficiary (nehene) – the child for whose benefit the trust exists. Under section 2 of the Law, a trust is created by law, by a contract with a trustee, or by an endowment deed. Family estate planning uses the last two.

Several provisions matter especially for a child with a disability:

• Assets stay in the trust. Income from the trust assets and assets that replace them are also trust assets (section 3(a)), and trust assets can be reached only for debts charged on them or arising from the trust's own activities (section 3(b)).
• Separation. The trustee must hold trust assets separately from other assets, or in a way that allows them to be told apart (section 3(c)).
• Registration. Where the trust holds a registered asset, such as an apartment, the trustee may notify the registrar of that register, who records a note (section 4). Once the note is recorded, the trust is effective against the whole world (section 5).

2. A trust in a will and a lifetime trust

Under section 17(a) of the Law, an endowment (hekdesh) requires a written document – an endowment deed – in which the creator states the intention to create it and sets its purposes, assets and terms. The document may be one of three: a deed signed by the creator before a notary; a will, other than an oral will; or a payment instruction for the purposes of section 147 of the Succession Law, 5725-1965 (Hok HaYerusha). Section 147 deals with amounts payable on a person's death under insurance, a pension fund or a provident fund, which are not part of the estate unless it was stipulated otherwise (a deceased person's pension fund).

A trust can also be created by contract with a trustee (section 2). Chapter B of the Law (sections 17–24) deals with trusts under an endowment deed; in a trust by contract, the terms – including changes and termination – are set in the contract, alongside the general provisions of Chapter A.

Where both parents make mutual wills, the trust chapter is usually written into the wills themselves – see mutual wills in Israel.

3. Who can be a trustee – and who protects the child's interests

Under section 21 of the Law, the trustee of an endowment is appointed in the deed or under it, and only with their consent. A minor, a person declared legally incompetent, a bankrupt and a company under a winding-up order cannot be a trustee, and a beneficiary of the endowment cannot be its trustee unless the deed allows it. A trustee can be a family member, a friend or a professional, and several trustees can be appointed – they then act together and, if they disagree, according to the court's directions (section 9(a)(1)). The Public Trustee (HaNe'eman HaTziburi) may also serve as trustee (section 36(b)).

The trustee's duties. The trustee must safeguard the trust assets, manage them and work to achieve the trust's purposes (section 10(a)), acting in good faith and with the diligence of a reasonable person in the same circumstances (section 10(b)). The trustee may not delegate their functions (section 10(d)) and may not derive any benefit from the trust assets for themselves or a relative (section 13). The trustee must keep accounts and report to the beneficiaries once a year and at the end of their term (section 7). These duties, like separation, the bar on delegation and the no-benefit rule, apply subject to the terms of the trust (section 11).

Fees. A trustee is not entitled to a fee unless acting as trustee is part of their occupation or the court sets a fee; the trustee is entitled to reimbursement of reasonable expenses (section 8). This too is subject to the terms of the trust (section 11), so the deed can address it.

When a trustee cannot continue. A trustee may resign by written notice; the resignation of a sole trustee, or of one appointed by the court, needs the court's approval. The court may remove a trustee who has not performed their duties properly (section 22). Where there is no trustee or the trustee cannot act, the court may appoint one (section 21(b)), and in the meantime the Public Trustee may take steps to protect the assets and the beneficiaries' rights (section 24). This is why the deed usually also names a replacement trustee.

Oversight. Any trustee, beneficiary, creator of the trust or other interested person may apply to the court (section 39), and the court may give the trustee directions at any time (section 19(a)). Where a beneficiary cannot assert their rights because of age, health or a mental or physical impairment, the Public Trustee may represent them towards the trustee (section 40). The competent court under the Law is the District Court (section 37). In practice, the deed also sets out who in the family receives reports from the trustee, and how often.

4. What the endowment deed sets out

• The purposes. What the money is for – housing, care and therapies, leisure, education – and what should be preserved in the child's routine.
• Payments. When and how the trustee spends money for the child, and what is left to the trustee's discretion.
• The trustee, the replacement trustee and who receives reports. See section 3 above.
• Investment. The trustee must hold or invest money not needed for current needs in a way that effectively preserves the capital and produces income (section 6), subject to the terms of the trust (section 11).
• What happens at the end. Who receives what remains after the child's lifetime – for example siblings or grandchildren. If one of the trust's purposes is to promote a public cause, it is a public endowment, and the trustee must notify the Registrar of Endowments (Rasham HaHekdeshot) within three months (section 26(a)) and file reports with the Registrar (section 29).

A beneficiary's rights under an endowment cannot be assigned, pledged or attached, unless the deed allows it or the court permits it in the circumstances set out in the Law (section 20). The court may also allow the assets to be used for the beneficiary's essential needs, even if this departs from the deed (section 19(b)).

Letter of wishes. A letter of wishes is not a term found in the Trust Law. In practice it is an accompanying document in which the parents tell the trustee about the child – their routine, the people close to them, what calms them and what matters to them. Provisions meant to bind the trustee are written into the endowment deed itself, which sets the endowment's purposes, assets and terms (section 17(a)).

5. A trust, leaving money to the child directly, or leaving it to a sibling

Advantages and disadvantages

Leaving money directly to the child. A guardian appointed for the child may do whatever is needed to perform their role, but certain acts – for example a transaction in an apartment or other real estate – need prior approval under section 74A (section 47(a) of the Legal Capacity and Guardianship Law). The guardian must hold or invest funds not needed for current needs in the ways set by regulations or ordered by the court (section 50), keep accounts and report to the Administrator General (Apotropos Klali) unless exempted by the Administrator General (section 53). Under the Administrator General's notice of 11.12.2025, guardians who are family members file an inventory of assets (prata) and a cost-of-living budget (sal mikhya) and are exempt from annual reports unless a supervisor specifically requests one. Under a notice of 6.5.2026, a request to exceed the investment limits is filed online with the Administrator General instead of with the court.

How the child will be supported in managing their affairs as an adult – a lasting power of attorney (yipui ko'ach mitmashekh), a decision-making supporter or a guardian – is considered separately from the trust and alongside it. See Turning 18: guardianship, supported decision-making or a lasting power of attorney.

6. A "special needs trust" from the US or the UK

Families from English-speaking countries are often familiar with the term "special needs trust", and some already have one, set up under the law of the country they came from. A trust under the Israeli Trust Law sounds similar, but what applies to one cannot be assumed to apply to the other.

What a US special needs trust is – general information

In the US, a "special needs trust" is a trust that holds assets for a person with a disability, structured so that the assets can be used for the person without being counted as the person's own resources for means-tested programmes such as SSI (Supplemental Security Income) and Medicaid. The exceptions for these trusts are in 42 U.S.C. §1396p(d)(4) (Medicaid), and SSI applies them through section 1613(e) of the Social Security Act, as explained in the Social Security Administration's Program Operations Manual System (POMS SI 01120.200 and SI 01120.203).

The guidance distinguishes several main types:

• First-party trust: under 42 U.S.C. §1396p(d)(4)(A) – a trust containing the assets of a person with a disability who is under 65, established for that person's benefit by the person, a parent, a grandparent, a legal guardian or a court, provided that on the person's death the State receives the amounts remaining in the trust, up to the total medical assistance paid for the person under Medicaid. Establishment by the person themselves applies to trusts established on or after 13 December 2016 (POMS SI 01120.203).
• Pooled trust: under 42 U.S.C. §1396p(d)(4)(C) – a trust established and managed by a non-profit association, with a separate account for each beneficiary and pooled investment. Amounts remaining on the beneficiary's death that the trust does not retain go to the State, up to the assistance paid.
• Third-party trust: a trust established with the assets of others, such as the parents. The provisions of §1396p(d), including the payback condition, apply to a trust formed with the person's own assets (§1396p(d)(2)(A)). SSA's instructions on trusts containing third parties' assets are in POMS SI 01120.200.

Distributions from the trust can also have an effect. Under POMS SI 01120.200E, cash paid directly from the trust to the person is unearned income for SSI; food or shelter that the person receives as a result of a payment to a third party is, under the instructions, income in the form of in-kind support and maintenance; and payments to third parties are generally not income, subject to the exceptions in the instructions.

According to the same instructions, questions such as whether a trust can be revoked depend on the terms of the trust and on State law, and State trust laws vary. A separate framework is the ABLE account under 26 U.S.C. §529A – a programme established and maintained by a State, for a person whose blindness or disability occurred before age 46.

In Israel, the Trust Law, 5739-1979, is a general law that is not built around eligibility for benefits. A trust is created by law, by contract with a trustee or by an endowment deed (section 2); an endowment deed can be a notarial document, a will or a beneficiary designation under section 147 of the Succession Law, 5725-1965 (section 17(a)). Trust assets are held separately (section 3(c)), and a beneficiary's rights under an endowment cannot be assigned, pledged or attached except as the Law allows (section 20). The effect on Israeli benefits is checked with the relevant authorities.

The information on US law is general only and is not advice under US law; any specific review is carried out in coordination with your advisers in the US.

The Israeli side

No treaty framework for recognition. Israel is not a party to the 1985 Hague Convention on the Law Applicable to Trusts and on their Recognition (according to the status table of the Hague Conference on Private International Law). A trust set up abroad therefore cannot be assumed to operate in Israel as it does in the country where it was created, nor can the reverse be assumed.

What is reviewed on the Israeli side:

• The law that governs succession. Under section 137 of the Succession Law, 5725-1965 (Hok HaYerusha), succession is governed by the law of the deceased's domicile at the time of death, subject to sections 138 to 140. Where the parents' centre of life is in Israel, Israeli law may govern the succession even if the will and the trust were made abroad – see An Israeli will alongside a foreign will.
• Assets in Israel. Assets in Israel pass to the heirs through an Israeli process – a succession order or a probate order – even where there is a foreign will. An Israeli will for the Israeli assets can include an endowment (hekdesh) for the child (section 17(a)(2) of the Trust Law), coordinated with the foreign trust and not contradicting it.
• How the money reaches the child. Where the trustee and the assets are abroad and the child lives in Israel, the review covers how distributions will reach the child. Money paid to the child becomes the child's property, and if a guardian has been appointed, it is managed under sections 47(a), 50 and 53 of the Legal Capacity and Guardianship Law.
• The parents' Israeli documents. A lasting power of attorney for each parent, and the way the child will be supported as an adult – Turning 18: guardianship, supported decision-making or a lasting power of attorney – need to fit with what the foreign trust provides.
• Tax and reporting. Trusts have a dedicated part in the Israeli Income Tax Ordinance (Part E2), and a connection of the creator, the trustee or a beneficiary with Israel may affect tax and reporting obligations. This is reviewed in coordination with your accountant on tax and reporting, and with your advisers abroad.
• Benefits. The effect on benefits is checked with the relevant authorities.

What to bring to the meeting. The foreign trust deed and any amendments; details of the trustee and replacement trustee; the governing law named in the deed; a list of assets and where they are; existing wills in each country; and contact details of your advisers abroad.

Foreign law – the validity of the trust where it was created, its treatment there for benefits, and taxation under that law – is reviewed in coordination with your advisers abroad. See also families in Israel and abroad.

7. Tax, reporting and benefits

Setting up a trust and transferring assets to it are considered in coordination with your accountant on tax and reporting. The effect on benefits is checked with the relevant authorities.

The trust is one part of a wider plan for your child's future, which also includes the parents' wills and lasting powers of attorney – see planning for a child with a disability.

Frequently asked questions

Can the child's brother or sister be the trustee?

Yes, if they consent (section 21(c) of the Trust Law, 5739-1979) and are not disqualified under section 21(d). If the sibling is also a beneficiary of the endowment – for example as the person who receives what remains at the end – they can be trustee only if the deed allows it (section 21(e)). Several trustees can also serve together, for example a family member and a professional (section 9).

Can a trust set up in a will be changed?

Until death, the will is subject to the rules on revoking wills, and the testator may revoke or change it (section 36 of the Succession Law, 5725-1965; section 18(c) of the Trust Law). Once the endowment has begun, it can be changed only if the right was reserved in the deed, with the beneficiaries' consent, or with court approval (section 18(b)), and the court may change a provision where there has been a material change in circumstances (section 23(a)).

What happens if the trustee dies or can no longer act?

The deed usually names a replacement trustee (section 21(a) of the Trust Law). If there is no such appointment, the court may appoint a trustee (section 21(b)), and until then the Public Trustee may take steps to protect the assets and the beneficiaries' rights (section 24). Where there are several trustees, those remaining act at once to fill the vacancy (section 9(a)(4)).

Can the child's creditors reach the money in the trust?

A beneficiary's rights under an endowment cannot be assigned, pledged or attached, unless the deed allows it, or the court permits it to pay maintenance or taxes owed by the beneficiary or, in special circumstances, other debts (section 20 of the Trust Law).

Will the trust affect my child's benefits?

The effect on benefits is checked with the relevant authorities, as part of building the plan.

The above is general information on Israeli law only, current as of the date of publication, and does not constitute legal advice or a substitute for advice on your specific circumstances. Consult a lawyer before acting.

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