You’ve worked most of your adult life, paying into social security in your country of origin and keeping your eye on the future and your retirement. Your Aliyah plan includes collecting those monthly payments after you settle in Israel.
But, Covid 19 has had a huge effect on the world economy and according to predictions by the Committee for a Responsible Federal Budget in the United States, Market Watch, Sept 5,2020- Alessandra Malito, “Social Security is in trouble.” This is sobering news for older new immigrants who are either approaching retirement age or have already retired. “The two trust funds that support the program [in the US], which pays out retirement benefits as well as disability and survivorship benefits, are already at risk of running out of money within the next two decades,” writes Malito.
“Today’s youngest retirees will face a sharp 25% drop in their benefits when they turn 73,” according to the CRFB in their analysis of the Congressional Budget Office report.
Even with the possible threat of a diminished steady income from social security benefits and the, as yet still unknown effects of Covid 19 on world health and the economy, there are still quite a number of ways for Olim to protect themselves both financially and physically in an unpredictable future.
At Hait Family Law we have had the privilege to assist many people in their Aiyah process and have gathered 10 of the things you need to know regarding planning for retirement in Israel.
- Can you collect your US pension or social security while living in Israel?
The good news is that as long as the money lasts in the government coffers of your home country, you are able to collect social security and pension benefits after making Aliyah.The United States and Canada both have a tax treaty with Israel so you will never be taxed on those social security payments. (Another benefit of the treaty is the tax hiatus on foreign income earned during the first ten years after Aliyah. After that, you will be taxed according to US rates, with some possible exemptions.)
- Are retired Olim able to collect Israeli social security?
If you make Aliyah before the age of 60 for women and 62 for men, even though you are entitled to a sum from Israeli Social Security or Bituach Leumi, it’s reduced from the amount distributed to Israelis who have been living and working in Israel for years. If you arrive in Israel after 62 you are not entitled to these payments. There may be a payment if you are impoverished, although it is not age related.
- Are you entitled to health Insurance if you move to Israel at retirement age?
Israel’s Universal Health Insurance, covers the basics (even if you have pre-existing conditions) but it doesn’t cover everything. There are two ways to supplement your healthcare coverage. a) You can expand the basic services in your chosen provider (there are 4 to choose from) for an additional monthly fee. b) You can purchase private insurance which is generally much cheaper than private insurance in the U.S. It’s important to understand the cost and details of healthcare so you can plan your new life in Israel.
- Are foreign wills honored in Israel?
Even though, in general, wills are honored in Israel, an informal handwritten will or one prepared by an unqualified attorney may be subject to challenge because of a number of details. Unclear language, illegible handwriting or missing dates may make it possible for someone to contest your will’s validity, resulting in your money going to someone to whom you didn’t intend. That’s why you need a seasoned attorney who understands both Israeli and foreign law to help you with the preparation of your will.
- What type of wills are honored in Israel?
There are four types of wills that are legally valid and binding in Israel. 1) A hand-written will, signed by you. 2) A death-bed will which is a declaration made by you when you are near death. 3) A will which is drawn up (usually by an attorney) dated and signed by two witnesses. 4) A will that is spoken in front of an authority, like a judge, where your wishes are made clear. Wills may not be honored if they don’t comply with the rules so it’s important to consult with an expert attorney in Israel to ensure your will is honored.
- How should you structure your will if you have assets in Israel and your home country?
Very often, olim leave assets back “in the old country.” Whether they are in the process of selling real estate or they’ve intentionally left the asset there for safe keeping in the long term, it’s very important to know how to structure a will so ownership isn’t challenged.There are two ways to address the holding of assets in Israel and your home country, regarding a will. While a single will is valid in both countries, it also has to be processed in both countries. This involves translating it into Hebrew and having it notarized and validated before it can be executed in Israel. This could add many months and additional cost to your beneficiaries before they receive their inheritance. At Hait Family Law we recommend writing two wills that can be submitted simultaneously, after you pass away, one in your home country and one in Israel, thus reducing the waiting time and the fees.
- What happens to your assets if you die without a will in Israel?
Every country has different laws about what happens to the estate and assets belonging to a person who has passed away without a will. In Israel, if the person is married or has a significant partner their spouse or partner will get half of their assets including half of the family residence. The children get the other half, equally divided. If they don’t have children the spouse will get everything. If there is no spouse, the children inherit everything and if there is no spouse or children the parents are the recipients. Then on to brothers and sisters etc.
While this seems like a pretty fair distribution of assets it may not be the way you would like it to go. Not to mention, if you neglect to make a will there may be irreversible rifts in your family that could have been easily avoided.
- Must a will be submitted to the Registrar’s Office to be valid?
Even though your will is valid without submitting it to the Registrar’s Office, we advise our clients to do so for a number of reasons. 1) It helps expedite the probate of your will because it’s registered under your identity number (teudat zehut). 2) It’s protected from being mislaid or damaged. 3) The fact that you were the one who submitted it to the Registrar of Wills Office makes a strong case that it’s the copy that will be honored.
- What is a Continuing Power of Attorney?
Probably one of the most important tools available to everyone, with significant and more immediate benefits to senior olim, is the Continuing Power of Attorney.
The continuing power of attorney is a document drawn up by a qualified attorney that enables you to protect your finances, lifestyle and health care choices if in the future, you are unable to make these decisions for yourself. You choose someone whom you trust and share your wishes with them, while you are of sound mind and body. They then, will be able to make those determinations on your behalf if need be. Your future medical treatments, eldercare lifestyle and the way in which your money will be handled will have all been decided by you.
The power of attorney only goes into effect if you become unable to make decisions for yourself. Very often, immediate relatives are not aware of the preferences and wishes of a loved one because they never discussed it. And it has happened that family members disagree about crucial matters if there is no directive or appointed spokesperson. It’s a kind action to prepare a continuing power of attorney that could very well save your family from bitter disagreements and future rifts.
To ensure the correct preparation of this empowering document it’s essential to have an attorney who understands all its legal implications and the correct way to file it so it’s available without delay if the need should ever arise.
- Could you lose your house to an estranged child after your spouse passes away?
Unfortunately, it has happened in Israel, that a surviving spouse has lost their house to an estranged child in an embittered lawsuit demanding the selling of the property. Unlike in some western countries where one spouse automatically gets the house when the other dies, here in Israel each spouse owns half. Consequently, the surviving children own equal parts of the half of the house that belongs to the deceased spouse and they can demand to be bought out or that the house be sold to the highest bidder. At Hait Family Law we highly recommend that you have an estate plan and wills in place so that everyone knows what will happen when one of you passes away.