A bank account that has more than one owner is defined as a shared account.<\/p>\n
Couples often have a shared bank account. Also, aged parents who need the help of their children to deal with financial issues, usually introduce them as shared owners in their account.<\/p>\n
When one opens such a bank account (or when one adds another owner to an existent bank account), the applicants sign legal documents that include a “Longevity Clause.”<\/p>\n
The Longevity Clause which appears in the legal documents grants every owner of the shared account the right to use the funds of his deceased partner after he passed away.<\/p>\n
As a matter of fact, the account owners instruct the bank what to do with the account in case one of the owners passes away. In most cases, the account owners instruct the bank to let the other owner, who is alive, to operate the account.<\/p>\n
The meaning of the “Longevity Clause” is that the bank will allow the partner who is alive to operate the account including ongoing management, withdrawals, execute payments, etc., although one of the owners passed away, and will not request a probate order or an inheritance order as a condition for its approval.<\/p>\n
The goal of the “Longevity Clause” is to avoid the freezing of the account following the death of one of the owners, and to allow the other owner to keep operating the account as usual till a probate order or an inheritance order will be given.<\/p>\n
The use of “Longevity Clause” became frequent only in recent years and not all the banks allow it. If it is allowed, the clause appears in the account opening documents as default.<\/p>\n
If owners of a shared account want to waive this clause, they must request it explicitly. So if one of them passes away, the bank will not allow the other owner to operate the account. Instead, the bank will freeze any activity in the account till a probate order or an inheritance order will be given.<\/p>\n
A Supreme Court precedent changed the essence and influence of the “Longevity Clause.” The court ruling deals with the case of a deceased woman who had a bank account with large sums of money. A short time before she passed away, she introduced a Jane Doe as a partner in her account. The court ruled that the deceased intention was to give Jane Doe a gift by adding her as an owner of the account, only after her death. The court ruled that according to the inheritance law in Israel one can give a gift during his life, but cannot obligate himself to give a gift after his death. The only way to plan an inheritance differently is by writing a will in accordance with the Israeli law.<\/p>\n
The court distinguished between a bank account which was opened as a shared account \u2013 so the money in the account belongs to all of the owners, and a bank account which was opened by one person who added another owner later \u2013 then one must prove the existence of a gift according to the Israeli gift law.<\/p>\n
The court argued that accepting a different settlement which allows other types of wills that are not recognized by the Israeli inheritance law, like adding another person as the owner of a bank account, might cause vagueness and uncertainty regarding the status of the will. Moreover, it might not follow the purpose of the will \u2013 respecting the wish of the deceased.<\/p>\n
The bottom line is that signing a “Longevity Clause” while opening a bank account, according to which the account balance will be transferred to one of the owners proceeding the death of the other, is not a substitute for writing a will.<\/p>\n
The main reason is that the law does not accept any instruction regarding what will happen to a person’s property after his death, which hadn’t been made by writing a will in accordance with the Israeli law.<\/p>\n
This precedent narrowed the application of the “Longevity Clause.”<\/p>\n
We invite you to contact us and receive legal consulting.<\/p>\n
Note:<\/b><\/p>\n
This article provides general and preliminary information only and should not be construed in any event as legal counseling and\/or as a substitute for legal counseling in respect of any case and its circumstances.<\/p>\n
The above should not be relied upon without consulting with an Israeli lawyer before taking any action or making any decision. The above is true as of the date of its composition, and its veracity may change from time to time.<\/p>\n
Distribution and\/or duplication and\/or photocopying of this document and\/or part thereof without permission are prohibited.<\/p>\n","protected":false},"excerpt":{"rendered":"
A bank account that has more than one owner is defined as a shared account. Couples often have a shared bank account. Also, aged parents who need the help of their children to deal with financial issues, usually introduce them as shared owners in their account. When one opens such a bank account (or when […]<\/p>\n","protected":false},"author":2,"featured_media":674,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[110],"tags":[],"class_list":["post-673","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-inheritance"],"acf":[],"yoast_head":"\n