In Israel many young couples buy their first apartment with help from their parents. The money usually changes hands without any document, on trust. If the couple separates, the question of who that money belongs to becomes one of the hardest disputes.
A gift to whom?
Under the Spouses (Property Relations) Law, a gift one spouse received during the marriage is excluded from the balancing of resources. But when the money is invested in an apartment registered in both names, it is hard to show that the gift was only to the parents’ child. The courts examine the circumstances and sometimes hold that the gift was made to both of you.
Gift or loan?
- A gift: the parents do not expect the money back. The only question is to which spouse it was given.
- A loan: the parents expect repayment and then have a monetary claim even after a separation. A loan without a document is very hard to prove.
How to protect the money
- A prenup providing that the amount from one spouse’s parents returns to that spouse on separation, or that his or her share in the apartment is larger.
- Registration of unequal shares at the Land Registry, reflecting what each of you contributed.
- A gift letter from the parents stating to whom the gift was made, or a signed loan agreement if it is a loan.
How to raise it without offence
Many couples worry that the request will look like a lack of trust. In practice, a clear arrangement protects both of you and your relationship with the parents. Do it before signing the purchase contract, not after. If one of you already owns an apartment, see a prenup when one partner owns an apartment, and for an expected inheritance see prenups and inheritance.
Next steps
Every couple comes with different circumstances, so the agreement should be built around yours. At Paz Israel & Co. Law Office we review your assets, your plans for the future and the right approval route with you. To learn more about the process, see our prenuptial agreement lawyer page, or contact us to arrange a meeting in Tel Aviv, Jerusalem or Modi’in.
This article provides general information about Israeli law and is not legal advice or a substitute for reviewing your specific circumstances.