Couples usually think about the apartment and the bank account. But for most employees in Israel, the largest financial asset after the home is their pension savings. High-tech employees also have options and shares.
What the law says
Under the resources-balancing regime, which applies to most couples married since 1974, rights accrued during the marriage are included in the balancing, and this generally covers pension rights, study funds (keren hishtalmut) and severance pay. The Law on Division of Pension Savings between Separated Spouses allows the fund to divide the rights under a judgment or an approved agreement.
What a prenup can set
- That each spouse’s pension savings remain his or hers, in whole or in part.
- That only the part accrued from the date of the marriage is shared, and how it is calculated.
- Balancing another way, for example by offsetting against another asset instead of dividing the fund.
- What happens to the study fund, which can usually be withdrawn after six years.
Employee options and shares
Options and restricted shares (RSUs) vest over time, sometimes after the separation. Israeli case law has held that rights arising from work during the marriage may be included in the balancing even if they have not yet vested. Without an agreement, the question of what part accrued “during the marriage” may become an expensive dispute. A prenup can set a clear formula. For business owners see prenups for business owners.
Do not forget the other side
A spouse who gives up part of a pension, for example because he or she works less to raise children, must understand what is being given up. An agreement one party did not understand may be challenged later. So each party should receive a full explanation and, where appropriate, separate advice. On the basic rules see Israel’s spousal property law.
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.