Inheriting Property in France: Receiving Rent in a French Bank Account

To receive rent from an apartment in Israel into a U.S. bank account after the death of an owner, the heir must first obtain a tsav yerusha (probate order) from the family court. This document is the only proof accepted by Israeli banks to unfreeze funds or open a new account. Without this order, no outgoing transfers can be made, and rent continues to accumulate in the deceased’s account, inaccessible to heirs. The procedure is rigid, differs from U.S. practices, and requires precise coordination between the estate attorney, the local bank, and the property manager.

Obtaining the tsav yerusha: the key to unlocking the account

• The tsav yerusha is the central legal document that authenticates heir status with Israeli financial institutions. Issued by the family court, it serves the same function as a probate letter or letters testamentary in the United States. Banks will not process any account modification or transfer request without presenting this document or a certified copy.
• It is crucial to distinguish the tsav yerusha from the tabou (land registry). The tabou proves ownership of the real estate, but it does not unlock financial flows. An heir may be listed on the tabou without being able to access the rent if the tsav yerusha has not yet been obtained. Only the latter authorizes the management of bank assets related to the estate.
• Unlike the United States, where a notarized document often allows for the immediate management of routine affairs after a death, Israel imposes a strict freeze. The law prohibits changing the title of a bank account without the court order. This rigidity protects creditors and other heirs, but it means that the financial management of the rental remains suspended until the end of the probate procedure.

Joint accounts and the freezing of funds after death

• As soon as the death is registered in the population registry, Israeli banks (Mizrahi, Leumi, Hapoalim) automatically freeze checking and savings accounts. For a joint account, this means the deceased’s share is immobilized. The procedure to lift this freeze on the surviving account holder’s share is specific and does not happen automatically.
• The fundamental difference with the United States is significant: in Israel, a joint account does not automatically transfer to the survivor. The deceased’s share becomes part of the estate subject to the tsav yerusha. The survivor cannot simply continue to use the account as before. They must initiate a procedure for partial reopening or closure of the deceased’s share.
• To start this procedure, you must provide the teoudat zeout (national ID card) of the living heir and the death certificate of the deceased. The bank will verify the survivor’s identity and confirm the death. Then, it will wait for the production of the tsav yerusha to authorize the withdrawal of funds corresponding to the deceased’s share. In the meantime, rent continues to enter the account, but it remains blocked.

Unlocking blocked rent: the local banking procedure

• Once the tsav yerusha is obtained, the heir must go to the bank to request the transfer of rent collected since the death. The process involves presenting the order, the heir’s teoudat zeout, and, if applicable, the attorney’s power of attorney. The bank will perform a cross-check between the order and the list of heirs to ensure that the transfer beneficiary has the status of a legal heir.
• This verification is strict. If the tsav yerusha lists multiple heirs, the bank will require signatures from all of them or the designation of a single representative before releasing the funds. The processing time for bank inquiries in Israel is often longer than for a standard international wire. It takes several business days, sometimes more, for the compliance department to validate the request. This wait directly impacts the payment of the property manager, who cannot be paid until the funds are available.
• To avoid a dispute with the manager, it is possible to request the bank to make a partial transfer to an intermediate account managed by the estate attorney. This account will be used to pay current expenses and the manager, while the balance remains blocked until the final distribution. This method secures the payment chain without violating estate rules.

Opening an account in Israel with the heir’s teoudat zeout

• If the heir does not have a bank account in Israel, they must open one to receive the rent. The essential condition is possession of a teoudat zeout. If the heir is a foreign resident without an Israeli ID, they must obtain this document via the population office or a specific consular procedure. Without a teoudat zeout, opening an account is impossible.
• It is impossible to open a bank account in Israel with a U.S. driver’s license or passport alone. Banks require the local ID document. This is a major difference from the United States, where a passport is often sufficient. This local requirement makes the procedure longer for heirs based in the U.S. To understand the detailed steps, consult our guide on How to open a bank account in Israel when you are a non-resident.
• The distinction between a « resident » account and a « non-resident » account has a direct impact on fees. A non-resident account can be more expensive to maintain, and international transfers may be subject to additional checks. It is recommended to open a dedicated account for rental management, separate from personal accounts. For details on specific rental management, see Opening a bank account in Israel: rental management.

The international transfer: from shekel to dollar

• During the SWIFT transfer to the United States, the conversion of the local currency (shekel) to the U.S. dollar happens automatically. Exchange fees are applied by the issuing bank in Israel and the receiving bank in the U.S. It is important to verify the exchange rate applied, as it may differ from the market rate. Fees can be significant if the amounts are low.
• To justify the origin of the funds to compliance services, it is recommended to include precise references in the transfer description. Mentioning the nature of the funds (rent) and the reference number of the tsav yerusha helps accelerate processing. Although the shtar ’hov (promissory note) is not a transfer document, it can serve as proof of the rental relationship if the bank requests additional documentation on the origin of the income.
• Israeli anti-money laundering (AML) controls are strict on outgoing flows. If the amount is unusual compared to the account history, the bank may require additional documentation. This can delay the transfer by several days. It is therefore advisable to group rent over a longer period before making the international transfer, to reduce the frequency of checks and associated fees.

The role of the property manager in the continuity of collections

• GII can continue to collect rent via a pass-through account during the probate procedure. This solution avoids any breach of lease or dispute with the tenant, who should not be informed of the details of the estate. The tenant pays as before, and the manager ensures the continuity of service. This approach is crucial for preserving the rental relationship and avoiding missed payments.
• The manager keeps a separate collection register for each heir, facilitating the later sharing of income according to the shares defined in the tsav yerusha. This register is a clear accounting document that allows the estate attorney to verify the amounts received and proceed with the final distribution. It eliminates ambiguities and disputes between heirs over rental income.
• Coordination between the manager, the estate attorney, and the bank is essential to secure the payment chain. The manager informs the attorney of collections, the attorney coordinates with the bank for the unfreezing, and the manager ensures the maintenance of the property. This fluid collaboration is detailed in our property management offer, which includes the management of legal and financial aspects related to the estate.

Tax implications of transferring funds to the United States

• Rental income received in Israel must be declared in the United States if the heir is a U.S. tax resident. The origin of the bank account (Israel or U.S.) does not change the declaration obligation. You must declare the gross amount of rent, then deduct deductible expenses (condo fees, maintenance, management). The method of calculating the tax depends on the heir’s status and U.S. tax rules.
• The risk of double taxation exists. A tax treaty between the U.S. and Israel applies to real estate income. It is necessary to verify if the treaty provides for exclusive taxation in the U.S. or in Israel. In general, real estate income is taxed in the country where the property is located (Israel), but it may be credited in the U.S. to avoid double taxation. You must consult a tax expert to determine the exact treatment and applicable tax credits.
• The transfer of funds itself is not taxable, but the income generated by the property is. It is important to keep all proof of payment for rent and expenses. These documents will be necessary to justify the amounts declared in the U.S. and in Israel. Coordination with the Israeli tax authority (reshut ha-misim) may be necessary to obtain a non-taxation certificate or tax credit.