Prenup and Inheritance - What Happens to Money You Inherited?

Inheritance - Private or Shared Asset?

This question concerns many couples, and rightly so. The Property Relations Law establishes a clear principle: inheritance and gifts received during marriage are not part of asset equalization. On paper, your inheritance is yours. But in practice, things get complicated.

When Is an Inheritance at Risk?

Commingling Funds

If you received a ₪500,000 inheritance and deposited it into a joint account - a court may treat that money as shared. Once inheritance funds mix with joint funds, it becomes very difficult to prove what belongs to whom.

Shared Use

Bought a car with inheritance money? Renovated the shared apartment? Paid off your spouse's debts? Any shared use of inheritance funds weakens the claim that they're "private."

Appreciation

An inherited apartment that was worth ₪1.5 million and is now worth ₪3 million - is the appreciation private? It depends. If your spouse contributed to the value increase (renovation, management, mortgage payments), part of the appreciation may be deemed shared.

What Should the Agreement Include?

A tailored prenup should address inheritance explicitly:

• Declaration that inheritance is private property - not just in principle, but in detail
• Account separation - inheritance should be kept in a separate account, never commingled with joint funds
• Appreciation - appreciation of inherited assets remains private
• Substitutions - if inherited property is sold and another purchased, the new asset is still private inheritance
• Yields - rental income from an inherited apartment, dividends from inherited stocks - private or shared?

Inheritance vs Will - What's the Difference?

Many people confuse a prenup with a will. The differences matter: a prenup governs division between spouses during their lifetime (and in divorce), while a will governs what happens after death. Sometimes you need both.

A Practical Example

Roni inherited an apartment from her grandmother. The apartment was rented, and the rental income was deposited into Roni and her spouse's joint account. After 10 years, when they reached divorce, the spouse claimed the rental income - and therefore part of the apartment's value - was shared. Without a clear prenup, the court had to decide.

With a prenup stating that yields from inheritance are private property - this dispute is avoided entirely.

The Bottom Line

Inheritance is too important to leave to the law's "default settings." Even though the law offers basic protection for inheritance, reality is more complicated. A prenup with detailed inheritance clauses is the safest way to protect what your family worked hard to build.

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