Property Regimes

What is a Property Regime?

A property regime is the set of rules that determines how assets and debts are divided between spouses. In Israel, the Property Relations Between Spouses Law, 1973 allows spouses to choose the regime that suits them through a prenup. If no agreement is signed, the default regime applies - resource balancing.

Full Separation

Under a full separation regime, each asset belongs to the spouse who acquired it. What was yours before the marriage stays yours. What you acquired during the marriage with your own money is yours.

Advantages:

• Maximum protection for personal and business assets
• Significant purchase tax savings (breaking the "family unit" classification)
• Complete clarity - no disputes over ownership

Disadvantages:

• May create a sense of inequality, especially if one spouse has significantly more assets
• Does not account for non-monetary contributions (childcare, household work)

Suitable for: Business owners, second marriages, those seeking maximum protection and tax benefits.

Full Sharing

Under a full sharing regime, all assets belong to both spouses equally, regardless of who acquired them or when. Assets from before the marriage become joint property.

Advantages:

• Complete equality between spouses
• Simplicity - no need to track who paid for what

Disadvantages:

• No protection for personal assets
• No tax advantage
• Can create problems in second marriages with children

Suitable for: Couples who want full equality and who do not have significant assets from before the marriage.

Partial Sharing (Most Common)

The most popular regime in Israel. Partial sharing allows flexibility: some assets are defined as personal and some as shared. For example:

• Apartment purchased before the marriage - personal property
• Apartment purchased during the marriage - shared property
• Business established before the marriage - personal property
• Savings accumulated during the marriage - shared property
• Inheritances - personal property

Advantages:

• Balance between protection and equality
• Flexibility - tailored to specific circumstances
• Tax benefits possible while maintaining fairness

Suitable for: Most couples. Allows protecting specific assets while sharing in building a joint future.

Custom Arrangements

The law allows significant creativity. Examples of special arrangements:

• Fixed compensation - instead of dividing assets, a predetermined cash amount
• Graduated mechanism - the longer the marriage, the greater the sharing
• Minimum protection - guaranteeing a minimum amount for each side, regardless of assets
• Residential protection - guaranteeing housing rights for the spouse raising children

Pension Options

The pension question is one of the most complex issues in prenups. The options:

• Full separation - each spouse keeps their own pension
• Full sharing - pensions are divided equally
• Sharing for the marriage period - only amounts accumulated during the marriage are divided
• Alternative compensation - instead of dividing the pension, compensation through another asset

Important: pensions are often the couple's largest asset, even if it does not feel that way. Explicit regulation in the prenup is essential.