The Law: Property Relations Between Spouses, 1973

Historical Background

The Property Relations Between Spouses Law, 1973 came into effect on January 1, 1974, replacing the previous law established by the Women's Equal Rights Law, 1951. The old law relied on the "presumption of sharing" - the assumption that assets acquired during marriage belong to both spouses equally. The Property Relations Law created a clearer framework, with the option for spouses to set their own arrangement through a prenuptial agreement.

The law applies to every couple married from January 1, 1974 onward. Couples married before that date are subject to the previous law (presumption of sharing).

Section 3: Freedom of Agreement

Section 3 of the law establishes the central principle: spouses may determine their property relations through a prenuptial agreement. The agreement can cover any financial matter - assets, debts, pensions, businesses, inheritances, and more. The freedom of agreement principle allows spouses to create a customized arrangement that reflects their unique circumstances.

Section 5: The Resource Balancing Regime (Default)

When there is no prenup, Section 5 applies - the "resource balancing" regime. Under this section, upon dissolution of the marriage (divorce or death), each spouse is entitled to half the value of all the couple's assets, except for non-balanceable assets.

It is important to understand: resource balancing is not a physical division of assets. It involves calculating the value of all assets and making a balancing payment - so each party receives half of the total value.

Section 5(a): Non-Balanceable Assets

Section 5(a) defines assets that are excluded from resource balancing:

• Assets that belonged to the spouse before the marriage
• Assets received as a gift or inheritance during the marriage
• Benefits paid to one spouse by the National Insurance Institute

However - and this is the critical point - ruling BA'M 5620/24 (2025) established that even "non-balanceable" assets may be divided if the spouses treated them as joint property. Therefore, the protection of Section 5(a) is not absolute without a prenup.

Section 8: Deviation from Equal Division

Section 8 allows the court to deviate from equal division "if it finds special circumstances justifying this." The court may award one spouse more than half the assets, for example:

• When one spouse depleted joint assets in bad faith
• When there is a significant gap in earning capacity
• When the marriage was very short

Section 15: International Jurisdiction

Section 15 establishes international jurisdiction rules: the Israeli court has jurisdiction over property relations between spouses if one of the following conditions is met:

• Both spouses are Israeli citizens
• Both spouses are Israeli residents
• The property is located in Israel
• The marriage took place in Israel

This section is especially important for new immigrants and binational couples, who may be subject to the laws of more than one country.

Key Amendments

The law has undergone several amendments since its enactment, including expanding the definition of "assets" to include pension rights, business goodwill, and professional licenses. Amendment 4 (2008) added the option to perform resource balancing even without divorce, when four years have passed and the spouses are living separately.