March 20, 2026

Intro (1-2 mins) Emma: Welcome to Tax4US, the podcast that makes complex tax issues simple. I'm your host, Emma, and today we have a very special guest - Ben Ginati, a tax expert specializing in U.S.-Israel tax affairs. Ben, thanks for joining us today. Can you tell our listeners a bit about why we're discussing U.S.-Israel estate taxes on this episode? Ben: Absolutely, Emma. The reason this topic is so important is that we're about to see some significant changes to U.S. estate tax laws in 2026 that will directly impact Israelis with assets in the United States. So it's crucial for anyone in that position to understand how their estate planning may need to evolve to account for these changes. Emma: That's great, Ben. I'm really looking forward to diving into the details with you. Let's start with the first major change - the increase in the U.S. personal gift and estate tax exemption. Segment 1: Increased U.S. Personal Gift and Estate Tax Exemption (2-3 mins) Ben: Sure, Emma. This is a big one. The U.S. personal gift and estate tax exemption amount has been gradually increasing over the past few years, and it's set to keep climbing even higher. Back in 2017, the exemption was $5.49 million per individual. But thanks to the Tax Cuts and Jobs Act passed in 2017, that exemption has steadily risen. In 2022, it reached $12.06 million per individual. Emma: Wow, that's a huge jump! So what does this mean for Israelis with U.S. assets? Ben: It means there's a tremendous planning opportunity. With the exemption now over $12 million, many more Israelis will be able to pass on their U.S. assets to their heirs without triggering any U.S. estate taxes. However, there's a catch - this increased exemption is set to expire at the end of 2025. So in 2026, the exemption is scheduled to revert back to the pre-2017 level, which could be as low as $5 million or even less, depending on future legislation. Emma: I see. So Israelis really need to take advantage of this higher exemption while they still can? Ben: Exactly. Anyone with U.S. assets, whether real estate, investments, or even business interests, should review their estate plan now to ensure they're maximizing the current $12 million exemption. This could involve things like gifting assets during their lifetime or restructuring their holdings to minimize the future tax burden. The key is being proactive, because once 2026 rolls around, the planning landscape will look very different. Segment 2: The U.S.-Israel Tax Treaty (2-3 mins) Emma: That makes sense. Now, you mentioned the U.S.-Israel tax treaty earlier. Can you explain how that factors into estate planning for Israelis? Ben: Absolutely. The U.S.-Israel tax treaty is a critical piece of the puzzle when it comes to estate planning for Israelis with U.S. assets. The basic principle of the treaty is that assets located in the U.S. are taxed in the U.S., while assets located in Israel are taxed in Israel. And to prevent double taxation, a credit system is in place. So for example, if an Israeli owns a vacation home in the U.S., that property would be subject to U.S. estate taxes. But any Israeli assets they own would be taxed in Israel, and they'd get a credit for the U.S. taxes paid. Emma: I see. So it's important for Israelis to really understand where their assets are located and how the treaty applies. Ben: Exactly. Failing to properly account for the treaty provisions in your estate plan could lead to unexpected tax consequences. That's why it's so crucial for Israelis to work with tax professionals who are well-versed in the nuances of the U.S.-Israel treaty. Emma: Got it. So what other key considerations should Israelis keep in mind when it comes to their U.S. assets and estate planning? Segment 3: Reporting Requirements on Foreign Assets (2-3 mins) Ben: Another critical factor is the reporting requirements for foreign assets, both in the U.S. and in Israel. In the U.S., there are forms like the FBAR and FAT