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Electricity Prices go down!

Electricity GuysIt’s time for a celebration when prices go down in Israel! So let’s party, because the Electric Authority has voted unanimously to lower its rates as of Feb. 15, 2010 to the tune of almost 10% to residential customers.

The new 41.32 agorot price per kilowatt hour is a 9.6% reduction from the previous price of 43.59 agorot. Commercial and public institutions will see an even higher drop of 16.3%.

The change was meant to happen back in April, 2009 but was postponed. There was a fight this time too, but the Manufacturers Association, the Federation of Israeli Chambers of Commerce and the Israel Consumer Council pushed for the cut. It’s intended to reflect the real cost of production (which is a requirement).

But just because the rates are dropping, please don’t run to use more! Using the same amount of electricity could afford you a 9.6% reduction in your bill without lifting a finger, the best possible savings!

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Posted in Budgeting, Saving Money. Tagged with , , .

What happens to your home after you die?

Elana_H_BilligMy colleague Attorney Elana Billig has put together an important document called “What Buyers Should Know About the Ownership Structure of Their Home in Israel.” She has kindly agreed to let me reprint it here on the blog.

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As an attorney handling, amongst other areas of law, purchases of Israeli real estate by many foreign residents as well as olim, I am often asked, “So, when I turn 120, does the ownership of our Israeli home automatically go to my spouse?”

While the answer to the above query may be affirmative in many foreign jurisdictions where property is held in joint tenancy with right of survivorship (which in short means that each owner has an equal right to share in the use and enjoyment of the property during their lifetime and upon the death of one owner, the other is entitled to the full ownership of property), clearly this is what the typical Anglo Israeli homeowner expects and is hoping to hear.  However, this is generally not the case in Israel.

In Israel, absent specific structuring of the purchase agreement, or a prenuptial agreement, or the like, when a married couple purchases a property, the ownership is registered in equal shares, and each spouse is recorded as a 50% owner of the asset.

Upon the death of one of the homeowners, the 50% ownership in the asset would be divided in accordance with their Last Will and Testament. However, in the absence of a valid will, that person’s 50% ownership would be divided in accordance with the rules of intestacy (defined as dying without a valid will).

Therefore, in Israel, when a person who is married and has children dies without a valid will, then the law would grant the surviving spouse half of the deceased spouse’s ownership in the home, and the children of the deceased would receive, in equal amounts, the other half of their deceased parent’s interest.

In Israel, in the situation where one spouse dies without children or parents, and without a valid will, the surviving spouse would receive the percentage as prescribed in the relevant law of the deceased spouse’s 50% ownership, and the deceased spouse’s siblings would also receive a predetermined percentage of the deceased’s 50% ownership. The relevant laws of intestacy continue to set forth a wide range of other scenarios about who the lawful heirs would be, and concludes with what happens in the situation when an individual dies with no lawful heirs.

Thus, in the absence of a valid will or other contractual or prenuptial agreement, a grieving spouse may be in a situation where he/she will have to seek permission of his/her own children, in-laws, or some other lawful heirs of the deceased, to continue living in their home.

An unfortunate and complicated situation such as this could be avoided through the drafting of a will which sets forth what will happen to the home, as well as other assets, upon the death of a homeowner. Israeli law allows for an individual, if he/she so desires, to draft a will which would bequeath his/her proportionate ownership in the home initially to the spouse, and upon the surviving spouse’s death, to their children or some other beneficiary.

A provision such as this would allow a married homeowner to feel comfortable that his/her spouse can remain in their home, and that his/her children or whoever else they specifically want, will subsequently inherit his/her interest in the home.

Note: This article relates to married couples as recognized by the Interior Ministry of the State of Israel. An entire article could be dedicated to the topic of others potentially recognized as spouses for inheritance purposes.

This article is for informative purposes only and in no way is to be construed as legal advice or a legal opinion. Elana H. Billig, Adv. is an Associate at Gideon Koren & Co., Law Offices and Notary. Should you have any questions or comments regarding this article, feel free to contact Adv. Billig by email at elana@gkl.co.il.

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Posted in In the News. Tagged with , .

My podcast from Rusty Mike Radio

radioI’ve just posted the audio from my appearance on Nettie Feldman’s “Afternoon Shmooze” on Rusty Mike Radio. Click on any of the buttons below to listen. Enjoy!

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Posted in Budgeting, In the News, Saving Money. Tagged with , , , .

One week to drop your HOT or YES subscription

YESFlash: if you’ve been thinking about canceling your HOT cable or YES satellite subscription to save money but have been locked into a yearly contract, you have one week in which you can do so without a penalty. The HOT smalldeadline is January 9 for HOT and January 12 for YES.

The reason is what’s being called the “Hallmark Clause.” According to the regulations of the Council for Cable TV and Satellite Broadcasting, reported in today’s Jerusalem Post, any time a service provider decides to remove a channel from their listings, customers have the right to cancel their subscription, provided they cite the removal of the channel as the reason.

The Hallmark channel was removed last week, triggering the clause, but ironically it wasn’t HOT and YES that wanted to drop Hallmark. Hallmark’s parent – NBC Universal – pulled it off the airwaves due to lack of revenue.

Another reason you might want to consider dropping your tie to cable or satellite: there is proposed legislation that will allow the two to broadcast commercials. If advertising on Channels 2 and 10 is any indication, that means a lot of long and intrusive breaks in the middle of movies and TV shows. Yech.

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Posted in Saving Money. Tagged with , , .

I’ll be on Rusty Mike Radio Dec. 31

RustyMike-logorI wanted to let you know that I’ll be appearing on Nettie Feldman’s Afternoon Shmooze program on Rusty Mike Radio Thursday, December 31 at 3:00 PM. We’ll be talking about how to manage your money, set up a family budget, and keep your expenses down.

Rusty Mike Radio is an Internet-only radio station that broadcasts out of the offices of the AACI in Jerusalem. The station mixes music and chat; Nettie’s show takes on a variety of useful – and sometimes controversial – topics, from religious-secular couplings to the pressure of body image in our society.

To tune in, go to www.rustymikeradio.com and click on the “Listen Live” button. To join the discussion, click the “chat” button on the Rusty Mike Radio website.

One nice feature about Rusty Mike is that they archive most of their talk shows and put them online for download. So if you can’t tune in live wait a few days and then check out this link.

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Posted in Budgeting, In the News. Tagged with , , .

No mortgage tax breaks = good news for Israel

TaxCreditThere was an interesting article in The Jerusalem Post a couple of weekends ago that presented another take on why Israel has come out relatively better from the global financial crisis (see my previous post here): we don’t have tax breaks for household mortgages.

When we first made aliyah, we couldn’t believe that, not only did you have to put 60% or more down on a mortgage, but that it wouldn’t help reduce your income taxes. We kept waiting for the day when Israel would “see the light” (and indeed, now-faltering insurance giant AIG did enter the Israeli market a number of years ago, though we never took advantage of its services).

The problem in countries other than Israel is that these mortgage tax breaks encouraged citizens from the U.S. to Australia to place a disproportionally large share of their savings into property, wrote Pinchas Landau in The Post. “This was entirely rational behavior, because the tax system had been rigged to encourage them to do so.”

But when the economy crashed, property investments tanked big time and with them went trillions of dollars of consumer wealth. A more balanced investment strategy would have been far more prudent, Landau claimed. Such as the way things are in Israel.

Nevetheless, Landau’s perspective seems a bit off when looking at wealthy neighborhoods in Jerusalem and the north of Tel Aviv. Still, the vast majority of Israelis’ property holdings are much more modest.

To compare with one of the worst hit U.S. cities, Holon is not Hollywood (Florida, that is).

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Posted in In the News, Saving Money. Tagged with , , .

Government to cancel drought tax?

WaterI’m not sure if this is a good or a bad thing. It appears that the Israeli government is strongly considering freezing the “drought tax” and only reintroducing it next summer.

From a household budgeting perspective, this would seem to be good news. The drought tax was instituted this past summer as a way to encourage Israelis to use less water in the face of years of too little rain and the steady receding of the Sea of Galilee, Israel’s main water source. The tax allotted each household a certain number of cubic meters of water use per month, based on the number of family members at home. Use beyond the maximum level resulted in tripled rates.

In our house, the tax has worked wonders. By dramatically changing the way we shower and wash dishes, in particular, not only has our water bill dropped to its lowest amount ever, but we feel like we’re contributing to a vital national need.

The freezing of the tax is apparently coming from Knesset members who are giving in to their constituents grumbling about how the tax affects families and individuals but not businesses or government gardens. The media has also been highly critical. But dropping the tax is expected to create a NIS 1.2 billion hole in the national budget.

Usually I’m the first to applaud a change in the law that results in lower prices for consumers. But I’m torn here. There are times when the greater good outweighs individual financial concerns, and this clearly seems to be one of those cases.

Of course, one could argue that citizens should be cutting down on their water use voluntarily to help the country with its “liquidity” problems. But we all know that unless there’s a mountain being held over one’s head, the average Israeli is unlikely to give up a long hot shower so that there’s something left to drink in another year.

Should we start a counter protest – an anti-populist crusade to keep the tax intact?

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UPDATE: since I wrote this article, the government has proposed increasing the regular water rates by up to 40% in the coming months. While this will clearly curtail excess water use, it seems to me to be vastly less fair than a tax that rewards specific behaviors. I’ll keep you posted as to what the government ultimately chooses to enact.

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Posted in In the News, Saving Money. Tagged with , , , .

Israeli banking to be explored on Internet radio

Rusty Mike LogoNettie Feldman who produces the “Afternoon Shmooze” talk show on the Israeli Internet broadcaster Rusty Mike Radio has planned an episode this week on Israeli banking tips.

The line up sounds very interesting:

  • Darron Green will explain how Israeli banking differs from other countries
  • Disgruntled customers will share their tales of woe, including Maale Adumim resident Irwin Blank
  • Mercantile Bank’s Matti Munk will address some complaints
  • JP economics editor Sharon Wrobel will tip us off on how to work the system

The show airs Thursday Oct. 29, between noon – 2:00 PM Israel time.

To listen, go to www.rustymikeradio.com and click on the “Listen Live” button. To join the discussion, click the “chat” button on the Rusty Mike Radio website.

If you miss the episode, it’s available as a podcast at: http://rustymikeradio.com/podcast/rm_podcasts.php?action=frontpage&search_string=nettie

Obviously I haven’t heard the show yet, but I’ll be listening!

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Posted in Budgeting, Israel, Saving Money. Tagged with , .

Cancel your cable? The price just doubled

HOT IsraelOne great way to save some money is to cancel your cable. The cable companies here in Israel are understandably not so interested in making that easy for you.

Last week, the cable television provider HOT doubled its fine for early termination, from NIS 240 to NIS 480. But that’s not all. The company is charging you NIS 45 per month for the amount of service you received before your contract is up.

So, for example, if you have a two-year contract and you want to end your service after only one year. HOT will charge you NIS 45 x 12 or NIS 540 – on top of the NIS 480 cancellation fee. That’s a total of NIS 1,020!

Over at YES, the fines are already high  – at NIS 402. The monthly cancellation “extra” hasn’t been implemented, but I wouldn’t be surprised if YES can’t resist keeping up with the Hotties.

Haaretz suggests that HOT’s increases stem from the competition involving a new digital television converter which will give viewers digital quality access to the free channels (1, 2, 10, 33 and 99) for no charge. The fine increases supposedly will bandage the hemorrhaging.

My advice: check when your contract expires. If you’re getting close to the end and you want to cancel, that’s the time. With so much available online, maybe you don’t need expensive cable. And if you do decide to keep your cable or satellite access, don’t be afraid to renegotiate with your provider. We just did that with YES and got the monthly bill down NIS 25 just for inquiring about termination fees!

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Posted in In the News, Saving Money. Tagged with , , , , .

How is Israel weathering the global economic storm?

FischerPeople often ask me, how is Israel weathering the global economic storm? Well, according to Bank of Israel head Stanley Fischer in an interview in today’s Haaretz, the recession in Israel is officially over.

That doesn’t mean that things will improve overnight. Unemployment generally lags behind increases in spending, as it takes time for companies to gear back up after months of sustained layoffs.

“Can we sit back and relax now? To a certain extent,” Fischer said in a separate interview with The Jerusalem Post. “But we should not exaggerate. Over the next two years we are likely to feel the repercussions of the crisis.”

How did Israel pull out so quickly? In part, because we didn’t have a sub-prime mortgage crisis. I used to bemoan the fact that we couldn’t put 5-10% down and own a house. In Israel, 60% down was the rule. But that seems downright smart these days.

We also didn’t have any banks fail during the crisis. BOI chief Fischer bought millions of U.S. dollars – what’s known as an expansionary monetary policy – which shored up the shekel to dollar exchange rate in favor of Israeli exporters. Fischer expects that today’s NIS 3.7 to the dollar will go up soon.

Ironically, another reason Israel fared relatively well: the national elections earlier this year. “The entire nation was being run until mid-year by the budget for 2008,” Fischer told Haaretz. That meant no new spending could be authorized. “Even if it wanted to, the government couldn’t squander money.”

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Posted in In the News, Israel, Saving Money.