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Due to the fact that the State of Israel was only established in 1948, and inheritance tax was abolished in 1981, trusts were not widely used by Israelis for personal tax planning. However, with the influx of new immigrants (already familiar with trusts), the dramatic increase in Israeli High Net Worth (HNW) families, and the constant threat of a reintroduction of IHT, Israelis are now turning to trusts for effective asset protection and estate planning.

It is possible to form an 'Israeli law' trust and indeed there is Israeli trust legislation – the Trust Law 5739–1979 – governing powers, duties, rights and conduct of trustees. However, Israeli trusts are usually deferred in favour of foreign law trusts, which are significantly more appealing to Israeli resident and domiciled HNW families for a number of key reasons.

Section 8 of the Succession Law 5725–1965 states that if one were to create a trust under Israeli law, the trust would become void on the settlor's death and revert to the settlor's