Family wealth management has always sounded like something more suitable for the absolute wealthiest / high profile people.

In practice, this is one of the biggest misconception since capital and wealth management is relevant to almost every business owner, person holding several apartments, or even in someone who has several properties that are expected to be inherited by him. Every person wants to take care of his children and his remaining property, regardless of the extant of property he has.

There are a number of solutions for this, the best known of which is the Last Will & Testament (“Will“). A legal document, usually drafted by a lawyer who specializes in the field in order to optimally express the manner of distribution of the testator’s estate according to his wishes. In many cases, this is a satisfactory solution (when done correctly). But the Will has a number significant disadvantages. The main one is the fact that it is only presented and comes into effect after the death of the testator, so that if there are disagreements, there is no one to ask. Another disadvantage is the fact that many people make a Will without legal accompaniment, so flaws which are discovered and undermine the credibility/validity of the Will or simply “interpretative” mistakes that leads to disagreements and costly feuds between the heirs. Additional significant disadvantage in making a Will (or perhaps an advantage…? depending on the situation…) is the fact that the heirs of the deceased testator can influence the distribution of the estate assets through an “estate distribution agreement”. There is also the existing limitation in the Israeli Inheritance Law which limits the chain of estate assets distribution to only two future heirs – “Heir After Heir”.

Another solution is a Trust. In this case, the testator establishes a Trust, to which his assets are transferred, several officials are appointed (trustee, custodian, manager, etc.) who are responsible for managing the assets, and the testator and even the heir can enjoy the revenues of the trust during the lifetime of both of them in our example. The main advantage of a trust fund is that it is already established during the life of the testator. He can decide who benefits from the Trust, to what extent, as well as additional instructions for the activity. The Trust also has taxation advantages (but sometimes also disadvantages…), arising from its legal status.

There are cases in which the balance leans towards the solution of opening a private company that will manage the assets of the testator. The advantages of this are that the company has internal mechanisms, established by law, which are responsible for its functioning. The same goes for its activity, its goals, its officials, and their control. Conflict prevention – most family disputes can be resolved by agreement and the “creator” of the trust/private company is still alive so he can resolve the misunderstandings / misinterpretations that arise. It is also possible, through mechanisms internal in the company’s bylaws and management documents, to create dispute resolution mechanisms upon the establishment of the company. The ability to prepare in advance for a possible resolution of a conflict that will minimize the damage and fallout – the solutions are diverse and could be rather simple: implementing the correct clauses in the company’s bylaws as to transfer the shares, differentiation between different classes of shares- control and management shares and other shares and the guidelines of managing the company.

A company is a separate legal entity and therefore has no real effect in the event of death – the company continues to exist in accordance with the provisions of it’s bylaws and this is a good way to avoid potential future conflicts. Orderly transfer of assets – there is no restriction on the transfer of assets more than once, and this is one way to “overcome” the “Heir After Heir” limitations that apply to a Will, as opposed to the existing limitation in the Israeli Inheritance Law. It must be kept in mind that when choosing this type of solution, beyond the fact that high sensitivity is required, it is also required to perform proper professional planning since establishing a company involves different costs and tax implications.

In conclusion, you should consult with professionals and make a proper plan that matches each individual case according to the relevant data and criteria’s.

In recent months, the famous ChatGPT entered our lives. This is a sort of an upgraded search engine, which, unlike Google, does not display links to the search results, but directly the answer. Its answer relies on AI and a search all over the web, in order to find the answer, based on a specially developed algorithm.

First, distinction must be made between ChatGPT and DALL-E 2 and the other AI products that are flooding the market recently. DALL-E 2 and similar tools are AI tools that allow us to create images according to the settings we provide to the tool, and it, based on the settings, creates the image.

The chat, as its name suggests, is a tool for conducting a conversation. A bit like the customer service bot of commercial companies, but much (much) more advanced. The chat allows us to conduct almost a conversation, and receive written answers, and not simply results or links leading to the answer. With the help of the chat ,you can get an answer to general questions such as ‘what will the weather be like in London on 20.5.23?’, ask it for background on a historical event, or even write an article or a business plan in various fields. In addition, you can use chat as a tool for writing a software code or even short stories.

The ease of use, the technology and the many uses that the chat allows us, make it different from other search tools, in that it ‘creates’ the answer. And here lies one of the main problems of this tool. While the Google search engine directs us to other sites, which give the answer, here the chat itself gives the answer, and the user does not know from where or on what basis it was given. This creates a situation in which, in the event of an error, it is not possible to know the source, except for the fact that it was given by the chat. This move creates new legal, moral and ethical questions, which affect the entire industry.

This is somewhat similar to the beginning of the wave of autonomous vehicles, when the question of responsibility arose in the event of an accident involving an autonomous vehicle – is the responsibility upon the vehicle manufacturer or the programmer who wrote the vehicle’s driving and control software. If we compare this to a chat, here questions arise not only in the field of intellectual property, but also the legal responsibility in the case of using the chat and its results. Does a code written by chat belong to the programmer or to Microsoft, the owner of ChatGPT? Is the responsibility for the products on the creator or the owner of the chat?

There will be those who say that this does not make a fundamental change, because many programmers already use GitHub and similar sites, in relation to programming. But this is a tie breaker. In our case, it is not a code that has already been written and is in free use, but a code, or a product, created especially for the user and according to his questions and needs, so that the connection between the product and the creator cannot be severed.

In this case – who will be responsible?

Additional questions also arise in relation to project pricing and transparency vis-à-vis the work client. For example, if a person asks a software company to write a code for him for a certain operation, is he obliged to tell the work client that the code, or the product, was created by the chat?

Moreover, the software firm prices the work according to ‘man hours’. From now on, will the pricing of work in the industry change because it is done, or can be done, by automated tools?

The legislator, as well as the industry as a whole, should take this into account and act accordingly.

And if it seems to you that this is something that has no effect, let’s do a little experiment – after reading the article, will your opinion on it change if you know that it was all written by ChatGPT, in response to the question – what are the legal difficulties in using ChatGPT?

If you’re looking for help managing your family wealth, or if you need more information about family office or HNW services, please feel free to contact us.

Ben Yacov Law Firm

Address: Hamasger 35, tel aviv
Fax: +972-3-6128606
Email: lawfirm@benyacov.com

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Adv. Idan Ben-Yacov of Ben-Yacov Law Firm handles transactions and provides consultation in the worlds of fintech, cryptocurrency and NFTs; family wealth management; real estate; investments in Israel and abroad; privacy law; ongoing corporate representation; startup and mature companies; and more.