The legal free rider problem: The inheritance struggle and the siblings who benefited for free
The Haifa Family Court recently ruled on a lawsuit involving a "legal free rider" problem in an inheritance dispute. The court rejected a brother's claim that his siblings had agreed to waive their inheritance rights in his favor, but ruled that it was unfair for them to benefit from his legal victory without contributing to the costs, ordering them to indemnify him.
The author is an attorney, a partner at the Firon law firm, and head of the family law department.
The problem of the "legal free rider" describes a situation where people enjoy the fruits of a legal proceeding initiated by another person without having borne the expenses involved in that proceeding.
This phenomenon is common in inheritance disputes, when one family member initiates a legal proceeding to recognize a will or to grant an inheritance order, and the other heirs receive their share for free following his success.
An unusual inheritance struggle
The Family Court in Haifa recently discussed a lawsuit by a brother against his brother and sister, due to his victory in an unusual inheritance struggle, which we have already covered in the article "The relatives who appear after the inheritance."
The three siblings are cousins of a lonely elderly man who passed away without leaving a will. In a surprising plot twist, the deceased's neighbors approached the court and claimed that they were his heirs by law, since they were born as a result of an affair their mother had with the deceased's father. If the neighbors won, the cousins would be disinherited.
The Family Court ordered a genetic test, which confirmed the neighbors' claim, but one of the cousins decided to fight for the inheritance and objected to the procedure. The cousin succeeded, and the court ruled that the cousins would win the estate.
The neighbors appealed to the District Court and won, but the cousin appealed to the Supreme Court. In the Supreme Court, the cousins and the neighbors reached a compromise agreement regarding the division of the estate.
All the proceedings, which lasted five years and spanned three courts, were financed by the cousin alone, but as a result of his victory, his brother and sister received an identical part of the estate without bearing any burden related to the legal struggle.
Indemnification for expenses
The cousin filed a lawsuit against his brother and sister, claiming there was an oral agreement that he would bear all costs and risks, and in return, he would receive the full inheritance if he won.
The court rejected the lawsuit, ruling that the brother did not prove that his siblings agreed in advance to waive their shares. However, the court ruled that it is not fair that the siblings enjoy the results of the brother's victory while he alone bears the expenses.
Courts have the authority to rule based on the doctrine of preventing "unjust enrichment," and it was determined that the brother and sister would be required to indemnify their brother for his expenses, by agreement or within the framework of a dedicated lawsuit.
Creative solutions
In other branches of law, courts are looking for creative solutions to prevent enrichment at the expense of another person's struggle. For example, in April, the Execution Office registrar ruled that a creditor who conducted a legal struggle to seize a debtor's vehicle would receive priority over other creditors who did not act legally.
In January, the lawsuit of a person who purchased an office in a building under construction was discussed, but the company fell into insolvency. Most buyers united to promote the project, but the plaintiff did not take part. To prevent the plaintiff from enjoying the completion of the project as a legal free rider, the court ruled that receiving possession of the office is conditional on indemnifying the representation for his share of the expenses.
