Moving into an assisted living facility usually involves depositing hundreds of thousands to millions of shekels. The deposit erodes at 3–5% per year; the remainder is returned to the resident or heirs at the end of the contract.
Types of Deposit Guarantees
The Assisted Living Law (2012) regulates the alternative guarantees an operator must provide:
- Mortgage registration: First-ranking on the operator's property, registered in the name of a trustee or directly to the resident.
- Bank guarantee: A guarantee from an insurance company or bank.
- Trust: Transfer of 40% of the deposit funds to a trustee, with the resident as the beneficiary.
Guarantees for Facilities Under Construction
- Bank guarantee until possession is taken
- Upon taking possession, the resident returns the bank guarantee; the operator registers a warning note regarding its obligation to register a first mortgage
- The operator must fulfil this obligation within two years of residents moving in
What happens to the deposit in an assisted living facility if the operator goes bankrupt?
Israel's Assisted Living Law (2012) requires operators to secure deposit funds through one of three mechanisms: a first-ranking mortgage, a bank or insurance guarantee, or a trust holding at least 40% of the deposit. These security arrangements are specifically designed to protect the resident's funds even in the event of the operator's insolvency, ensuring the remaining deposit can be recovered.
What is a trust in the context of an assisted living deposit?
A trust arrangement in assisted living means that at least 40% of the deposit funds are transferred to an independent trustee, with the resident named as the sole beneficiary. The funds are held separately from the operator's own assets. The trustee is legally obligated to return the funds to the resident or their heirs when the contract ends.
