Researchers in the Field

Researchers in the Field / Adam Hofri-Winogradow

Many researchers compete for the prestigious grants awarded by the Israel Science Foundation (ISF). The ISF is the main state body responsible for supporting academic research in Israel. The competition is based on criteria of scientific excellence and includes diverse research fields. Dr. Adam Hofri-Winogradow, a senior faculty member, is one of the lucky few who have received a substantial grant from the ISF.

In 2009, Hofri-Winogradow requested funding from the ISF for a study examining the use of trusts in Mandate Palestine and the State of Israel. The research project was focused on legal history, with economic history angles. “In 2010, I received a substantial four-year grant of over NIS 400,000. To the best of my knowledge, this was the largest grant the ISF had, to that time, awarded a legal scholar,” Hofri-Winogradow recalls. Legal scholars who manage to secure ISF grants usually receive smaller sums than members of other academic faculties. Needless to say, the grant is not a personal gift to the scholar; it is used to cover various costs, such as research assistants' salaries.

We asked Hofri-Winogradow whether the State of Israel should be investing NIS 400,000 in legal research. “In some legal fields,” he replied, “such as freedom of expression and other aspects of constitutional law, the quantity of research is enormous.

However, in some other fields, fields that attorneys and accountants encounter in their daily work, there is hardly any research.” To date, trust law has barely featured in legal studies and research in Israel. “I searched high and low for material, and discovered that the field has been badly neglected in the past. When Israeli  university faculties and non-university law schools provide trusts courses, they are usually given by external lecturers rather than faculty members,” Hofri-Winogradow explains. While trusts practice is varied and increasing, the discipline has rarely been engaged by academics. 

We asked Dr. Hofri-Winogradow to tell us a little more about the contents of his research project. The project is divided into several articles, some of which have already been published (e.g., in the Law and History Review) while others are due to appear (e.g., in Law and Social Inquiry).

One part of Hofri's research project examines the uses to which Zionist settlers in Mandate Palestine put private trusts. Hofri-Winogradow has discovered that “during the British Mandate, the Supreme Court ruled that private trusts were not then a part of the law of Palestine. Yet Zionist settlers were then making extensive use of trusts, including private trusts.” Even more interestingly,  settlers used trusts to transfer the assets of Germany's persecuted Jews to Mandate Palestine. Hofri-Winogradow explains: “Until the outbreak of the Second World War, Jews could leave Germany but were forced to leave their money and assets behind. Besides the quota system, the British only allowed people to immigrate to Palestine who had a minimum sum of money, which was gradually increased. Accordingly, a Catch 22 situation developed that made it very difficult for Jews to leave Nazi Germany.” The World Zionist Organization created a complex legal structure based on the trust model, thereby enabling some 52,000 Jews to immigrate to Mandate Palestine and bring a large proportion of their assets along.

Another part of Hofri's research project presents a legislative history of the Trusts Act of 1979. “I wanted to expose how our Trusts Act acquired its unprecedented features,” Hofri-Winogradow explains. It emerges that the drafting process took no less than 14 years. The unusual solution incorporated in the Act reflected  Israeli practice more than the orthodox conceptual foundations of the trust, as developed in English or American law. “The Israeli Act is highly unusual, and is, surprisingly, similar to the 2001 Trust Act  [信托法, Xintuo Fa] of the People’s Republic of China,” says Hofri-Winogradow.

The third and final part of Hofri's project is not a piece of legal history. It examines the construction of Israel's trusts taxation regime, added to the Income Tax Ordinance in 2005. “Until 2005, the subject was not fully regulated in Israel,” Hofri-Winogradow recalls. “Many legal experts and professionals reached a conclusion that  irrevocable trusts were tax-exempt, so long as they were not dedicated for unmarried beneficiaries aged 20 or less. Such trusts were therefore  a loophole in the Israeli tax system.” The use of such trusts was one mechanism facilitating Israel’s transition from a poor, socialist society to a richer, less egalitarian one. “When the Tax Authority finally began to formulate a trusts taxation regime in 2002, two attorneys and an accountant who were active in exploiting this loophole joined the Authority’s representatives to work on a legislative regime  closing it down.” Hofri-Winogradow continues: “How did it transpire that private professionals who had profited from a situation where there was no taxation acted in a manner that was contrary to the interests of some of their clients?” He argues that the state needed professionals capable of cracking the tough nut of trusts taxation. “The Tax Authority managed to encourage three professionals to distinguish between their clients’ interests and their own, and to help develop a complex new regime which itself created plenty of work for lawyers and accountants.”

According to Hofri-Winogradow, trust law has so far largely remained “under the academic radar” in Israel. His study is unique in dealing with both the mid-20th-Century realization of Zionism and the current hot-button issue  of Israel's increasingly inegalitarian society. Trusts were and are central to both processes. “The trust is one of the main tools used by High Net Worth Individuals in order to retain and increase their worth,” he concludes.