The legal nightmare with Migdal: Received 382,000 shekels — and was forced to return every shekel

A dramatic ruling by the Labor Court clarifies a key principle in inheritance and pension insurance law, following an error by an insurance company that proved costly. At the center of the case is the late Avraham Yosef Leizerzon, who was employed at the Independent Education Center and passed away in 2020 while still employed.

Following Leizerzon's death, the insurance company Migdal distributed the compensation funds accumulated in his executive insurance policies among the heirs according to a standard inheritance order. As a result of the erroneous distribution, his son, Simcha Bonim Leizerzon, received a sum of 382,143 shekels. However, according to the law, compensation funds of a deceased employee are intended for dependents only and not for all heirs, and in this case, exclusively for the widow.

When the error was discovered, Migdal paid the full amount to the widow and demanded that the son return the funds. The son refused, arguing that since his father had passed retirement age during his lifetime, the right to compensation had already matured as a proprietary right and became part of the estate's assets. The court rejected this argument entirely and ruled that since the deceased chose to continue working,

"it was the death of the deceased that gave rise to the right."

The court cited a previous ruling and emphasized that Section 5 of the Severance Pay Law is intended to benefit dependents, and therefore the estate has "no part or share" in these funds.

The court also rejected the son's claim that he should be exempted from restitution due to his good faith, noting that Migdal contacted him within just 21 days of the payment. It was determined that this was part of an inheritance he expected to receive and not money he relied on for his livelihood. Ultimately, the son was ordered to return to Migdal the full amount he received, plus shekel interest and legal costs in the amount of 10,000 shekels.