Creating a living trust in Hawaii allows you to control your assets before and after death and maintain a level of privacy not available with probate proceedings. A revocable living trust may be the right fit for you.
Living Trusts in Hawaii
A Hawaii living trust is set up to take ownership of the grantor’s assets. As the grantor, you select a trustee, who can be anyone, even yourself. The trustee is responsible for managing the trust assets and using them for the benefit of the grantor, which means you continue to live in your house, use your funds, and drive your vehicles with no change. After your death, the trustee (if not yourself), or the successor trustee who takes your place, distributes the assets to the people you have selected as your beneficiaries.
When you create a living trust in Hawaii, you choose what assets to place into the trust. Generally the idea is to transfer as much as you can, however special accounts like IRAs, Keoughs, and 401(k)s are not eligible for transfer. The most common type of living trust in Hawaii is a revocable living trust which can be modified or deleted by the grantor during his lifetime. An irrevocable living trust can never be changed once created.
Living trusts allow you to avoid probate for the assets in the trust. Although Hawaii uses the Uniform Probate Code so its procedures are streamlined, probate can take months and incur costs for an executor and attorney fees. Assets passed in a trust can be distributed immediately upon the grantor’s death with no wait and no court procedure. Hawaii offers an even more simplified probate procedure for estates less than $100,000, so if you fall into this category this is likely a less expensive option than a trust.
In Hawaii you cannot disinherit your spouse by placing assets in a living trust. Hawaii law extends the surviving spouse elective share (an option to take property even if not left to the spouse) to apply against a revocable living trust
Do I Need a Living Trust in Hawaii?
Creating a living trust in Hawaii can be part of your estate planning if it fits your needs. One important benefit is that a trust gives you maximum control over your assets during life and even after death. During your lifetime, as the trustee, you handle your assets as you normally would, using them as you wish. After you die, the trust distributes the assets as you have directed and you have the option to space this out over time, giving assets when beneficiaries reach certain ages or achieve specific goals.
A living trust provides protection for you should you ever become mentally incapacitated. Your assets are already in trust, with a trustee or successor trustee in place. Your finances can be managed and your needs met without a conservatorship proceeding.
Many people create revocable living trusts because of the privacy they afford. A will must be probated and become public record. A trust needs no court approval and is effective on its own. The beneficiaries, assets, and terms of the trust never become public record.
Living Trusts and Estate Taxes in Hawaii
Living trusts generally do not shield assets from estate taxes, unless a special QTIP trust, also called an AB or marital trust, is established which passes assets from one spouse to the surviving spouse with no estate tax. Hawaii has a $3.5 million exemption for estate tax and the federal exemption is in excess of $5 million. Only estates over these amounts are subject to estate tax. Note that a revocable trust is not protected from Medicaid spend down laws.
How to Create a Living Trust in Hawaii
To set up a trust you need to have a trust document prepared with all of your details and specifications. You sign the document before a notary public. Finally, you transfer ownership of assets from your name to that of the trust.
Living trusts can be an excellent tool to create control and privacy over family wealth. They can be an important part of your estate planning.
LegalZoom can help you create a Hawaii living trust online in three simple steps. Start by filling out an online questionnaire. We will review your answers, create your living trust, and send your living trust package to you by mail.