What is a Living Trust?
A living trust, also known as a revocable trust, is a legal document that holds ownership of your assets during your lifetime, and outlines how those assets should be distributed upon your death. Created during your lifetime, you can change or cancel this trust at any time, giving you a high degree of control and flexibility over your future.
How do I create a Living Trust in Hawaii?
At Dynasty, we provide free Trust Creation Platform that will guide you through our digital workflow of creating and signing your Trust, as well as notarization. For those users looking for more advanced solutions, we also offer trustee services, existing trust conversions, and asset transfer assistance.
Creating a Living Trust in Hawaii involves several steps. Here’s a general outline of the process:
- Decide on the Type of Trust: Determine if you need a revocable living trust (which can be altered during your lifetime) or an irrevocable trust (which generally cannot be altered once established). Most people opt for a revocable living trust for its flexibility.
- Choose the Trustee: Decide who will manage the trust. You can be your own trustee (most common), or you can appoint someone else or a financial institution. Also, select a successor trustee who will manage the trust upon your incapacity or death.
- Designate Beneficiaries: Determine who will receive the trust’s assets upon your passing. This could be family members, friends, or charitable organizations.
- Add Specific Assets (Optional): With GetDynasty and some platforms you can also add and track all of your assets you want in the Trust. As well as create specific requirements around who should receive them.
- Draft the Trust Document: This is the foundational step. It involves creating a legal document that outlines all details of the trust, including the trustee’s powers, the distribution of assets, and other provisions. Given the legal complexities, it’s generally advised to consult with an attorney experienced in Hawaii estate planning.
- Notarize and Execute the Trust: While not a strict legal requirement in Hawaii, notarizing the trust document helps prevent challenges to the document’s validity.
- Fund the Trust: Transfer assets into the trust’s name. This might include changing titles or deeds for real estate, changing beneficiary designations on accounts, or assigning ownership rights to the trust. This step is crucial—without transferring assets to the trust, it remains an empty vessel.
How much does it cost to create a Trust in Hawaii?
The cost of crafting a trust varies considerably based on its complexity, the service route you opt for, and even the area in which you reside. Whether you’re looking for a straightforward, self-drafted document or a detailed, attorney-guided Trust, the associated costs can range significantly. Below, you’ll find a pricing table that breaks down the average potential expenses
|Trust Lawyers||Trust Software||GetDynasty|
$2700+ for initial setup. Thousands for additional changes.
What are the main benefits of a Hawaii Living Trust?
- Avoid Probate: Perhaps the most significant benefit of a living trust is that it allows your assets to avoid probate, the often lengthy and expensive court process of settling an estate.
- Privacy: Unlike a will, which becomes a public document once it’s submitted to probate court, a living trust remains private, keeping details about your assets confidential.
- Protection in Case of Incapacity: A living trust allows you to plan for possible mental or physical incapacity. You can designate a successor trustee who can step in and manage your assets without the need for a court-appointed guardian or conservator.
- Ease of Asset Management: With a living trust, your assets are consolidated under the trust’s ownership, which can make them easier to manage than if they were each owned individually.
- Flexibility: Living trusts can be revised, amended, or revoked entirely during your lifetime as your situation or wishes change.
- Continuity of Management: A living trust can provide for a smooth transition of management upon your death or incapacitation. The successor trustee you’ve appointed can take over without the need for court intervention.
- Potential Tax Benefits: For larger estates, certain types of trusts can provide significant estate tax advantages, though this benefit varies based on your specific situation and tax laws at the time.
Do you need a Trust in Hawaii?
A Living Trust, primarily used to avoid the time-consuming and often expensive probate process, ensures that assets are passed on to heirs smoothly and privately. In Hawaii, having a Living Trust can be especially beneficial given the state’s higher property values and potentially lengthy probate proceedings.
However, there’s an exception. Hawaii offers an alternative for smaller estates through the “Affidavit for Collection of Personal Property for the Decedent”. This is referred to in many states as a “small estate affidavit”. If the total value of the estate is below a certain threshold (which can change, so it’s essential to check current limits), heirs might be able to bypass the probate process altogether by using this affidavit. If you qualify for this provision, a Living Trust might not be immediately necessary for the primary goal of avoiding probate.
That said, even if you qualify for the state’s summary administrations, there are other compelling reasons to consider a Living Trust. A Living Trust provides a layer of privacy, as the contents and terms remain private, unlike a will which becomes a public document. It also allows for easier management of assets should you become incapacitated, offering a clear roadmap for trustees to follow.
In conclusion, while Hawaii provides options for those with smaller estates, it’s always a prudent idea to weigh the benefits of a Living Trust. Every individual’s situation is unique, and consulting with an estate planning attorney can provide clarity on the best steps forward for your circumstances.
Does a Living Trust Have to be Registered in Hawaii?
It is required to register your trust with the state of Hawaii, however, very few trusts are actually registered with the state and there seem to be no clear penalties for not doing so. When you create a Living Trust, it still operates primarily as a private document.
However, there are a few important things to note:
- Real Property Transfer: If you are transferring real property (like a home or land) into the trust, you’ll need to record a new deed with the county where the property is located. This isn’t “registering” the trust itself but rather showing the transfer of the asset into the trust.
- Trustee’s Powers: Some institutions might request a copy or certification of the trust to verify the trustee’s powers. This is especially common with banks when transferring assets into or out of the trust’s name.
- Confidentiality: While the deed transferring property to the trust is a public document, the terms and conditions of the trust itself remain private unless litigated in court.
- Taxes: In some situations, the trust might need an employer identification number (EIN) from the IRS, especially if it becomes irrevocable upon the death of the grantor. This isn’t “registering” in the traditional sense but is a necessary step for tax purposes.
- Notice to Beneficiaries: While not an aspect of “registration,” some states have requirements about notifying beneficiaries or heirs when certain actions are taken with respect to a trust, especially when a trust becomes irrevocable. It’s crucial to be aware of any such requirements in Hawaii.
In Hawaii, do I need a Will, if I have a Trust?
In Hawaii, even if you establish a Living Trust, it’s often recommended to also have a “pour-over will.” This type of will ensures that any assets not initially transferred into the trust are directed into it upon the grantor’s death. It acts as a safety net for any overlooked or new assets, although assets not in the trust may still go through probate if they exceed the small estate threshold. Furthermore, a will is essential for those with minor children, as it allows parents to nominate guardians. While a trust manages most asset distributions, a will can specify individual inheritances, like family heirlooms. Together, a will and trust provide a comprehensive approach, ensuring all assets are handled as intended and providing clarity in potential legal challenges. It’s always a good idea to consult with an estate planning attorney in Hawaii to ensure a cohesive estate plan.
Although, with GetDynasty you are able to specify assets and provide detailed descriptions about them similar to a Will. In the event that an asset is not Transferred, your GetDynasty Trust can act similar to a Pour-over-Will as a fallback.
What happens after death with a Hawaii Living Trust?
After a death in Hawaii, if the deceased individual had a Living Trust, several steps and procedures typically ensue to ensure the proper management and distribution of the trust assets. Here’s a general overview of what happens:
- Notification of Death: First, the trustee (or successor trustee if the deceased was the original trustee) should be promptly informed of the individual’s passing.
- Review of the Trust Document: The trustee should thoroughly review the trust document to understand its terms, the beneficiaries’ rights, and the trustee’s responsibilities.
- Gather Important Documents: The trustee should gather all relevant documents, including the trust document, death certificates, financial statements, and asset inventories.
- Notify Relevant Parties: Hawaii law requires that the trustee notify all beneficiaries of the trust and the deceased’s legal heirs within 60 days of the deceased’s death. This notification provides information about the trust and gives recipients the right to request a copy of the trust.
- Inventory and Appraise Trust Assets: The trustee should make an inventory of all trust assets and may need to have certain assets appraised to determine their current value.
- Settle Debts and Expenses: Before distributing assets to beneficiaries, the trustee is responsible for settling the deceased’s legitimate debts and any expenses related to the administration of the trust.
- Tax Responsibilities: The trustee must file any necessary final personal income tax returns on behalf of the deceased. Additionally, if the trust has accumulated income or if the estate exceeds federal estate tax thresholds, respective trust and/or estate tax returns may need to be filed.
- Distribute Assets to Beneficiaries: Once debts, taxes, and expenses are settled, the trustee will distribute the remaining assets to the beneficiaries as outlined in the trust document.
- Finalizing Trust Administration: Once all assets have been distributed, taxes and debts have been paid, and all other trust-related tasks are complete, the trust administration concludes. The trustee may provide an accounting to the beneficiaries, detailing all financial transactions undertaken during the administration.
Remember, the Living Trust is designed to bypass the probate process, which can be time-consuming and costly. While administering a trust comes with its responsibilities and challenges, it often provides a smoother and more efficient means of managing and distributing assets after someone’s death compared to traditional probate.