Probate & Trust Administration
Settling a loved one's affairs.
Compassionate and
Competent Representation
The obligation to transfer a loved one’s property and settle their affairs typically falls on that person’s “trustee” or “personal representative”. The tasks involve includes paying outstanding bills, collecting and transferring assets, and paying taxes.
As a trustee or personal representative for a loved one, you may be faced with complicated legal and practical issues relating to that loved one’s property, taxes, and family.
With experience and wisdom gained from assisting with hundreds of estates, we can provide you with direction and guidance.
How Property Transfers in Hawaii
After someone dies, their property can transfer in many different ways. Part of the process of settling a loved one’s affairs is understanding how their property will transfer.
A will is a legal document which directs how a person wishes their property to be distributed after death. A will typically nominates someone to carry out the terms of the will, called a “personal representative.” In order for the will to be effective, it must be approved by the probate court, and the court must officially appoint the personal representative. The appointed personal representative then has authority to act on behalf of the deceased person. This includes being able to transfer accounts and sign real estate deeds.
A trust is a legal arrangement to hold property during someone’s life. The person who creates the trust is called a “Grantor” or “Settlor” and transfers property to the trust. The trust survives the Grantor/Settlor. In the trust document, the Grantor/Settlor names a new trustee and gives directions to the new trustee on how to distribute the trust property.
Property can be owned individually or it can be owned with others. When property is owned with others, it’s called co-ownership. There are different forms of co-ownership. One type of co-ownership is called “joint ownership” which comes with “rights of survivorship.” Rights of survivorship mean that the surviving joint owner(s) automatically receive a deceased joint owners share in the property at the deceased owner’s death. In Hawaii, we have a special form of joint ownership between spouses called “tenants by the entirety” which offers more benefits than ordinary joint ownership.
For many types of financial property, such as banking accounts, investment accounts, life insurance and annuities, a beneficiary may be designated. On death, the financial account automatically transfers to the designated beneficiary, subject to policy requirements of the particular financial institution.
When someone dies without signing a will, any property that does not pass by way of trust, title, or designation may be subject to the probate process and will be distributed according to “intestate” laws which act as a default plan for distribution of a decedent’s assets to appropriate heirs.
Probate
Probate is a court proceeding to settle a deceased person’s affairs and transfer title to that person’s property to the correct beneficiaries.
It may be necessary when the decedent died with property in his or her name and that property does not pass by another method such as through a beneficiary designation or joint title.
Probate may be necessary whether or not someone leaves a will. When someone dies with a will, they are said to have died “testate”. When someone dies without a will, they are said to have died “intestate.” When someone dies intestate, then their property passes according to default rules set by statute.
In addition to opening a probate as testate or intestate, probate may be opened along two tracks: informal or formal. Informal probate is meant to be faster and simpler and is used when there is no significant dispute or challenge. A judge is not involved unless requested for a particular reason. Formal probate is used when there is a significant dispute or question. A judge presides over the proceedings.
In combination, there are four ways that a probate may be opened: informal/testate, formal/testate, intestate/informal, intestate formal.
No matter the form of probate, a “personal representative” must be appointed by the court to carry out the tasks necessary to settle a decedent’s estate.
The personal representative has the same authority to act as the decedent had with respect to his or her property. However, the personal representative has legal responsibilities, called fiduciary duties, to look out for the best interest of the estate beneficiaries.
Trust Administration
Trust administration is necessary when someone dies with property held in trust. A trust is simply a legal arrangement to hold property for someone’s benefit.
There are three relationships required for a trust:
Grantor/Settlor: The person who creates the trust
Trustee: The person who takes care of trust property
Beneficiary: The person who receives the benefits from the trust property.
In order for a trust to work, legal title to property must be held by the Trustee. During life, people with revocable living trusts act as their own trustee. When they die, a new successor trustee who is named in the trust document steps in to take care of the property and follow the terms of the trust document.
Administration of a trust can be substantially easier than probate. However, a trustee is often faced with questions about their legal responsibilities, the rights of beneficiaries, property issues, and taxes.
A new trustee ordinarily has a series of tasks that they must complete in order to distribute the trust property to the trust beneficiaries.
What a trustee needs to do can vary significantly depending on the circumstances. Some cases will be simple and straightforward. Others will be more complicated. How complicated a case will be may depend on many of factors such as the number of assets held in the trust, the types and nature of assets held in the trust, the value of the assets in the trust, the number of beneficiaries, and whether there are any outstanding legal issues for the trustee to address.
