Hawaii is a “Separate Property” State, which generally means that at death assets in your sole name will pass to those you have designated in your will. However, a surviving spouse may elect to take a percentage of your estate, regardless of what your will says, including probate assets, insurance, trust property — depending upon the number of years of marriage. After 15 years of marriage, the spouse may elect a full 50% of your estate. Certain assets are excluded and a rights of a spouse may be waived in advance by agreement, including a prenuptial agreement.In Hawaii, if non-real estate assets in a person’s sole name at death do not exceed $100,000 (not counting the value of any autos), there is no need for a probate, and the assets and any autos may be collected by the rightful beneficiaries or the person named in a will as the personal representative using a simple Affidavit and a certified copy of the death certificate.
Hawaii law allows a married couple, including civil unions, to hold any property, real or personal, as Tenants by the Entirety. This type of ownership has rights of survivorship for a surviving spouse. Hawaii allows any type of property, real or personal, to be titled in this tenancy. Property held by the Entirety is deemed to be owned by the marital unit. Consequently a creditor seeking recovery against only one spouse will in most cases be unsuccessful in attaching any of the property held in this form. Recently, Hawaii adopted a law allowing Tenants by the Entirety property to retain its protected status when transferred into a couple’s revocable trust.
Although Hawaii has a state tax on income, qualified retirement plan income is exempt from state taxation, making it easier to retire in paradise.
In 1999, Hawaii adopted a modified version of the Uniform Health-Care Decisions Act. This law combined the features of a “living will” with those of a durable power of attorney for health care decisions, creating a vehicle for a customized Advance Health-Care Directive.
Hawaii has a complicated system of land transfer and recording. All recording of deeds and other related documents is done at the State level, either in the Bureau of Conveyances system, in the Land Court system, or in both systems. As such, there are no statutory deed forms and a Hawaii attorney will likely be required to assist in preparation of transfer documents to a revocable trust or to another person or entity. Similarly, there are no statutory powers of attorney in Hawaii.
Hawaii has “decoupled” from the federal estate tax regime and imposes an estate tax on a person’s estate at death to the extent the person’s estate exceeds the federal estate tax exemption ($5.34 million in 2014). Thus, the estate of a resident of Hawaii who dies with an estate below $5.34 million will not be taxed. For estates larger than that, the estate tax rate begins at 0.8% and ends at 16%.
If a non-resident of Hawaii has died owning real estate in Hawaii, in most cases the property may be transferred without an ancillary probate, through a simple Acknowledgment of Authority procedure wherein the personal representative in the home state is granted authority to act in Hawaii.
Revocable and irrevocable trusts have been around for many years in Hawaii and assets held in trusts will generally avoid probate. If a probate is required to transfer property in Hawaii, the relatively new changes to the Hawaii Probate Code provide for a less expensive and more efficient probate or intestate administration. Attorney’s fees are no longer based upon a statutory percentage of the value of the estate, and must be reasonable as reviewed by the Court. Most proceedings are handled on an informal basis, without court hearings.
Hawaii recently adopted a Transfer on Death Deed statute, allowing the transfer of real property directly to beneficiaries upon ones death, without probate.