Ethan R. Okura
Hawai‘i Herald Columnist
Probate is a court proceeding that is necessary in Hawai‘i when a person dies owning any real estate in his or her name alone. Probate is also required when the total value of all “personal property” owned in one’s name alone is worth more than $100,000. Personal property is any asset which is not real estate.
Motor vehicles such as cars, trucks and motorcycles don’t count towards the $100,000 limit of personal property to determine whether a probate is necessary. However, if a probate is required anyway (because the person died with real estate or more than $100,000 in personal property), then the motor vehicles will also be subject to the probate process.
The law requires probate for a good reason. If a person dies, probate ensures that the property goes to the people who are supposed to inherit it. The probate law requires that a written notice be sent to the persons named in the will and also to the persons who would have inherited had there been no will. Each one has the right to see the will, see what was owned and make sure that the assets are divided correctly. In a probate, the court appoints someone (usually a spouse or a child) as the “personal representative.” Previously, this person was called the “executor.” The personal representative has the power to gather the assets of the estate, pay bills and distribute the assets according to the will.
If there is no will, the assets are distributed according to the “laws of intestacy.” The laws of intestacy spell out who inherits assets when there is no will, which is generally the person’s closest living family members. If there is any problem during the probate, the court can make sure things are done fairly.
Although probate protects heirs from being cheated, it is still a hassle. A simple probate often takes eight months to a year to complete. Some probates go on for many years before the assets can be inherited.
Certain assets do not have to go through probate when a person dies, even if the person owned real estate, or the total value of personal property is worth more than $100,000.
First, assets held by two or more people as “joint tenants” or “tenants by the entirety” will go to the survivors without probate when one of them dies. This is true for real estate, checking accounts, savings accounts, stocks, etc. If real estate is owned together with others as “tenants in common,” then the share belonging to the person who died generally has to go through probate, just like it does when there is no co-owner.
Second, assets which have a named beneficiary do not have to go through probate. These include life insurance, annuities, IRAs, 401(k) plans, savings bonds and “pay-on-death” savings accounts. Ever since 2011, we can even name a beneficiary of real estate to avoid probate by using a “Revocable Transfer on Death Deed.” If you forget to name a beneficiary for any of the above, then the asset has to go through probate if the total personal property is over $100,000 or if the person who died owned any real estate alone or as tenant in common (without naming a beneficiary in a Revocable Transfer on Death Deed).
Third, a Revocable Living Trust avoids probate. It allows you to have complete ownership and control over your assets. When you die, your assets go to the persons named in your trust, without probate. The problem with a Revocable Living Trust is that it does not protect your assets from nursing home costs. To qualify for Medicaid to pay for your long-term care, you have to take the home out of the trust. Then the government may put a lien on your home. For the elderly, instead of a Revocable Living Trust, we often recommend using an Irrevocable Trust, which can also avoid probate and help protect assets from nursing home costs, while maintaining many of the same tax benefits of the Revocable Living Trust. However, this is a subject for another article.
© OKURA & ASSOCIATES, 2021
Honolulu Office (808) 593-8885
Hilo Office (808) 935-3344
Kauai Office (808) 241-7500
Ethan R. Okura received his JD from Columbia University in 2002. He specializes in Estate Planning to protect assets from nursing-home costs, probate, estate taxes and creditors.
This column is for general information only and is not tax or legal advice. The facts of your case may change the advice given. Do not rely on the information in this column without consulting an estate-planning specialist.