Ethan R. Okura
Hawai‘i Herald Columnist
In last month’s issue, we discussed the privacy of wills and trusts while a person is living. In this issue, we will focus on the privacy of wills and trusts after a person dies.
If probate is necessary when a person dies with a will, the attorney will present the original will to the court. Anyone can go to the court records and look at the will. Therefore, if probate is necessary, a will has no privacy after death. The filing of an inventory, however, is optional. An inventory is a list of all of the property owned by the person at the time of death and its value. If the personal representative, who is the person appointed by the probate court to settle the estate, chooses to file an inventory in court, then anyone can go to the court and see exactly what the person owned at time of death. If the personal representative does not file an inventory in court, he or she must still send a copy of the inventory to every “interested person” who requests it. The term “interested person” includes heirs (the person who would have inherited had there not been a will), devisees (the persons named in the will to inherit), children, spouse, reciprocal beneficiary, creditors and persons with priority to become personal representatives.
The court documents do not have to reveal how much is inherited by each person. However, even if the inventory is not filed in court, if you are an interested person and you request a copy of the inventory, you can figure out just about how much each person inherited just by looking at the will and the inventory together. If you do not have a copy of the inventory, you will not know how much each person inherited, unless the personal representative chooses to file a statement with that information in court. If there is a court battle over the assets and unless there is a confidential settlement, the court will make a written order as to how much each person inherits. This can be seen by the public.
Let us now look at the privacy of a trust after death. After the settlor (the person who creates a trust) dies, the successor trustee has a duty to keep the beneficiaries “reasonably informed” of the trust and its administration. Within 60 days after acceptance of the trust, the trustee must inform the qualified beneficiaries of the acceptance and the trustee’s name, address and telephone number. A “qualified beneficiary” is any current beneficiary to whom the trustee could make distributions and any contingent beneficiary to whom the trustee could make a distribution if the current beneficiaries’ interest in the trust were to terminate. Also within 60 days after a trustee learns that a trust has become irrevocable, the trustee must notify the qualified beneficiaries of the trust’s existence, of the identity of the settlor or settlors, of the right to request a copy of the trust instrument, and of the right to a trustee’s report.
Upon request, the trustee must provide a qualified beneficiary with a copy of the trust instrument. If requested, the trustee must also provide the beneficiary with information about the assets of the trust and details about the administration of the trust. A beneficiary can also request an annual accounting (a report by the trustee of all the money that came in and went out of the trust during the year). A beneficiary is also entitled to an accounting when the trust ends and whenever there is a change in trustees.
In summary, if a probate is necessary, a will is available for the public to see. Although it used to be the case that a full copy of the trust did not have to be given even to a beneficiary, who only had the right to see the part of the trust that affects that particular beneficiary, as of January 1, 2022, with the Hawaii Uniform Trust Code becoming effective, any qualified beneficiary has a right to a copy of the trust. With a will, any “interested person,” (and if the inventory is filed in court, anyone at all) can learn about the assets and who will inherit them. With a trust, only beneficiaries have a right to find out about the assets and distributions. Thus, it appears that trusts afford more privacy than wills. However, with both trusts and wills, if there is a lawsuit, it is likely that the person suing can find out just about anything.
© OKURA & ASSOCIATES, 2021
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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.