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Commonly Asked Questions about Hawaii Revocable Living Trust
Although a Will is the most common estate planning document, there are situations where a revocable living trust makes more sense. For example, setting up a trust can help your beneficiaries avoid the time and expense of probate court if you have a sizable estate. Read on to learn about Hawaii's revocable living trust, why you need it, and how to create one.
What Does a Hawaii Revocable Living Trust Entail?
A Hawaii revocable living trust is a legal document that allows you to transfer ownership of your assets to a trustee. The trustee then manages the assets for the benefit of your chosen beneficiaries.
For example, let's say you have a bank account with $50,000. You could name your spouse as the trustee and your children as the beneficiaries. Based on the trust agreement, your spouse would then distribute the money to your children upon death.
Why Do You Need a Revocable Living Trust in Hawaii?
One of the main benefits of a Hawaii revocable living trust is that it can help avoid probate. Probate is the legal process of distributing a person's assets after death. It can be time-consuming and expensive, so setting up a trust can spare your beneficiaries the headache.
Another benefit of a Hawaii revocable living trust is that it gives you more control over how and when your assets are distributed. With a Will, for example, your assets would go through probate to be distributed according to Hawaii state law. With a trust, on the other hand, you can specify exactly how and when you want your assets to be distributed.
You can also use a revocable living trust to plan for incapacity. If you become incapacitated, the trustee can step in and manage your affairs according to the terms of the trust agreement.
And the best part about a revocable trust is that you can change it anytime. So if you want to change, add or remove assets from the trust, you can do so simply by revising the trust agreement.
How to Set Up a Hawaii Revocable Living Trust
The first step is to choose a trustee. The trustee can be anyone you trust, although choosing a family member or close friend is often advisable. You'll also need to select a successor trustee who will take over if the primary trustee is unable or unwilling to serve.
Decide which assets you wish to include in the trust. For example, you can transfer ownership of bank accounts, investment accounts, real estate, and other assets to the trust.
Create the trust agreement. The trust agreement is a legal document that outlines the terms of the trust. For example, it will specify the trustee, the beneficiaries, and how and when the assets will be distributed.
The final step is to sign the trust agreement before a notary public. This can be done simply by changing the title or deed to reflect the trustee's name. Once you've signed the trust agreement, you're ready to transfer ownership of your assets to the trust.
Do You Still Need a Revocable Trust If You Have a Will?
A will does not avoid probate, meaning your assets will still go through the court after death. On the other hand, a revocable trust allows your assets to be transferred directly to your beneficiaries.
Yet, it is wise to note that a will can do some things a trust cannot do. For instance, a will names an executor, offers direction on tax, debt payments, and establishes guardianship for your kids. As such, it helps to have a revocable living trust and a will to ensure all your businesses are in order.
What Are Living Trust Alternatives?
Luckily in Hawaii, you can still forego probate even without a living trust. The state has adopted the Uniform Probate Code to simplify the probate process. In the same way, Hawaii offers a more simplified probate process for small estate owners.
The beneficiaries can use an affidavit to claim assets valued below $100,000. Additionally, beneficiaries can directly petition the court clerk for estate administration.
Does a Revocable Living Trust Affect Estate Taxes in Hawaii?
A living trust does not protect your assets from estate taxes in Hawaii. However, you can use AB or marital trusts to minimize the impact of estate taxes on your heirs.
Creating a Hawaii revocable living trust may sound daunting. But it can be easy with the free printable forms at Forms.legal. These forms allow you to create a revocable living trust online; all you need to do is fill in, download, and print the form.