Hawaii Probate

Without taking the proper steps to develop a comprehensive estate plan, upon the death of a loved one, a probate proceeding may be necessary.  Although there are many details and intricacies of the administration of a probate proceeding, in its simplest form, probate is a method governed by the laws of the State of Hawaii in order to transfer your assets to the persons entitled to them, after paying for expenses of the probate administration and any debts that you may leave behind.

One of the most common misconceptions is that if you have a Will, you can avoid probate.  This is simply not true – a Will does not avoid probate.  Without a fully funded trust, and regardless of whether or not you have a Will, a probate may be necessary in order to transfer your assets to the persons entitled to them.  The main differences between having a will and not having a Will (i.e., intestate) are that with a Will, you are able to: (i) determine the person responsible for the administration of your estate (this person is referred to as the Personal Representative), (ii) determine who should receive your assets (these people are referred to as the Beneficiaries), and (iii) appoint a Guardian for your minor children if any.

Without a Will, the laws of the State of Hawaii will determine who your Personal Representative will be, who should receive your assets, and a separate proceeding may have to be initiated in order to appoint a Guardian for your minor children.

You may have heard that probate is a “bad” thing, which should be avoided.  Although it is generally true that probate should be avoided, there are certain specific situations where a probate could be beneficial.  The following highlights some of the reasons why a probate proceeding may not be an ideal method for the transfer of one’s assets upon death:

LESS FLEXIBILITY

The probate process is governed by complex statutes,  rules, and case law found in the Hawaii Revised Statutes, Hawaii Probate Code, and case opinions of higher court rulings on certain issues, all of which your Personal Representative is bound by.  This means that there is less flexibility and often times, more “red tape” that must be followed in order to properly administer your estate.

COURT PROCEEDING

The death of a loved one can be a time of sadness and sorrow.  During this difficult time, a probate proceeding will force your loved ones to go through a court process, which can be very stressful.  In addition, court proceedings can be very time-consuming and expensive.

IF YOU DO NOT LEAVE A WILL, THE STATE OF HAWAI`I WILL DETERMINE WHO RECEIVES YOUR ASSETS

If you do not have a Will, the State of Hawai`i will determine the persons entitled to your assets through the laws of intestacy.  The laws of intestacy make assumptions as to who you most likely would have wanted your assets to go to.  However, in many situations, these assumptions are contrary to what you would have wanted.  For example, if you die in the midst of a divorce, your spouse may receive your entire estate.  Another example is where you die leaving a spouse, and a child from a prior relationship.  It is possible that your surviving spouse will inherit all or the bulk of your assets, leaving little or nothing for your child – a result you may not have anticipated or wanted.  Additionally, often times, the laws of intestacy emit a sense of entitlement, as the beneficiary may view the inheritance as a right under the laws of the State of Hawaii, rather than a conscious gift you left to a loved one after much thought and consideration.

INVITATION TO A FIGHT

Regardless of whether you have a Will, probate is often times an invitation to a fight.  With all probate proceedings, the Personal Representative is required to inform all “interested persons” of the decedent’s death.  The term “interested persons” is very broad and may include unwanted people or creditors.  Once notified of the proceeding, any of those people or creditors can contest basically any and all aspects of the probate administration.  Although unfortunate, it is common to see family relationships breakdown because the decedent did not take the proper steps to make their wishes known through proper estate planning documents.

INHERITANCE TO MINORS AND YOUNGER ADULTS MAY BE PROBLEMATIC

If your Will or the laws of intestacy dictate that your assets be left to a minor, a separate and more costly proceeding called a Conservatorship proceeding will have to be established in order to manage those assets on behalf of the minor, regardless of whether that minor has a living parent.  In addition, once the minor reaches 18 years of age, all assets must be distributed outright, regardless of his or her financial maturity.  When you were 18, what would you have done with a substantial amount of money?

NO CREDITOR PROTECTION FOR BENEFICIARIES

One of the last steps of the probate process is to transfer assets to the rightful beneficiaries.  The beneficiaries will receive your assets outright, which means that the assets are subject to claims of their creditors and predators, and could potentially be taken away from them.  For example, you leave substantial assets to your daughter, who subsequently gets a divorce.  The assets left to your daughter could potentially be shared with her ex-spouse during divorce proceedings.  Another example is where your beneficiary becomes involved in a bad business deal.  Your inheritance is now subject to the claims of the business’ lawsuit.

PUBLIC PROCESS

In this day and age, privacy is a concern for many people.  Probate is a public process, which means that anyone can go to court and request to see all of your personal information.  If you left a Will, anyone can request a copy of it to see what you left, and to whom.  In addition, should your probate become contested, the “dirty laundry” is open to public viewing.

THE PROBATE PROCESS CAN BE TIME-CONSUMING

Although the length of time to complete a probate administration can vary greatly depending on the circumstances of each case, in our experience, the administration of an average probate proceeding will take eight to fourteen months to complete, and it is not uncommon for some probate proceedings to last several years.

A COMPREHENSIVE ESTATE PLAN CAN AVOID THE PROBLEMS ASSOCIATED WITH THE PROBATE PROCESS

Through proper planning, we will assist you in setting up your estate to avoid the probate process through counseling, execution, and implementation of plans.  We will provide you with:

  • Enhanced flexibility for your Trustee to administer your estate in a more effective and efficient manner by avoiding unnecessary red tape.
  • The ability to avoid unnecessary court filings and appearances, thereby reducing expenses and the stress associated with a court proceeding.
  • The ability give your assets to who you want, when you want, the way you want.
  • The potential for family disputes can be minimized, so that your beneficiaries will appreciate the time you took to carefully plan for their care upon your passing.
  • The ability to keep your administration private, decreasing the opportunity of identity theft, and an invitation to a fight.
  • Peace of mind knowing that you’ve left your assets to your loved ones in a way that will protect them from creditors and predators, such as an ex-spouse or lawsuit.
  • A plan to avoid costly conservatorship or guardianship proceedings for your minor or incapacitated beneficiaries.
  • Proper planning for your beneficiaries to address financial maturity or substance abuse, or to incorporate incentivized distributions to promote positive values.

ESTATE PLANNING GROUP CAN ASSIST YOU DURING THE PROBATE PROCESS

Should you find yourself in the situation where a probate administration is needed, Estate Planning Group is here to walk you through the probate process in the most effective, efficient, and compassionate manner possible.  Estate Planning Group has helped many families navigate through the myriad of issues that arise out of probate administration, and we strive to have an open line of communication, so that our clients are informed and understand every stage of the process.