One of your biggest concerns when it comes to your estate planning might be how you can avoid having your estate go through the probate process after you pass away.
Probate is an administrative proceeding through the Hawaii courts. It involves appointing a personal representative, who is responsible for distributing assets according to your will, or if you have no will, according to Hawaii’s probate laws.
Why you might want to avoid probate
A personal representative is also responsible for paying any of your remaining debts, filing a final tax return and closing out your estate. The probate process can also be lengthy, complex and result in disputes between family members.
There are several options to protect your assets and shield them from Hawaii’s probate process. Choosing one or more of these options can provide you with security and peace of mind knowing that your assets will go directly to your heirs.
Real estate is often one of people’s most valuable assets. Your main concern could be ensuring that your home goes to your spouse so they can continue living in it.
Your real estate can be left out of the probate process, depending on its ownership status. You can title your real estate as jointly owned with a right of survivorship, which means that the joint owner will automatically receive it upon your death.
Consider setting up a revocable living trust. This is a trust that you place your assets in while you are still alive and can be a valuable part of an estate plan.
You retain the power to access and manage these assets during your lifetime and direct who they go to after you pass away. You can also revoke the trust or modify its terms.
An irrevocable living trust is essentially the same, but you will not have the power to change or remove any of the terms.
Another way to prevent assets from going to probate is to designate beneficiaries. Many assets, such as retirement accounts, insurance policies and certain types of investments allow you to choose a beneficiary.
Once you select a beneficiary, the asset goes directly to them upon your death. It is important to regularly review your beneficiary selections to avoid the asset going to someone who is no longer living, which would result in it going into probate.
Payable on death
Review any other accounts you have that do not fall into these categories. Examine their terms carefully, as you might be able to make the accounts payable on death.
This works the same way as setting up beneficiaries for your other accounts. You select a beneficiary, and the account automatically goes to them after your death, meaning it does not go through probate.
Knowing which options are best for you depends on your specific situation. There are sometimes tax or other considerations that must be examined and setting up a legal entity such as a trust usually has several requirements. Therefore, it is best to have professional advice and guidance as you make these decisions.