Estate Planning of Honolulu Blog
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Hawaii estate planning attorneys often hear, “I don’t have children, so I don’t need to do any estate planning.” It’s surprising that many people are unaware of the pitfalls of not having an estate plan, even if they don’t have a child or spouse. You need an estate plan in Hawaii, regardless of your family situation, and here’s why.
Hawaii’s Intestate Laws
Everyone has an estate; it’s not a term reserved for the wealthy. Your estate comprises everything you own, and that means your assets as well as your debts.
If you die intestate, which means without a will, the state decides who inherits your estate. In Hawaii, the estate passes to the closest surviving relative. That could be your spouse, your parents, or your siblings. If you do not have a spouse or children at the time of your death, and your parents are still living, your parents inherit your estate. But remember that your estate is your assets and your debts. Do you want to saddle your elderly parents with a mortgage?
A Hawaii estate planning attorney will guide you through tough decisions and remind you that inheritance isn’t always a good thing. Your parents or siblings do not want to inherit your debts or even a fully paid-off house that they must maintain or sell.
Understand Your Assets
Now you may be thinking, “But my ‘estate’ is very modest. It’s just a paid-off home and a little cash in the bank. I don’t need a will.” Assets are not only tangible items. Have you written a song or a book to which you own the rights? If so, do you really want the state to decide who receives your royalties? You’d probably prefer the person that inspired the song or edited the book to receive the royalties.
Take Care of Your Pets
Pets are part of your family; you can delineate a set amount of your estate (cash or assets that can be sold) for the care of your pet. A Hawaii estate planning attorney will help you make a plan for your pet, such as who will care for it, a monthly allowance or lump sum for the pet’s care, and so on. Failing to plan for pet care can mean your beloved companion winds up in a shelter or adopted by someone you don’t know.
Hawaii estate planning attorneys also see many instances in which a client chooses a friend or a charity to inherit his or her assets after making a plan to clear up debts (usually through life insurance). That is a perfectly acceptable way to add value to someone’s life or to support a cause you care about.
Everyone Needs an Estate Plan
You don’t need to have children to make an estate plan. Debts, relationships, royalties, pets, and more must all be considered—failure to plan means that the state steps in and makes the plan for you. Protect the things you value now and after you pass on. Let a Hawaii estate planning attorney help you create a plan today.
If you don’t remember the last time you looked at your estate plan, it is almost certainly time to dust it off and do a thorough review. Your life isn’t static, which is why it doesn’t make sense to think that drafting an estate plan is something you do once and forget about it. The passing of time isn’t the only reason you should sit down with your estate planner to review and update your will and estate plan. There are many other reasons that have nothing to re-evaluate your estate plan.
You’re Worth More (or Less)
If your assets or liabilities have changed dramatically since you put your estate plan together, it’s important to re-evaluate how you plan to distribute your wealth. For instance, you may have inherited money or lost money on an investment. Regardless of whether it’s an increase or decrease in worth, you need to reassess your plan.
At this time, you’ll also want to re-examine the beneficiaries of any retirement plans like an IRA or 401(k) to ensure they’re still appropriate. Reviewing your beneficiaries regularly is important because the last thing you want is someone who, for example, is no longer in your life to have a legal right to some of your estate.
Tax laws (and other laws that impact estates) change, and those changes should always trigger an estate plan review. These changes can be laws around powers of attorney and medical instructions, both of which you will want to understand so that you can adjust your end-of-life plans accordingly.
Revising Your Heirs
There will be instances where people come into your life, maybe a new child or grandchild, and where people will leave your life, such as through death or divorce. Specifically, naming new children, grandchildren, or a new spouse to your estate plan ensures they are legally recognized as your heirs. Failure to do so will result in people being left out of your estate plan or will give an ex-spouse claim to part of your estate.
Have You Moved?
While it would certainly simplify matters, there are no national estate laws. Instead, each state governs their own.
When you move to a different state, you will want to do a thorough review with a professional estate planner so that you’re aware of how the laws differ and whether or not any changes are required as a result. For instance, there are some states that specify a minimum amount that a spouse must inherit as part of an estate plan, and that amount is different from state to state.
Also, there are different regulations around medical instructions and powers of attorney based on your region. Moving is a hassle, but don’t let that prevent you from doing your due diligence on the estate laws in your new state to avoid conflicts or confusion down the road.
A Honolulu Estate Planner is well versed in all regulatory changes that could potentially impact how your estate is settled. In addition, they will walk you through many of the scenarios above to be sure there have been no material changes to your life that would impact your estate plan and will.
Before committing to an estate plan review, or if you don’t have a plan in place, schedule a no-obligation consult today!
There are some common misconceptions out there when it comes to retirement planning. Some examples include as long as you have a good nest egg hidden away, you’re ready for retirement, or you don’t have enough money to leave your family to justify the time and cost of putting an estate plan together. The amount of money you have in the bank is not an indicator of whether or not you should have an estate plan because there are a wide range of decisions to be made, not just who inherits your money. It’s important to think beyond what’s in your piggy bank and here’s why.
Where There’s a Will…
55% of Americans don’t have a will. That means that over half of the population of the United States will end up letting the courts settle their estate upon their death or if they become medically incapacitated. People live busy lives today, and there will always be something more pressing to do than putting an estate plan together, but the risks that come with not having one far outweigh the time spent getting it done.
It’s important to take control of your affairs while you still can to ensure your estate is settled as you want it to. In the absence of a legal will and documented power of attorney, the courts could take control of significant decisions like end-of-life medical care, how your assets are distributed, and naming a guardian for your minor children. These aren’t decisions that you want to be left in the hands of the Hawaii Probate Court.
Avoiding probate also means your family bypasses the time-consuming, expensive, and often invasive court proceedings following your death. We’ve all heard horror stories about families being torn apart by ugly legal battles following the death of a family member. A legally-binding estate plan reduces the likelihood of family conflict by specifying clear instructions on how your assets are divided and who’s in charge of executing your will.
Death and Taxes
Working with a trusted professional allows you to develop an asset allocation plan that minimizes the tax burden on your heirs. Your assets are potentially subject to both state and federal estate taxes, which can put a considerable dent in your legacy. But there are ways to reduce the amount of tax paid by transferring your wealth to your beneficiaries in advance of your death or by setting up a trust as part of your estate plan. A trust helps married couples take advantage of estate tax exemptions and can result in savings on capital gains. Not to mention, when you put your properties into a trust, they will not be subject to probate.
We all want to make sure our loved ones are well cared for after we pass. Having enough money to do that is just a start. Protect your legacy by working with a Honolulu Estate Planner to ensure your final wishes are granted.
Estate Planning of Honolulu is always ready when you are. If you don’t have a plan in place for you and your loved ones, contact Michael Madison for a no-obligation consult absolutely free.
Building a plan for the future and protecting financial assets is not simply for those with incredible wealth. Hawaiians across the state should have an estate plan that protects their assets over the long-term. To help introduce you to the topic of estate planning in Honolulu and its value, we’ll provide a comprehensive overview in this latest post.
Saving Your Family from Difficult Decisions
If anything happens to you in the coming years, your family may face many difficult decisions in determining how to allocate your assets. Building an estate plan now can help ensure your family is protected and that they have a precise understanding of your wishes. Those factors can be particularly important in cases where a person is incapacitated and unable to make decisions.
Reduce Attorney Fees and Court Expenses
Should you pass away without an estate plan, a large proportion of your assets is likely to go to paying attorney fees and court-related expenses that result from your family attempting to access your assets. With a clear estate plan in place, you can legally document your wishes and make sure that your loved ones keep your assets.
Assure Swift Transfer of Property
If you own property in Honolulu, comprehensive estate planning is of critical importance. That’s because an estate plan can help to ensure that your property is allocated according to your wishes. If you don’t have your estate plan in place, your family may have to wait for potentially a year or more to receive access to your property through the probate courts. Planning now can help you avoid Hawaii probate court.
Keep Children from Government Protection Services
Your children will face a significant trauma when you pass away. Make sure that you have a plan in place for maintaining their protection when you’re gone. That usually involves speaking with loved ones and arranging for them to take care of minor-aged children in your absence. You can work with your Honolulu estate planning attorney to discuss this process and to find a solution that is best for your family.
Another clear benefit of taking on the estate planning process now is that it can help you to simplify your retirement. You can put a plan in place that makes sure your benefits are secured and that any services required are paid and ready for your retirement years. When speaking with your Honolulu estate planning attorney, ask them to go over your retirement planning options and to plan out how each option can benefit you over the decades to come.
Help Make Plans for Potential Medical Issues
Medical problems can arise with few warning signs, and so it’s important that you are proactive and make a plan for how you wish to handle your finances if you experience a medical problem. An estate plan can help you select your power of attorney, who will help you make decisions or make them on your behalf if you struggle or cannot do so for health reasons.
Take the time to explore your estate plan options with local Honolulu estate planning professionals. The process will help prevent financial challenges and secure your family’s future over the long-term.
Avoiding probate is something you’ll be determined to do because it can prevent heated arguments and unnecessary tension during the distribution of a loved one’s assets. The evaluation and division of assets can be a messy, drawn-out process that may leave a family confused and stressed. Don’t place this burden on your family, so be sure to set up reliable measures for probate avoidance in Honolulu.
One way to avoid probate in Honolulu is to make a living trust. To do this, you need a trust document naming someone who will take over as the trustee of possessions after you pass. After your death, the trustee will then be responsible for asset management. As a result, the property will be controlled by the trust’s terms. The living trust process is similar to creating a will and allows the successor trustee to transfer ownership to the designated trust beneficiaries without probate court involvement.
It’ important to note that for Hawaiian estates that exceed the small estate threshold and are not attached to a will or the will does not contain a living trust, probate will be needed. Without a living trust, it becomes harder to transfer the estate to beneficiaries at will. If your estate is deemed a ‘small estate’ court proceedings are not needed.
Transfer-On-Death Deeds for Real Estate
Also termed as beneficiary deeds, transfer-on-death deeds allow you to sign and record the deed from now. However, this deed and its accompanying terms only take effect once you have passed away. Revoking the deed or selling the property is up to you, and whoever you have named as a beneficiary cannot take responsibility until after your death.
Another common probate avoidance method is proving you and someone else co-own your property while outlining a right of survivorship. Once this is declared, the surviving owner takes hold of the property once the co-owner dies.
You will need paperwork to prove legitimacy, but this process does not require a probate court’s intervention. One joint ownership scenario in Hawaii is a joint tenancy, where property owned automatically passes to the surviving owner(s) when another owner dies. This method works best for couples, so if you have a spouse or significant other and have acquired real estate, this is a smart alternative to consider. Within a joint tenancy in Honolulu, each owner must own equal shares of the assets in question.
Another option is tenancy by the entirety, which works much like joint tenancy, but can only apply to married couples or certified domestic partners. If you’re divorced, a divorce decree or judgment can affect the awarding of Hawaii real property. So make sure to update your estate planning documents to determine what your ex-spouse is or is not entitled to after you’ve passed.
For these agreements, you’ll still need to prepare a deed or alternative conveyance document, have it signed, notarized, and recorded in the right Hawaii recording office. Following these steps will legally ratify the property transfer.
If you’re wondering what will happen to your assets and your loved ones after you pass, then set up a free consult with Michael Madison, Honolulu Estate Planning Attorney to talk about your expectations and wishes.
When someone dear to you passes away, many things get left in limbo. When he or she is no longer with you, the assets that loved one possessed and future ownership over them are now under scrutiny. For cases like these, a probate court steps in to appoint an executor for the estate in order to transfer property ownership. The last thing your children need at this time is to spend money on legal fees to handle what can be a tricky and sensitive matter for all involved. Avoiding probate in Honolulu, at all costs, can prevent such awkward dealings for generations to come.
Why Should You Be Avoiding Probate?
The probate process can be time-consuming and lead to spent money and emotions. When you pass, your children will have to go through this process if your property is not in a trust or you have not made a declaration of joint ownership. Not even having a will can help with probate avoidance, with proceedings potentially taking months or years to complete.
Because probate deliberations take a while, they can leave your heirs with immediate debt in terms of covering the funeral, household utilities, and insurance or taxes. Also, probate is a state court proceeding, so the deceased person’s assets, beneficiaries, and other information will become public record, making it accessible to just about anyone, possibly even exploitative relatives.
How Can You Avoid It?
Probate avoidance in Honolulu can be achieved as long as you’re prepared. There are some ways that you can set your children up to avoid probate.
One way, as mentioned above, is a living trust. In Hawaii, you can create this trust to avoid probate for real estate, vehicles, bank accounts, and much more. Similar to a will, a trust document allows you to name someone to take over as your property’s trustee after your death. You must then transfer ownership of your property to yourself as the trust’s trustee. The trust’s terms will then dictate how the property will be controlled. Your successor trustee will then be able to transfer the property to trust beneficiaries upon your death.
Another way to ensure you’re avoiding probate is joint ownership, which is a document stating the right of survivorship. That right means the surviving owner automatically owns the property once the original owner passes away. Parents should ensure that any documents of joint ownership with children explicitly state that their intention is for ownership of land, properties, bank accounts, possessions, and other assets to be transferred entirely to their children.
There are also beneficiary deeds you can explore such as transfer-on-death deeds. This deed allows you to sign and record the deed now, but the deed’s terms don’t take effect until you die. You can revoke the transfer-on-death deed any time, while you’re living, and the beneficiary cannot assume any responsibilities before you pass on.
Make official, binding end-of-life preparations so that your children aren’t dealing with courts while trying to grieve their loss. Schedule a free consult with Michael Madison, Honolulu Estate Planning Attorney to discuss your options.
When undergoing the difficult process of transitioning a deceased loved one’s assets, probate avoidance is a must. Probate court proceedings can be long and frustrating, putting your family through unnecessary hassle as they ascertain who gets what. Sparing those close to you of the emotional and financial stress that this process causes can be achieved in various ways. One vehicle to drive this quest for avoiding probate will help considerably to ease the process.
Joint Ownership of Estate
Joint ownership is a reliable and effective way to secure probate avoidance in Honolulu or anywhere else in Hawaii. If you co-own a property and this co-ownership includes the right to survivorship, then the surviving owner automatically owns that property when the other owner passes away. You will then be able to transfer the property without needing the courts to get involved. All you need to do is show paperwork proving that you, the surviving owner, legally hold the property’s title.
Three joint ownership types contain a right to survivorship in Hawaii. One case is joint tenancy, where a property is passed to the surviving owners when one dies. If you have a significant other (married or not), this is very helpful when you’ve acquired real estate, vehicles, or any other valuable property. Then, there’s tenancy by the entirety, which is much like joint tenancy, but is permissible for married couples and registered domestic partners only. Another type for married couples is community property with right of survivorship, which functions similarly to joint tenancy.
How to Prove Joint Ownership
If you find that your property is not properly titled, it is highly recommended that you execute a new deed that clearly states survivorship intentions. All you have to do is complete a simple form and supply a copy of the previous owner’s or co-owner’s death certificate to become the sole owner.
For real property, you as the surviving owner will have to record a document proving joint ownership. Evidence can be presented as an affidavit or a sworn statement. This statement should contain a legal property description and a statement that the property was held in joint tenancy. You should also include recording information that identifies the prior document was establishing joint ownership. So attach the book and page number or document identification number for the prior deed. The deceased owner’s name, death date, and death certificate copy should be included as well as your name.
Whenever you or a loved one owns property or accrues liquid assets worth more than $100,000, you should take the time to create a solid backup plan. There are potential drawbacks when you add someone as a co-owner, such as the potential triggering of the federal gift tax if the property value is high. But, using joint ownership measures will help you avoid stressful proceedings when you transfer property rights. Probate avoidance in Honolulu and across the board becomes achievable by putting this simple vehicle in motion.
To learn more about proper estate planning, schedule a free consult with Michael Madison, Honolulu Estate Planning Attorney.
What is probate?
Many people don’t think about probate until someone they care about passes away and their assets are held up in probate court. What is probate? Probate is the official way an estate is settled with the supervision of Hawaii courts. Probate only comes into play when there is no will or a will has been determined to be invalid. On the most basic level, probate helps prevent fraud. Fraud could occur if a person’s assets are taken from who they are intended for. Without proper legal documents and proceedings, this could happen.
During probate, the court has the legal authority to gather and estimate value for the deceased’s assets. Once the value of one’s estate is determined, all outstanding bills and taxes are paid. After all debts are paid in full, the remaining value will be distributed amongst beneficiaries and heirs. Usually, one person either the decedent’s spouse, child, or personal representative, will be assigned by the court to distribute these benefits.
In Hawaii, there are several ways a person can avoid their estate entering probate. But, the most important factor is that all paperwork is handled appropriately and filed before death.
Establish Joint Ownership
One of the ways, Hawaiians can avoid probate court is to establish joint ownership. Joint ownership will help families avoid probate. Under joint ownership, if something is owned with a partner, and “the right of survivorship” applies, the asset can pass to one owner if the other dies. This type of agreement does not have to go through probate court.
In Hawaii, you can create a living trust for virtually any asset including real estate, bank accounts, and vehicles too. Living trusts are designed to protect a decedent’s largest assets from probate proceedings. It is one of the most popular forms of probate avoidance strategies in Hawaii. Living trusts are relatively cost-effective and simple to set up. However, it’s best to have legal guidance to ensure the trust cannot be challenged in the future.
Designate Transfer-On-Death Beneficiaries
With transfer-on-death benefits, a person’s assets can transfer automatically at the time of a person’s death. Examples of assets that can be handled under this legality include bank accounts, brokerage accounts, real estate, and not securities. Transfer on death benefits do not apply to vehicles in Hawaii.
The guidelines above can help a family avoid the hassle of probate court after a loved one’s death. Taking steps to avoid probate court can ease a family’s burden and allow them to mourn in peace.
If you are entitled to a portion of an estate and got stuck in Hawaii probate court, you are likely wondering where you should turn for answers. Your only option at this point is to deal with the process in a way that reduces the pain and stress. You already know by now that a proper estate plan would have helped you avoid this situation, but you can’t do much about it now that you are here. Tell your friends and family that they need a proper estate plan if they own property or more than $100,000 in assets.
People tend to panic when they go to probate court because they don’t know if they will get the property or assets to which they are entitled. Since avoiding probate in Hawaii is not possible once you are in it, do your best not to panic. If you allow yourself to panic, you could make a poor decision that will make the problem worse than it already is. Take a few deep breaths and give yourself a little time to relax. Although it won’t always be easy, calming yourself down and keeping a level head are your best options if you want to make the most of the situation.
If you and the other beneficiaries have trouble reaching a fair agreement, you could stay in Hawaii probate court much longer than you thought. You will force the court to settle disputes between you and the people who disagree with you, which could take several hearings. In addition to going to court hearings, someone could try to appeal a decision with which they disagree. Being agreeable and willing to make a few compromises won’t be easy but is the best way to move forward without unneeded stress. Working with the other people involved in the legal process might not seem ideal from the surface, but it could save you a lot of time and legal fees.
You can never know if the other people involved with the case have your best interests at heart when they move forward. Probate issues are complex and often trigger people’s greed, prompting loved ones to turn on each other. Even if you trust the other beneficiaries, getting a lawyer is the only safe way for you to take action. Your probate lawyer is the only one who will place your interest above everything else.
Avoiding probate in Hawaii is the best way to handle the situation, get the assets to which you are entitled, and ensure that your loved one’s final wishes are met. A member of our legal team will speak with you and help you prevent going to probate court so that you won’t need to deal with the complex legal process. Even if you are already stuck in probate court, our legal team can safeguard your rights and give you the best results possible. If you have questions or would like to move forward, contact us today to get your free consultation.
Deciding on a business structure that is right for your entity is an essential part of establishing a new organization. It is necessary to know the difference between a sole proprietorship and a limited liability company (LLC). These business structures differ in members benefit, ownership, and taxes. This article highlights the three significant advantages of LLC owners have over sole proprietors.
- Limited Personal Liability
In a limited liability company, proprietors are not responsible for business debts, while in a sole proprietorship setting the property owners to settle the advances. If the entity is unable to pay its loans on time, lenders will go after bank accounts or properties of each owner to raise their money. By contrast, if an LLC firm runs out of finances, the individual members are not usually accountable. Also, LLC members have protection from any court case that arises against the enterprise.
It is worth noting that under certain situations, a shareholder may be responsible for the LLC debts if:
- They guarantee a loan
- The organization violate state law like failure to pay revenue or defraud consumers
- Their funds have intermingled with LLC finances
- The LLC has minimal insurance and capitalization
- More Tax Options
The Income of LLC shareholders is not taxed at the corporate level. Individual proprietors share company losses as they are directly passed to them. It allows individual members to claim the losses of a firm. The feature aids to avoid double taxing and margins to stay within an entity for future growth.
If you operate a company as a sole proprietor, the revenue department will tax you as a self-employed firm. The business law considers the enterprise income as your income for taxation purposes. A limited liability company, on the other hand, can be taxed as a corporation, partnership, or sole proprietorship. LLC owners have the power to make an election for the business to be classified as a corporation for the sake of taxation. Failure to make the request, the organization, will pay its duties as a sole proprietorship. The number of its members also determines whether it falls under sole proprietorship or an LLC.
- Ease of Ownership Transfer
Stakeholders in a limited liability company have the right to sell their shares to a third party. The ownership transfer process will not affect the business operations. However, for a sole proprietorship enterprise, the owner cannot sell their interests directly as they have to individually transfer each of its permits, assets, and licenses. Sole proprietors must produce new and valid tax identification numbers and bank accounts for the transfer.
Sole proprietorship and a limited liability company are the most popular structures for enterprises. Hawaii residents should understand their advantages and disadvantages to make an ideal decision. Remember to check out the startup and operational costs of both structures to save your money. The two must adhere to specific regulations during registration, taxation, and ownership transfer. A business lawyer will guide you on the perfect structure for your needs.