Hawaii Living Trust

Introduction

Key Things to Know

1. 1

   Hawaii imposes its own state estate tax under HRS chapter 236E on estates above an exclusion amount frozen at the federal applicable exclusion as it stood on December 31, 2017, before the 2018 federal increase (HRS Section 236E-6). A revocable living trust does not reduce or avoid this tax because its assets remain in your taxable estate.

2. 2

   No notary, witness, or will formality is required to create a Hawaii trust. HRS Section 554D-402 requires only capacity, indicated intent, a definite beneficiary, and a trustee with duties to perform, and Section 554D-407 will enforce even an oral trust on clear and convincing evidence. The separate deed that funds real property into the trust must still satisfy ordinary Hawaii conveyancing formalities.

3. 3

   Real property funded into a Hawaii trust is recorded with the State's single Bureau of Conveyances in Honolulu, not a county recorder (HRS Sections 502-1, 502-83), and a deed from you to your own revocable living trust, or back to you as beneficiary, is exempt from Hawaii's conveyance tax (HRS Section 247-3(14)).

4. 4

   Hawaii's homestead exemption under HRS Section 651-92 is fixed at $30,000 for a head of family or a person 65 or older, and $20,000 for anyone else, set in 1978 with no inflation adjustment. No Hawaii statute says whether the exemption survives once the home is deeded into a revocable trust; that question is unresolved, so ask a Hawaii attorney before funding your homestead into this trust.

5. 5

   Hawaii is not a community property state; it is a common-law, separate-property state, and spousal protection runs through the elective share instead. If more than one settlor funds the trust, HRS Section 554D-602(b)(2) lets each revoke or amend it only as to the portion attributable to that settlor's own contribution.

6. 6

   A Hawaii revocable living trust gives you no creditor protection while you are alive; HRS Section 554D-505(a)(1) subjects its assets to your creditors the same as property you own outright. Hawaii's Permitted Transfers in Trust Act, HRS chapter 554G, does allow real asset protection, but only through a separate, irrevocable trust with a Hawaii-resident or Hawaii-licensed trustee.

7. 7

   Hawaii used to require trustees to register certain trusts with the circuit court, but that scheme was repealed effective January 1, 2022, when Hawaii adopted the Uniform Trust Code (HRS chapter 554D). An ordinary Hawaii living trust files nothing with any court by default, and its trustee's compensation, absent a contrary agreement, follows the statutory fee schedule in HRS Sections 607-18 and 554D-708 rather than an open reasonable-fee standard.

Hawaii Requirements for Living Trust

• Hawaii Statewide Recording and Conveyance Tax Exemption

  A deed conveying Hawaii real property to the trustee is recorded with the State's single Bureau of Conveyances in Honolulu, not a county recorder (HRS Sections 502-1, 502-83). A deed from the settlor to the settlor's own revocable living trust, or back to the settlor as beneficiary, is exempt from Hawaii's conveyance tax (HRS Section 247-3(14)).

• Hawaii Homestead Fixed Since 1978; Trust Interaction Unresolved

  HRS Section 651-92 exempts $30,000 of equity for a head of family or a person 65 or older, and $20,000 for anyone else, figures fixed in 1978 with no inflation adjustment. No Hawaii statute addresses whether the exemption survives deeding the residence into a revocable trust; flag this as unresolved rather than assuming it carries over.

• Hawaii Is Not a Community Property State

  Hawaii is a common-law, separate-property state. For a trust funded by more than one settlor, HRS Section 554D-602(b)(2) lets each settlor revoke or amend the trust only as to the portion of trust property attributable to that settlor's own contribution.

• Hawaii Certificate of Trust

  HRS Section 554D-1013 lets the trustee furnish a certification of trust in place of the full instrument to a bank, title company, or other third party, stating the trust's existence, the trustee's identity and powers, and its revocability. A recipient who demands the full instrument in bad faith may be liable for resulting damages.

• Hawaii State Estate Tax Not Avoided by a Revocable Trust

  HRS chapter 236E imposes Hawaii's own estate tax on estates above an exclusion frozen at the federal applicable exclusion as it stood on December 31, 2017 (HRS Section 236E-6). A revocable living trust's assets remain in the taxable estate, so the trust provides no reduction or avoidance of this tax.

• Hawaii Self-Settled Asset Protection Requires an Irrevocable Chapter 554G Trust

  HRS Section 554D-505(a)(1) subjects a revocable trust's assets to the settlor's creditors during the settlor's lifetime. Real creditor protection in Hawaii requires a separate, irrevocable trust under the Permitted Transfers in Trust Act, HRS chapter 554G, administered by a Hawaii-resident or Hawaii-licensed trustee.

• Hawaii Trust Registration Repealed; Statutory Trustee Fee Schedule Applies

  Hawaii repealed its trust-registration statute (former UPC Article VII, HRS Sections 560:7-101 and following) effective January 1, 2022. Absent a contrary agreement, an individual trustee's compensation instead follows the statutory fee schedule in HRS Sections 607-18 and 554D-708, not an open reasonable-fee standard.