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Reciprocal Beneficiaries and Estate Planning in Hawaii - A Brief Overview

4/13/2012

Hawaii Revised Statutes Chapter 572C was enacted in 1997 and codifies the reciprocal beneficiary laws in Hawaii. The reciprocal beneficiary statutes seek to provide some of the legal rights and benefits that are only available to married couples to people who legally prohibited from marrying. Some of these rights include having the standing to sue for wrongful death and other tort claims, rights to workers' compensation benefits, receive payments of wages on the death of an employee, family leave, health insurance, property rights, hospital visitation, healthcare decision-making and inheritance rights.
In terms of estate planning, when a person dies intestate (i.e. without a Will), a reciprocal beneficiary has the same inheritance rights as a surviving spouse. In the event a person does have a Will, but perhaps leaves little or nothing to the surviving reciprocal beneficiary, the survivor can opt to take an "elective share", which is a percentage of the combined estates of the decedent and surviving reciprocal beneficiary. This percentage depends on the length of time the couple were registered as reciprocal beneficiaries and increases the longer they were together.
Reciprocal beneficiaries may also hold property as tenants by the entirety. Tenancy by the entirety is a form of concurrent property ownership that affords a couple who holds property as tenants by the entirety additional creditor protection. A creditor of one of the reciprocal beneficiaries may not attach and sell the property interest of the debtor reciprocal beneficiary. However, a joint creditor of both reciprocal beneficiaries may do so.
With respect to healthcare decision-making, a reciprocal beneficiary is considered to be an "interested person" and is on equal footing with an adult child, parent or sibling of the patient (Hawaii Revised Statutes Section 327E-2). Therefore, a reciprocal beneficiary will have a say in healthcare decision-making if the patient does not have an advance health care directive.

"Intestate Succession" in Hawaii - Dying without a Will

1/13/2012

When a person dies without having made a will, the person is said to have died "intestate". So, what happens to the property of a person who has died intestate? In Hawaii, the law provides a default distribution scheme by which the estate will be distributed. Specifically, Hawaii Revised Statutes Section 560:2-101 to 103 governs intestate succession. It is also important not to forget that the estate of a person who died intestate will have to go through probate.
That being said, the fate of a decedent's assets depends on the decedent's familial situation at the time of his or her death. Did the decedent leave a surviving spouse or reciprocal beneficiary? Children from another marriage? No children? Are his or her parents still alive? Below is a brief summary outlining the intestacy statute, which provides for a variety of situations. For brevity and simplicity's sake, "reciprocal beneficiary" is omitted from the examples below, but can be interchanged with "surviving spouse".
A decedent's entire estate will go to the surviving spouse in these situations:

Decedent was not survived by any children or his or her parents; or
There are surviving children who are the natural descendants of both the decedent and surviving spouse. Also, the surviving spouse cannot have any living children who were not from the decedent (i.e. surviving spouse cannot have any living children from another relationship).

The first $200,000 and 3/4ths of any balance of the estate will go to the surviving spouse if:

Decedent did not leave any surviving children, but at least one of the decedent's parents is alive. The parents will take 1/4th of any balance of the estate.

The first $150,000 and 1/2 of any balance of the estate will go to the surviving spouse if:

All of the decedent's surviving children are also the children of the surviving spouse, but the surviving spouse has children who are not the decedent's (e.g. surviving spouse has children from another relationship). Decedent's surviving children will share any balance of the estate equally.

The first $100,000 and 1/2 of any balance of the estate will go to the surviving spouse if:

The decedent left one or more surviving children who are not the children of the surviving spouse (e.g. Decedent had children from another relationship). Decedent's surviving children will share any balance of the estate equally.

But what happens if the decedent was not married or is a widow/widower? Again, it depends on the decedent's familial situation at the time of death. Below is a summary of the priorities of takers of an estate if the decedent did not leave a surviving spouse.

Decedent's surviving children (e.g. children born out-of-wedlock or children from prior marriage); if none, then...
Decedent's surviving parents (to both equally or to all to the surviving parent); if none, then...
Decedent's siblings or their children; if none, then...
1/2 to maternal grandparents or their descendants and 1/2 to paternal grandparents or their descendants; if there are no takers on either the maternal or paternal side, the other side will take the other half; if none then...
State of Hawaii.

As you can see, in order for the decedent's property to escheat to the State of Hawaii a decedent basically has to have no living relatives (or at least none that can be located). However, some people are not comfortable with the idea of their assets being distributed to distant, unknown relatives and would rather have, for example, a charitable organization benefit from their estate. If you do not agree with this default distribution scheme, but do not have a Will or Trust, it is imperative that you visit an attorney as soon as possible to have a testamentary instrument drafted so that your wishes will preempt the Hawaii intestate statute.

Reciprocal Beneficiaries and Estate Planning in Hawaii - A Brief Overview

"Intestate Succession" in Hawaii - Dying without a Will

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