Dear Quentin,
My sister owns several properties in Hawaii. She is not married and has no children. She is not interested in setting up a will or trust because she does not think that they are worth paying for. In the event that she should pass, she believes that everything she owns will go to our mother. If our mom passes before her, she does not care who gets her properties.
Several years ago, we found out that our biological father, who we never met and who passed away many years ago, was married to another woman and has a son. The son is in his 30s now. We’ve never met the son, but it is well known within our extended family that he exists and that he knows that we exist. Our mom and biological father never married.
If my sister passes away without a will or trust, does our half-sibling get a portion of her estate?
Curious Sibling
Related: My friend discovered he had a biological daughter 60 years ago. Does she — or her family — have a claim on his estate?
“In Hawaii, half-siblings inherit as if they were full or ‘whole’ siblings — as if you both shared the same father and mother.”
MarketWatch illustration
Dear Curious,
Perhaps if you enlighten your sister about the intestate laws in Hawaii — that is, what happens to her estate if she dies without a will — she would change her mind about writing one. What’s stopping her? She does not want to think about death? She believes she will have all the time in the world to write one eventually? Still, your sister is not unusual in this. In one recent survey, 67% of Americans said they did not have an estate plan.
So here’s the sweet-’n-lowdown: If your sister dies and has no spouse or child, her estate would indeed pass to your mother. If your mother dies before your sister, her estate would be distributed equally among her siblings and, yes, half-siblings. In Hawaii, half-siblings inherit as if they were full or “whole” siblings — as if you both shared the same father and mother. This piece of information could, in itself, be enough to nudge your sister to make a will.
If a resident of Hawaii dies owning real estate, “no matter how small its value, a probate is required,” says Okura & Associates. “However, if the total value of the assets is $ 100,000 or less, the Small Estates Division of the Circuit Court may be willing to handle the case for you. They charge 3% of the value of the assets, plus costs such as court filing fees and newspaper publication fees. … An informal probate can be used when the beneficiaries are all cooperative. No court appearances are required. This is the least expensive and fastest kind of probate.”
Setting up a trust
If your sister wants her estate and wishes to remain private and confidential, a trust will serve her better than a last will and testament, which, because it must go through probate court, is effectively a public accounting of her assets and liabilities. When a will is filed with probate court, it becomes part of the public record, and family members, extended-family members, friends, next-door neighbors and old high-school classmates can access it.
If she sets up a revocable trust, she can be both grantor and trustee during her lifetime, and she has the freedom to change the terms. There are limitations to a revocable trust: It cannot be used to make medical decisions during her lifetime, protect her from civil judgements or creditors or help her qualify for Medicaid, the program that provides medical care for low-income Americans. A trust can also be costly to set up and comes with ongoing administrative and legal costs.
She could appoint an executor to her estate — ideally, someone she trusts — and appoint a relative, friend, attorney or financial institution as a successor trustee. A trustee is a fiduciary and has a legal and ethical duty to carry out her wishes. It may sound bizarre — to your sister at least — but organizing her affairs should be an interesting and, dare I say it, enjoyable process. She has worked hard for her properties. Should she not have a say in how they are distributed after she’s gone?
You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com, and follow Quentin Fottrell on X, the platform formerly known as Twitter.
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