Apr 2017 AFR: 2.6%
Gift Annuity State Regulations

Hawaii


Intestacy


General Definition

A decedent's intestate estate is defined as any part of the estate not effectively disposed of by a valid will.

Order of Distribution


The intestate share of a decedent's surviving spouse or reciprocal beneficiary is:

  1. The entire intestate estate if no descendant or parent of the decedent survives the decedent or All of the decedent's surviving descendants are also descendants of the surviving spouse or reciprocal beneficiary and there is no other descendant of the surviving spouse or reciprocal beneficiary who survives the decedent;
  2. The first $200,000, plus 3/4 of any balance of the intestate estate, if no descendant of the decedent survives the decedent, but a parent of the decedent survives the decedent;
  3. The first $150,000, plus 1/2 of any balance of the intestate estate, if all of the decedent's surviving descendants are also descendants of the surviving spouse or reciprocal beneficiary and the surviving spouse or reciprocal beneficiary has one or more surviving descendants who are not descendants of the decedent; or
  4. The first $100,000, plus 1/2 of any balance of the intestate estate, if one or more of the decedent's surviving descendants are not descendants of the surviving spouse or reciprocal beneficiary. Sec. 560:2-102.

Any part of the intestate estate not passing to the decedent's surviving spouse passes in the following order to the individuals designated below who survive the decedent:

  1. To the decedent's descendants by representation;
  2. If there is no surviving descendant, to the decedent's parents equally if both survive, or to the surviving parent; provided, however, if the decedent is a minor, and if it is shown by clear and convincing evidence that any parent has: (A) Deserted the child without affording means of identification for a period of at least ninety days; (B) Failed to communicate with the child when able to do so for a period of at least one year when the child is in the custody of another; or (C) Failed to provide for care and support of the child when able to do so for a period of at least one year when the child is in the custody of another despite a child support order requiring such support; such parent shall be deemed to have predeceased the decedent;
  3. If there is no surviving descendant or parent entitled to inherit, to the descendants of the decedent's parents or either of them by representation; and
  4. If there is no surviving descendant, parent entitled to take, or descendant of a parent, but the decedent is survived by one or more grandparents or descendants of grandparents, half of the estate passes to the decedent's paternal grandparents equally if both survive, or to the surviving paternal grandparent, or to the descendants of the decedent's paternal grandparents or either of them if both are deceased, the descendants taking by representation; and the other half passes to the decedent's maternal relatives in the same manner. Sec. 560:2-103.

An individual who fails to survive the decedent by one hundred twenty hours is deemed to have predeceased the decedent for purposes of homestead allowance, exempt property, and intestate succession, and the decedent's heirs are determined accordingly. If it is not established by clear and convincing evidence that an individual who would otherwise be an heir survived the decedent by one hundred twenty hours, it is deemed that the individual failed to survive for the required period. This section is not to be applied if its application would result in a taking of intestate estate by the State. Sec. 560:2-104.

If there is no taker under Hawaii law, the intestate estate passes to the State of Hawaii. Sec. 506:2-105.

Will Qualifications


Common Law or Community Property

Hawaii is a common law, elective share state. Sec. 506:2-202.

Capacity

An individual 18 or more years of age who is of sound mind may make a will. Sec. 560:2-501.

Drafting

A will must be:

  1. In writing;
  2. Signed by the testator or in the testator's name by some other individual in the testator's conscious presence and by the testator's direction; and
  3. Signed by at least two individuals, each of whom signed within a reasonable time after the individual witnessed either the signing of the will as described in paragraph (2) or the testator's acknowledgment of that signature or acknowledgment of the will. Sec. 560:2-502.

An individual generally competent to be a witness may act as a witness to a will. The signing of a will by an interested witness does not invalidate the will or any provision of it, including any gift to or appointment of the witness. Sec. 560:2-505.

A will that does not comply with the above is valid as a holographic will, whether or not witnessed, if the signature and material portions of the document are in the testator's handwriting. Intent that the document constitute the testator's will can be established by extrinsic evidence, including, for holographic wills, portions of the document that are not in the testator's handwriting. Sec. 560:2-502.

Although a document or writing added upon a document was not executed in compliance with Sec. 560:2-502, the document or writing is treated as if it had been executed in compliance with that section if the proponent of the document or writing establishes by clear and convincing evidence that the decedent intended the document or writing to constitute: (1) The decedent's will; (2) A partial or complete revocation of the will; (3) An addition to or an alteration of the will; or (4) A partial or complete revival of the decedent's formerly revoked will or of a formerly revoked portion of the will. Sec. 560:2-503.

A will may be simultaneously executed, attested, and made self-proved, by acknowledgment by the testator and affidavits of the witnesses, each made before an officer authorized to administer oaths under the laws of the state in which execution occurs and evidenced by the officer's certificate, under official seal, in substantially the following form as detailed in Sec. 560:2-504. A signature affixed to a self-proving affidavit attached to a will is considered a signature affixed to the will, if necessary to prove the will's due execution. Sec. 560:2-504.

Beneficiaries

An individual who is not established by clear and convincing evidence to have survived an event, including the death of another individual, by one hundred twenty hours is deemed to have predeceased the event. Sec. 560:2-702.

Modifications

A will or any part thereof is revoked by: (1) Executing a subsequent will that revokes the previous will or part expressly or by inconsistency; or (2) Performing a revocatory act on the will, if the testator performed the act with the intent and for the purpose of revoking the will or part or if another individual performed the act in the testator's conscious presence and by the testator's direction. A "revocatory act on the will" includes burning, tearing, canceling, obliterating, or destroying the will or any part of it. A burning, tearing, or canceling is a "revocatory act on the will," whether or not the burn, tear, or cancellation touched any of the words on the will. Sec. 560:2-507.

If a subsequent will does not expressly revoke a previous will, the execution of the subsequent will wholly revokes the previous will by inconsistency if the testator intended the subsequent will to replace rather than supplement the previous will. The testator is presumed to have intended a subsequent will to replace rather than supplement a previous will if the subsequent will makes a complete disposition of the testator's estate. If this presumption arises and is not rebutted by clear and convincing evidence, the previous will is revoked; only the subsequent will is operative on the testator's death. The testator is presumed to have intended a subsequent will to supplement rather than replace a previous will if the subsequent will does not make a complete disposition of the testator's estate. If this presumption arises and is not rebutted by clear and convincing evidence, the subsequent will revokes the previous will only to the extent the subsequent will is inconsistent with the previous will; each will is fully operative on the testator's death to the extent they are not inconsistent. Sec. 560:2-507.

An individual who is divorced from the decedent or whose marriage to the decedent has been annulled is not treated as a surviving spouse unless, by virtue of a subsequent marriage, the individual is married to the decedent at the time of death. Sec. 560:2-802 and Sec. 560:2-804.

Probate Process


Naming of Personal Representative

Prior to receiving letters, a personal representative shall qualify by filing with the appointing court any required bond and a statement of acceptance of the duties of the office. Sec. 560:3-601. To acquire the powers and undertake the duties and liabilities of a personal representative of a decedent, a person must be appointed by order of the court or registrar, qualify and be issued letters. Administration of an estate is commenced by the issuance of letters. Sec. 560:3-103.

A person is disqualified from serving as a personal representative who is:(1) An individual under the age of eighteen; or (2) A person whom the court finds unsuitable in formal proceedings. Persons who are not disqualified have priority for appointment in the following order:

  1. The person with priority as determined by a probated will including a person nominated by a power conferred in a will;
  2. The surviving spouse or reciprocal beneficiary of the decedent who is a devisee of the decedent;
  3. Other devisees of the decedent;
  4. The surviving spouse or reciprocal beneficiary of the decedent;
  5. Other heirs of the decedent; and
  6. Forty-five days after the death of the decedent, any creditor. Sec. 560:3-203.

Submission of Will

In Hawaii, a person having custody of a will of the testator shall either deliver it with reasonable promptness to a person able to secure its probate or if none is known, deposit it with an appropriate court. A person who knowingly and willfully fails to so deliver or deposit a will is liable to any person aggrieved for any damages that may be sustained by the failure, and the court may award treble damages. A person who willfully refuses to deliver a will after being ordered by the court in a proceeding brought for the purpose of compelling delivery is subject to penalty for contempt of court. Sec. 560:2-516.

To be effective to prove the transfer of any property or to nominate an executor, a will must be declared valid by an order of informal probate by the registrar, or an adjudication of probate by the court. Sec. 560:3-102.

Notifications

Notification must be given to any interested person or the person's attorney. Notice may be given by (1) mailing a copy at least fourteen days before the time set for the hearing by certified, registered or ordinary first class mail addressed to the person being notified at the post office address given in the person's demand for notice, if any, or at the person's office or place of residence, if known; (2) delivering a copy to the person being notified personally at least fourteen days before the time set for the hearing; or (3) if the address or identity of any person is not known and cannot be ascertained with reasonable diligence, by publishing at least once a week for three consecutive weeks, in a newspaper having general circulation in the judicial circuit where the hearing is to be held, the last publication of which is to be at least ten days before the time set for the hearing. Sec. 560:1-401.

Inventory

Within three months after the appointment, a personal representative must prepare and file or mail an inventory of property owned by the decedent at the time of death, listing it with reasonable detail, and indicating as to each listed item, its fair market value as of the date of the decedent's death and the type and amount of any encumbrance that may exist with reference to any item. The personal representative must send a copy of the inventory to interested persons who request it. The personal representative may also file the original of the inventory with the court. Sec. 560:3-706.

If any property not included in the original inventory comes to the knowledge of a personal representative or if the personal representative learns that the value or description indicated in the original inventory for any item is erroneous or misleading, the personal representative must make a supplementary inventory or appraisement showing the market value as of the date of the decedent's death of the new item or the revised market value or descriptions, and the appraisers or other data relied upon, if any, and file it with the court if the original inventory was filed, or furnish copies or information to interested persons who request it or who requested a copy of the original inventory. Sec. 560:3-708.

Homestead, Elective Share, Exempt Property and the Family

A decedent's surviving spouse or reciprocal beneficiary is entitled to a homestead allowance of $15,000. If there is no surviving spouse or reciprocal beneficiary, each minor child and each dependent child of the decedent is entitled to a homestead allowance amounting to $15,000 divided by the number of minor and dependent children of the decedent. The homestead allowance is exempt from and has priority over all claims against the estate. Homestead allowance is in addition to any share passing to the surviving spouse or reciprocal beneficiary or minor or dependent child by the will of the decedent, unless otherwise provided, by intestate succession, or by way of elective share. Sec. 560:2-402.

The surviving spouse has a right of election under Hawaii law. The elective-share amount equals a percentage of the augmented estate, determined by the length of time the spouse and the decedent were married. Sec. 560:2-202.

In addition to the homestead allowance, the decedent's surviving spouse is entitled to a value, not exceeding $10,000 in excess of any security interests therein, in household furniture, automobiles, furnishings, appliances, and personal effects. If there is no surviving spouse, the decedent's children are entitled to the same value. If encumbered chattels are selected and the value in excess of security interests, plus that of other exempt property, is less than $10,000 or if there is not $10,000 worth of exempt property in the estate, the spouse or children are entitled to other assets of the estate, if any, to the extent necessary to make up the $10,000 value. Sec. 560:2-403

Surviving spouse or reciprocal beneficiary and minor children whom the decedent was obligated to support and children who were in fact being supported by the decedent are entitled to a reasonable allowance in money out of the estate for their maintenance during the period of administration, which allowance may not continue for longer than one year if the estate is inadequate to discharge allowed claims. Sec. 560:2-404.

Debts and Distributions

A person applying or petitioning for appointment of a personal representative or probate of a will or declaration of an intestacy may publish a notice to creditors once a week for three successive weeks in a newspaper of general circulation in the judicial circuit in which the application or petition is filed notifying creditors of the estate to present their claims no later than four months after the date of the first publication of the notice or be forever barred. The notice may be combined with any published notice of the pendency of the probate proceedings. The personal representative must undertake reasonable review of the decedent's records to ascertain the decedent's creditors. The personal representative may give written notice by mail or other delivery to each known creditor, notifying the creditor to present that creditor's claim within four months after the published notice or within sixty days after the mailing or other delivery of the notice, whichever is later. Sec. 560:3-801.

Claims against a decedent's estate may be presented as follows

  1. The claimant may deliver or mail to the personal representative a written statement of the claim indicating its basis, the name and address of the claimant, and the amount claimed, or may file a written statement of the claim, in the form prescribed by rule, with the clerk of the court. The claim is deemed presented on the first to occur of receipt of the written statement of claim by the personal representative, or the filing of the claim with the court. If a claim is not yet due, the date when it will become due shall be stated. If the claim is contingent or unliquidated, the nature of the uncertainty shall be stated. If the claim is secured, the security shall be described. Failure to describe correctly the security, the nature of any uncertainty, and the due date of a claim not yet due does not invalidate the presentation made;
  2. The claimant may commence a proceeding against the personal representative in any court where the personal representative may be subjected to jurisdiction, to obtain payment of the claimant's claim against the estate, but the commencement of the proceeding must occur within the time limited for presenting the claim. No presentation of claim is required in regard to matters claimed in proceedings against the decedent which were pending at the time of the decedent's death;
  3. If a claim is presented under (1), no proceeding may be commenced more than sixty days after the personal representative has mailed a notice of disallowance; but, in the case of a claim which is not presently due or which is contingent or unliquidated, the personal representative may consent to an extension of the sixty-day period, or to avoid injustice the court, on petition, may order an extension of the sixty-day period, but in no event shall the extension run beyond the applicable statute of limitations. Sec. 560:3-804.

If the assets of the estate are insufficient to pay all claims in full, the personal representative shall make payment in the following order:

  1. costs and expenses of administration;
  2. reasonable funeral expenses including any claim by the department of human services;
  3. debts and taxes with preference under federal law;
  4. reasonable and necessary medical and hospital expenses of the last illness of the decedent, including compensation of persons attending the decedent;
  5. debts and taxes with preference under other laws of this State;
  6. any other claim against the estate pursuant to Sec. 346-37; and
  7. all other claims. Sec. 560:3-805.

Estate/Inheritance Tax


There is no inheritance tax. Residents will pay estate tax on the value of their estate in excess of the federal exemption amount. The estate tax is a graduated tax with a top rate of 15.7% on estates in excess of the exemption amount. Sec. 236E-8(b).

Income Tax Charitable Deductions and/or Credits


Hawaii allows a taxpaying resident to deduct itemized charitable gifts in the same manner as the IRS. Sec. 235-2.3(a).

Gift Annuity Requirements


Hawaii, a "registration" state, regulates the issuance of charitable gift annuities under Hawaii Statutes Sec. 431:1-204. Charities must obtain a permit from the Insurance Division of the State of Hawaii Department of Commerce and Consumer Affairs and meet the annual filing and reserve requirements before issuing charitable gift annuities in this state. The permit exempts the organization from compliance with the Hawaii Insurance Code as an insurance company and upon failure to comply, Hawaii deems the gift annuity agreement life insurance subject to the insurance code.

To qualify, applying charities must have been in continuous operation as a program or fundraiser in Hawaii for at least 10 years, maintain a segregated reserve account fund, and have a net worth of at least $200,000 in the State (consisting of cash, cash equivalents or publicly traded securities exclusive of the assets of any annuities).

Application Process

To register for a permit with the Insurance Division, the charity must assert it meets the above qualifications and provide supporting documentation although there is no state form. No fee is required. The documentation will include proof of its segregated fund, information on its calculated reserves and sample gift annuity agreements.

Disclosure Language

The sample annuity agreements must contain the following state-required disclosure language featured prominently on the first page:

"This gift annuity is not insurance under the laws of the State, is not subject to regulation by the insurance division, and is not protected by any state guaranty fund."

Reserve Requirements

The segregated fund must maintain the sum of its reserves for all outstanding gift annuity agreements plus a surplus of the greater of: (i) $100,000; or (ii) 10% of its reserves. The reserves shall be calculated in accordance with mortality tables and discount rates as determined by the Commissioner of Insurance and within accepted actuarial standards. The segregated fund must be invested under prudent investor rules found in Sec. 431: 1-204(c)(3). Sec. 431:1-204(c)(2) states that the segregated assets shall not be considered in determining whether the foundation or organization meets the $200,000 net worth requirement.

Annual Filing Requirements

Once a permit is granted, Hawaii requires annual filings be submitted to the Department of the Attorney General by March 15. These filings renew the registration annually by providing the charity's most recent annual report and showing that its net worth and reserve requirements are in compliance. Hawaii provides an annual statement form. No fee is required.

Reserve Calculations

In Commissioner's Memorandum 2009-2A issued Nov. 2, 2009, the Hawaii Insurance Commissioner stated that charitable gift annuities must comply with Hawaii Revised Statutes (HRS) §431:1-204 Life insurance and §431:5-307 Standard valuation law. The applicable section of "HRS §431:1-204 Life insurance" permits the Commissioner to select a mortality table and interest rate. In Commissioner's Memorandum 2009-2A, the Insurance Commissioner specified the 2001 CSO Mortality Table as required in HRS sect;16-171-501.

HRS §431:5-307 (c)(4)(B)(ii) states that "(ii) For single premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and from guaranteed interest contracts with cash settlement options, I = .03 + W (R - .03) where R1 is the lesser of R and .09, R2 is the greater of R and .09, R is the reference interest rate defined in this section, and W is the weighting factor defined in this section." Therefore, Hawaii gift annuity reserves may be calculated using a composite Lx male and composite Lx female mortality table specified by the American Society of Actuaries under the 2001 CSO Mortality Table and an interest rate calculated by the formula I = .03 + 0.8 (R - .03), where R is the Moody's Corporate Bond Yield Average for the July 1 to June 30 period preceding the valuation date.

State Contact Information

State of Hawaii Insurance Division
Department of Commerce and Consumer Affairs
P.O. Box 3614
Honolulu, HI 96811-3614
(808) 586-2790
insurance@dcca.hawaii.gov
Paul Yuen (Regulation Analyst)

Hawaii Department of the Attorney General
425 Queen Street
Honolulu, HI 96813
Phone: (808) 586-1500
Fax: (808) 586-1239

State Forms

For more information on state-specific form requirements, please contact Crescendo at 800-858-9154.
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