Dear Quentin,
My sister owns several properties in Hawaii. She is unmarried and has no children. She is not interested in setting up a will or trust because she does not believe it is worth paying for. If she passes, she believes everything she has will go to our mother. If our mother passed before her, she didn't care who got her property.
Several years ago, we discovered that our biological father, whom we had never met and who had died many years ago, was married to another woman and had a son. The son is now in his thirties. We have never met the Son, but it is well known within our extended family that he exists and that he knows we exist. Our mother and biological father were never married.
If my sister dies without a will or trust, will our half-brother get a portion of her estate?
Nosy brother
Related: My friend found out he had a biological daughter 60 years ago. Does she – or her family – have a right to his property?
“In Hawaii, half-siblings inherit as if they were full or ‘full’ siblings – as if you shared the same mother and father.”
Market watch illustration
Dear curious,
Maybe if you educate your sister about Hawaii's intestacy laws—that is, what happens to her property if she dies without a will—she will change her mind about writing a will. What's stopping her? She doesn't want to think about death? Do you think she'll have all the time in the world to eventually write one? However, your sister is not unusual in this. In one recent poll, 67% of Americans said they did not have an estate plan.
So here's a little information: If your sister dies and doesn't have a husband or child, her assets will actually pass to your mother. If your mother dies before your sister, her estate will be distributed equally among her siblings and, yes, half-siblings. In Hawaii, half-siblings inherit as if they were full or “full” siblings – as if you shared the same father and mother. This information in itself may be enough to prompt your sister to write a will.
If a Hawaii resident dies while owning property, “no matter how small its value, 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. … Informal will can be used when all beneficiaries are cooperating. There is no need to appear in court. This is the least expensive and quickest type of will.
Create trust
If your sister wants her assets and wants them to remain private and confidential, a trust will serve her better than a last will and testament, which, because it has to go through probate court, is effectively a public accounting of her assets and liabilities. When a will is filed with the probate court, it becomes part of the public record, and can be accessed by family members, extended family members, friends, neighbors, and old high school classmates.
If you create a revocable trust, she can be both grantor and trustee during her lifetime, and is free 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 judgments or creditors or help her qualify for Medicaid, the program that provides medical care to low-income Americans. Setting up a trust can also be expensive and comes with ongoing administrative and legal costs.
She can appoint an executor of her estate — ideally, someone she trusts — and appoint a relative, friend, attorney or financial institution as successor trustee. A trustee is a fiduciary and has a legal and moral duty to carry out his or her wishes. It may seem strange – to your sister at least – but organizing her affairs should be an interesting and, dare I say it, fun process. She worked hard for her property. Doesn't she have a say in how it's 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.
paying off The Moneyist on Facebook A group, where we search for answers to life's thorny money issues. Post your questions, tell me what you'd like to know more about, or participate in the latest Moneyist columns.
The Moneyist regrets that he cannot respond to questions individually.
Previous columns by Quentin Futrell:
My parents want to pay off their $200,000 mortgage and move into my rental home. They say I owe my sister $100,000. Is this too risky?
I inherited $246,000 from my mother and used $142,000 to pay off the mortgage. If we divorce can I take him back?
I want more time with my newborn son, but my husband doesn't work. Should I quit my job and dip into my six-figure trust fund?
