What is an Irrevocable Hawaii Trust?

An irrevocable Hawaii trust cannot be revoked by the grantor during the grantor’s lifetime. The Hawaii trust is properly funded with assets, but no portion of the assets will be included in the grantor’s gross estate.

As with a revocable trust, the assets will not be included in the Honolulu probate process.

However, there are exceptions that can cause irrevocable trust assets to be calculated and included back in the grantor’s gross estate.

Transfer within 3 years of death:

  • Transfer of a life insurance policy that was owned by the Grantor and who is the insured, transferred the policy and retained incident of ownership
  • Transfer of property, which the grantor reserved the right to alter, amend or revoke
  • Transfer of a lifetime right of a property that the grantor reserved the right to use or enjoy and relinquished the right
  • Transfer of property to an irrevocable trust, in which the Grantor held a reversionary interest that was greater than 5%

Drawbacks of Irrevocable Hawaii Trusts:

  • The Transfer of assets could promote a gift tax liability on the assets repositioned
  • Once established and funded, it cannot be changed or terminated by the Grantor
  • In order to repeal the trust, special court order would need to be obtained