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Hawaii Transfer on Death Deed Overview
Transfer on Death Deeds in Hawaii
In 2011, Hawaii enacted its version of the Uniform Real Property Transfer on Death Act (URPTODA), found at Chapter 527 of the Hawaii Revised Statutes.
Along with Hawaii, a growing number of states are choosing to adopt the provisions of the URPTODA. The new law allows landowners to direct the distribution of what is often their most significant asset, their real estate, with a correctly executed and recorded transfer on death deed.
Transfer on death deeds are nontestamentary, which means ownership of the property passes to the beneficiary without instructions in a will or the need for probate (5277). Unnecessary conflicts are likely to add confusion and expense, however, so property owners should take care to ensure that their wills and TODDs contain the same instructions.
Hawaii's version of the URPTODA sets out the specific requirements for lawful transfer on death deeds:
The capacity required to make or revoke a transfer on death deed is the same as the capacity required to make a will (5278, 560:2-501).
It must contain the essential elements and formalities of a properly recordable inter vivos deed, such as warranty or quitclaim deed (5279(1))
It must state that the transfer to the designated beneficiary is to occur at the transferor's death (5279 (2))
Most importantly, it must be recorded before the transferor's death in the office of the clerk of the county commission in the county where the property is located (5279 (3)).
The named beneficiary gains no present rights to the property, only a potential future interest. Instead, the transferors retain absolute control during their lives. This includes the freedom to sell or transfer it to someone else, and to modify or revoke the intended transfer on death (52712). These details, along with the fact that TODDs only convey the property rights remaining, if any, at the owner's death, explain why they do not require notice or consideration (52710).
According to 52713(a), the beneficiary gains equitable interest in the property ONLY when the owner dies. Note, however, that the beneficiary must be alive at the time of the transferor's death or the interest returns to the estate. To prevent this from happening, the owner may identify one or more contingent beneficiaries. All beneficiaries take title subject to any obligations (contracts, easements, etc.) associated with the property when the transferor dies (52713(b)).
With the new transfer on death deeds, real property owners in Hawaii have access to a convenient, flexible tool for managing one aspect of a comprehensive estate plan. Even so, a TODD may not be appropriate for everyone. Since each situation is unique, contact an attorney with specific questions or for complex circumstances.