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Hawai‘i Asset Protection Trust

A new and powerful estate planning tool.

March 8, 2012
Scott A. Makuakane and Roya J. Deyhim - Estate Planning Attorneys , The Maui Weekly

Two years ago, Hawai'i joined Delaware, Nevada and 11 other states in validating "self-settled spendthrift trusts." What this means is that you can now create a trust for yourself that will protect your assets from your own creditors. This is a huge departure from prior law, which expressly prohibited such trusts. For convenience, we will call them "APTs," which stands for "Asset Protection Trusts."

Not only do APTs provide asset protection, they can also be made to last "forever," or at least until all of the assets are used up. Hawai'i law has long recognized something called the "rule against perpetuities," which essentially says that a private trust (any trust other than a charitable trust) can last for about 100 years, and then the trust must terminate.

Hawai'i's first attempt at allowing APTs, which was back in 2010, was doomed to failure. For one thing, the law imposed a 1 percent tax on all assets transferred to APTs. The law also limited the kinds of assets that could be put into APTs.

As of July 1, 2011, our Legislature removed the restrictions on APTs, so that a person can place any kind of property into his or her APT, and there is no longer a 1 percent tax imposed on each asset transferred into the trust.

Hawai'i APTs do not shelter assets from claims of existing creditors. In other words, you cannot incur a debt (for example, by way of a car accident or a bad business deal) and then create a Hawai'i APT to shield your assets from liability on that debt. On the other hand, the ideal time to create a Hawai'i APT is before you start a new business or launch a practice in a field such as medicine, law or architecture, where legal claims against you are an ongoing risk.

A Hawai'i APT is not for everybody. You should only create one if you understand what it is and how it works, and before you do anything else, you should seek the assistance of competent legal counsel and other advisors who can help you evaluate whether this is a workable strategy for you.


Scott A. Makuakane and Roya J. Deyhim are estate planning attorneys with the law firm of Est8Planning Counsel LLLC. Contact Est8Planning Counsel LLLC at 891-8881 or



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