Full question:
My father passed away on 4/28/09. He had a trust set up in the State of Hawaii. A local bank was named trustee, but declined to be trustee after his passing. My 2 brothers and I signed a form acknowledging their withdrawal, but in no way declared that any of us would be trustee. No one in our family was willing to be trustee and as of now there still is no personal representative. His estate has tremendous debts. What happens when there's no trustee? Are we going to be in any way responsible for his debts?
- Category: Trusts
- Date:
- State: Hawaii
Answer:
The outcome depends on the trust document's terms, particularly regarding successor trustees. If the trust does not name a successor, the beneficiaries can petition the court to appoint one. Generally, a deceased person's debts are paid from the estate's assets. As children, you typically do not inherit your parent's debts unless you co-signed or guaranteed them. In community property states, a spouse may be liable for certain debts, but this varies by state law.
After debts are settled, remaining assets are distributed among beneficiaries. If a child inherits property tied to a debt, like a mortgaged house or an unpaid car, the debt transfers with the property. If the estate lacks sufficient assets to cover debts, unsecured creditors, like credit card companies, may not be paid. In Hawaii, beneficiaries representing a majority can nominate a trustee to the court (Haw. Rev. Stat. § 554-2).
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.