(a) A creditor may avoid a permitted transfer pursuant to § 554G-8 only to the extent necessary to satisfy the transferor‘s debt to the creditor at whose instance the transfer has been avoided, together with costs including attorney’s fees as allowed by a court.
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Terms Used In Hawaii Revised Statutes 554G-10

  • Attachment: A procedure by which a person's property is seized to pay judgments levied by the court.
  • Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
  • Creditor: means , with respect to a transferor, a person who has a claim. See Hawaii Revised Statutes 554G-2
  • Debt: means liability on a claim. See Hawaii Revised Statutes 554G-2
  • Equitable: Pertaining to civil suits in "equity" rather than in "law." In English legal history, the courts of "law" could order the payment of damages and could afford no other remedy. See damages. A separate court of "equity" could order someone to do something or to cease to do something. See, e.g., injunction. In American jurisprudence, the federal courts have both legal and equitable power, but the distinction is still an important one. For example, a trial by jury is normally available in "law" cases but not in "equity" cases. Source: U.S. Courts
  • Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
  • Garnishment: Generally, garnishment is a court proceeding in which a creditor asks a court to order a third party who owes money to the debtor or otherwise holds assets belonging to the debtor to turn over to the creditor any of the debtor
  • Lien: A claim against real or personal property in satisfaction of a debt.
  • Permitted property: includes real property, personal property, and interests in real or personal property. See Hawaii Revised Statutes 554G-2
  • Permitted transfer: means a transfer of permitted property by or from one or more transferors who own an undivided interest in the property to one or more trustees, at least one of which is a permitted trustee, by means of a trust instrument, regardless of whether consideration is exchanged. See Hawaii Revised Statutes 554G-2
  • Tenancy by the entirety: A type of joint tenancy between husband and wife that is recognized in some States. Neither party can sever the joint tenancy relationship; when a spouse dies, the survivor acquires full title to the property.
  • Transfer: means the disposition, conveyance, or assignment of property, including the change in the legal ownership of property occurring upon the substitution of one trustee for another or the addition of one or more new trustees, or the exercise of a power that causes the disposition, conveyance, or assignment of permitted property to a trustee or trustees, but shall not include the release or relinquishment of an interest in property that was formerly the subject of a permitted transfer. See Hawaii Revised Statutes 554G-2
  • Transferor: means :

    (1) An owner of permitted property;

    (2) The holder of a power of appointment that authorizes the holder to appoint in favor of the holder, the holder's creditors, the holder's estate, or the creditors of the holder's estate; or

    (3) A trustee who directly or indirectly makes a disposition of permitted property. See Hawaii Revised Statutes 554G-2

  • Trust instrument: means an irrevocable instrument appointing a permitted trustee or permitted trustees for the permitted property that is the subject of a disposition. See Hawaii Revised Statutes 554G-2
  • Trustee: A person or institution holding and administering property in trust.
  • Trustee: includes an original, additional, or successor trustee, whether or not appointed or confirmed by court. See Hawaii Revised Statutes 554G-2
(b) In an action pursuant to subsection (a) to avoid a permitted transfer:

(1) If a court finds that a trustee has not acted with intent to defraud, hinder, or delay the creditor in accepting or administering the property that is the subject of the permitted transfer:

(A) The trustee shall have a first and paramount lien against the property that is the subject of the permitted transfer in an amount equal to the entire cost including attorney’s fees properly incurred by the trustee in the defense of the action or proceedings to avoid the permitted transfer;
(B) The permitted transfer shall be avoided, subject to payment of proper fees, costs, preexisting rights, claims, and interests of the trustee and of any predecessor trustee who has not acted with intent to defraud, hinder, or delay the creditor; and
(C) For purposes of this paragraph, it shall be presumed that the trustee did not act with intent to defraud, hinder, or delay the creditor merely by accepting the property; and
(2) If the court is satisfied that a beneficiary of the trust has not acted with intent to defraud, hinder, or delay the creditor, the permitted transfer shall be avoided subject to the beneficiary’s right to retain any distribution made prior to the creditor’s commencement of an action to avoid the permitted transfer; provided that for purposes of this paragraph, it shall be presumed that a beneficiary did not act with intent to defraud, hinder, or delay the creditor merely by creating the trust or by accepting a distribution made in accordance with the terms of the trust.
(c) A creditor who brings an action pursuant to § 554G-8 to avoid a permitted trust shall have the burden of proving by clear and convincing evidence that a trustee or beneficiary acted with intent to defraud, hinder, or delay the creditor; provided that in the case of a beneficiary who is also the transferor, the burden on the creditor shall be to prove by a preponderance of the evidence that the transferor-beneficiary acted with intent to defraud, hinder, or delay the creditor.
(d) For purposes of this chapter, attachment, garnishment, sequestration, or other legal or equitable process shall be permitted only where permitted by the express terms of this chapter.
(e) Notwithstanding any other provision of this chapter, a creditor shall have no right against the interest of a beneficiary to a trust based solely on the beneficiary’s right to authorize or direct the trustee to use all or part of the trust property to pay:

(1) Estate or inheritance taxes imposed upon or due to the beneficiary’s estate;
(2) Debts of the beneficiary’s estate; or
(3) Expenses of administering the beneficiary’s estate,

unless the beneficiary actually directs the payment of taxes, debts, or expenses and then only to the extent of that direction.

(f) Where spouses make a permitted transfer of property and, immediately before the permitted transfer, the property, any part of the permitted property, or any accumulation to the permitted property was, pursuant to applicable law, owned by them as tenants by the entirety, then notwithstanding the permitted transfer and except where the provisions of the trust instrument expressly provide to the contrary, the property and any accumulation to the property, while held in trust during the lifetime of both spouses, shall be treated as though it were held in tenancy by the entirety and shall be subject to all applicable law; provided that in every other respect, the property shall be subject to the terms of the trust instrument.

In any action concerning whether a creditor of either or both spouses may recover the debt from the trust, upon avoidance of the permitted transfer the sole remedy available to the creditor with respect to trust property treated as though it were held in tenancy by the entirety shall be an order directing the trustee to transfer the property to both spouses as tenants by the entirety.

(g) Subject to all of the provisions of this section and except as otherwise provided in subsection (f), upon avoidance of a qualified disposition to the extent permitted under subsection (a), the sole remedy available to the creditor shall be an order directing the trustee to transfer to the transferor the amount necessary to satisfy the transferor’s debt to the creditor at whose instance the disposition has been avoided.

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