(a) Notwithstanding the breadth of discretion granted to a trustee in the terms of the trust, including the use of terms such as “absolute”, “sole”, or “uncontrolled”, the trustee shall exercise a discretionary power in good faith and in accordance with the terms and purposes of the trust and the interests of the beneficiaries.
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Terms Used In Hawaii Revised Statutes 554D-814

  • Ascertainable standard: means a standard relating to an individual's health, education, support, or maintenance within the meaning of section 2041(b)(1)(A) or 2514(c)(1) of the Internal Revenue Code of 1986, as in effect on the effective date of this chapter. See Hawaii Revised Statutes 554D-103
  • Court: means the circuit court in this State having jurisdiction over all subject matter relating to trusts. See Hawaii Revised Statutes 554D-103
  • Fiduciary: A trustee, executor, or administrator.
  • Interests of the beneficiaries: means the beneficial interests provided in the terms of the trust. See Hawaii Revised Statutes 554D-103
  • Marital deduction: The deduction(s) that can be taken in the determination of gift and estate tax liabilities because of the existence of a marriage or marital relationship.
  • Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
  • Person: means an individual; corporation; business trust; estate; trust; partnership; limited liability company; association; joint venture; government; governmental subdivision, agency, or instrumentality; public corporation; or any other legal or commercial entity. See Hawaii Revised Statutes 554D-103
  • Settlor: means a person, including a testator, who creates, or contributes property to, a trust. See Hawaii Revised Statutes 554D-103
  • Spouse: includes individuals who are married to each other and individuals who are reciprocal beneficiaries. See Hawaii Revised Statutes 554D-103
  • Trustee: A person or institution holding and administering property in trust.
  • Trustee: includes an original, additional, and successor trustee, and a cotrustee. See Hawaii Revised Statutes 554D-103
(b) Subject to subsection (d), and unless the terms of the trust expressly indicate that a rule in this subsection does not apply:

(1) A person other than a settlor who is a beneficiary and trustee of a trust that confers on the trustee a power to make discretionary distributions to or for the trustee’s personal benefit may exercise the power only in accordance with an ascertainable standard; and
(2) A trustee shall not exercise a power to make discretionary distributions to satisfy a legal obligation of support that the trustee personally owes another person.
(c) A power whose exercise is limited or prohibited by subsection (b) may be exercised by a majority of the remaining trustees whose exercise of the power is not so limited or prohibited. If the power of all trustees is so limited or prohibited, the court may appoint a special fiduciary with authority to exercise the power.
(d) Subsection (b) shall not apply to:

(1) A power held by the settlor’s spouse who is the trustee of a trust for which a marital deduction, as defined in section 2056(b)(5) or 2523(e) of the Internal Revenue Code of 1986, as in effect on the effective date of this chapter was previously allowed;
(2) Any trust during any period that the trust may be revoked or amended by its settlor; or
(3) A trust if contributions to the trust qualify for the annual exclusion under section 2503(c) of the Internal Revenue Code of 1986, as in effect on the effective date of this chapter.
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