If a trustee determines that an allocation between principal and income required by sections 557A-409 through 557A-412 or section [ 557A-415 ] is insubstantial, the trustee may allocate the entire amount to principal if one of the circumstances described in section 557A-104(c) does not apply to such an allocation. This power may be exercised by a co-trustee in the circumstances described in section 557A-104(d), and it may be released for the reasons and in the manner described in section 557A-104(e). An allocation shall be presumed to be insubstantial if:

(1) The amount of the allocation would increase or decrease an accounting period‘s net income, as determined before the allocation, by less than ten per cent; or

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Terms Used In Hawaii Revised Statutes 557A-408

  • Accounting period: means a calendar year unless another twelve-month period is selected by a fiduciary. See Hawaii Revised Statutes 557A-102
  • Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
  • Income: means money or property a fiduciary receives as the current return from a principal asset. See Hawaii Revised Statutes 557A-102
  • Net income: means the total receipts allocated to income during an accounting period minus the disbursements made from income during the period. See Hawaii Revised Statutes 557A-102
  • Principal: means property held in trust for distribution to a remainder beneficiary when the trust terminates. See Hawaii Revised Statutes 557A-102
  • 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 a court. See Hawaii Revised Statutes 557A-102
(2) The value of the asset producing the receipt for which the allocation would be made is less than ten per cent of the total value of the trust’s assets at the beginning of the accounting period.