(a) A trustee may account for net receipts from the sale of timber and related products under subsection (b), unless the trustee determines that net receipts are insubstantial and allocates the net receipts to principal under § 557A-408. If a trust owns more than one block of timberland, the trustee may use different methods to account for net receipts from different blocks.
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Terms Used In Hawaii Revised Statutes 557A-412

  • Contract: A legal written agreement that becomes binding when signed.
  • Decedent: A deceased person.
  • Income: means money or property a fiduciary receives as the current return from a principal asset. See Hawaii Revised Statutes 557A-102
  • Income interest: means an income beneficiary's right to receive all or part of the net income, whether the terms of the trust require it to be distributed or authorize it to be distributed in the trustee's discretion. See Hawaii Revised Statutes 557A-102
  • Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC
  • 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
(b) If a trustee does not account under § 557A-408 for net receipts from the sale of timber and related products or allocate the net receipts to principal because they are insubstantial, the trustee shall allocate the net receipts:

(1) To income to the extent that the amount of timber removed from the land does not exceed the rate of growth of the block as a whole during the accounting periods in which a beneficiary has a mandatory income interest;
(2) To principal to the extent that the amount of timber removed from the land exceeds the block’s rate of growth or the net receipts are from the sale of standing timber;
(3) To or between income and principal if the net receipts are from the lease of timberland or from a contract to cut timber from land owned by a trust, by determining the amount of timber removed from the land under the lease or contract and applying the rules in paragraphs (1) and (2); or
(4) To principal to the extent that advance payments, bonuses, and other payments are not allocated pursuant to paragraph (1), (2), or (3).
(c) In determining the net receipts from the sale of timber, a trustee shall deduct and transfer to principal a reasonable amount for depletion.
(d) This chapter applies regardless of whether a decedent or transferor was harvesting timber from the property before it became subject to the trust.
(e) If a trust owns an interest in timberland on July 1, 2000, the trustee may allocate net receipts from the sale of timber and related products as provided in this section or in the manner used by the trustee before July 1, 2000. If the trust acquires an interest in timberland after July 1, 2000, the trustee shall allocate net receipts from the sale of timber and related products as provided in this section.

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