(a) An amount received as interest, whether determined at a fixed, variable, or floating rate, on an obligation to pay money to the trustee, including an amount received as consideration for prepaying principal, shall be allocated to income without any provision for amortization of premium.
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Terms Used In Hawaii Revised Statutes 557A-406

  • Amortization: Paying off a loan by regular installments.
  • Income: means money or property a fiduciary receives as the current return from a principal asset. See Hawaii Revised Statutes 557A-102
  • 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.
  • 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) An amount received from the sale, redemption, or other disposition of an obligation to pay money to the trustee more than one year after it is purchased or acquired by the trustee, including an obligation whose purchase price or value when it is acquired is less than its value at maturity, shall be allocated to principal. If the obligation matures within one year after it is purchased or acquired by the trustee, an amount received in excess of its purchase price or its value when acquired by the trust shall be allocated to income.
(c) This section shall not apply to obligations to which sections 557A-409 through 557A-412, 557A-414, and 557A-415 apply.

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