[§554G-12]  Taxation.  (a)  The State shall levy a one-time one per cent excise tax on the fair market value of all permitted transfers.  This one-time excise tax shall be administered by the department of taxation with all of its authorities under title 14, including all rights relating to the assessment, collection, and enforcement of the tax laws.  The department of taxation shall be authorized to implement the tax under this section, including the timing, collection, and appeal rights of persons affected, by rule, including temporary rule.

     (b)  A non-grantor trust established under this chapter shall be subject to income tax in Hawaii; provided that to the extent that the beneficial interest in the non-grantor trust shall be held by a beneficiary or beneficiaries residing outside this State, any income or capital gains accumulated for the benefit of the non-resident beneficiary or beneficiaries shall be excluded from Hawaii income tax for that year.

     (c)  A trustee of a non-grantor trust established under this chapter shall not be required to track accumulated income or gains attributable to a nonresident beneficiary.

     (d)  Notwithstanding any discretionary distribution provisions to the contrary, where the percentage interests of the beneficiaries are indeterminable based on the provisions of the trust, the trustee shall allocate accumulated income and gains equally among all beneficiaries then entitled to distributions of income.

     (e)  Hawaii resident taxpayers who receive actual or constructive distributions of income or principal from trusts shall be subject to all applicable taxes on that income. [L 2010, c 182, pt of §2]