STAND. COM. REP. NO. 2286

                                   Honolulu, Hawaii
                                                     , 2000

                                   RE:  S.B. No. 2536
                                        S.D. 1




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Judiciary, to which was referred S.B. No.
2536 entitled: 

     "A BILL FOR AN ACT RELATING TO THE UNIFORM PRINCIPAL AND
     INCOME ACT,"

begs leave to report as follows:

     The purpose of this measure is to repeal the Revised Uniform
Principal and Income Act (Chapter 557, Hawaii Revised Statutes),
and establish in its place a new uniform principal and income
act.

     Your Committee finds that Hawaii's present Uniform Principal
and Income Act, which dates from 1973, does not sufficiently
accommodate modern methods of investment.  In particular, the
present law does not allow a trustee to invest trust funds in
ways that produce high capital gains but low or no income, such
as growth-oriented stocks, because the trustee cannot then use a
portion of the capital gains to pay income beneficiaries.  This
bill would bring our law into line with other states that have
updated their laws in this area, and would allow trustees the
flexibility to invest trust funds for maximum total return, while
remaining fair to both income and remainder beneficiaries.

     Testimony in support of this measure was submitted by
Hawaii's Commission to Promote Uniform Legislation, the Hawaii
Bankers Association, Pacific Century Trust, and the Hawaii
Society of Certified Public Accountants.


 
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     Upon further consideration, your Committee has amended this
measure by making technical, non-substantive amendments for the
purposes of clarity and style.

     As affirmed by the record of votes of the members of your
Committee on Judiciary that is attached to this report, your
Committee is in accord with the intent and purpose of S.B. No.
2536, as amended herein, and recommends that it pass Second
Reading in the form attached hereto as S.B. No. 2536, S.D. 1, and
be referred to the Committee on Ways and Means.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Judiciary,



                                   ______________________________
                                   AVERY B. CHUMBLEY, Co-Chair



                                   ______________________________
                                   MATTHEW M. MATSUNAGA, Co-Chair

 
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