STAND. COM. REP. NO. 2610

                                   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 Ways and Means, to which was referred S.B.
No. 2536, S.D. 1, entitled:

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

begs leave to report as follows:

     The purpose of this bill is to enact a new Uniform Principal
and Income Act.

     This bill also repeals the existing Revised Uniform
Principal and Income Act under chapter 557, Hawaii Revised
Statutes.

     Your Committee finds that this bill brings Hawaii's law in
line with other states that have updated their laws in this area.
Hawaii's present uniform law on this subject, 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.

     Your Committee agrees with the intent of this bill, which
allows trustees the flexibility to invest trust funds for maximum
total return, while remaining fair to both income and remainder
beneficiaries.

 
a                                                      SB2536 SD1
 
                                   STAND. COM. REP. NO. 2610
                                   Page 2


     As affirmed by the record of votes of the members of your
Committee on Ways and Means that is attached to this report, your
Committee is in accord with the intent and purpose of S.B. No.
2536, S.D. 1, and recommends that it pass Third Reading.

                                 Respectfully submitted on behalf
                                 of the members of the Committee
                                 on Ways and Means,



                                 ________________________________
                                 CAROL FUKUNAGA, Co-Chair



                                 ________________________________
                                 ANDREW LEVIN, Co-Chair

 
a                                                      SB2536 SD1