REPORT TITLE:
Probate


DESCRIPTION:
Authorizes trustees to split a trust into separate trusts for
administration or tax purposes.  Streamlines transfer of
unclaimed assets from a personal representative or trustee to the
State.  Apportions expenses incurred in the determination of
apportionment of estate taxes.  Raises threshold for
classification as a small estate from $60,000 to $100,000.
(HB2646 HD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        2646
HOUSE OF REPRESENTATIVES                H.B. NO.           H.D. 1
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO TRUSTS AND ESTATES.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  Section 554A-3, Hawaii Revised Statutes, is
 
 2 amended by amending subsection (c) to read as follows:
 
 3      "(c)  A trustee has the power, subject to subsections (a)
 
 4 and (b):
 
 5      (1)  To collect, hold, and retain trust assets received from
 
 6           a trustor until, in the judgment of the trustee,
 
 7           disposition of the assets should be made;
 
 8      (2)  To receive additions to the assets of the trust;
 
 9      (3)  To continue or participate in the operation of any
 
10           business or other enterprise, and to effect
 
11           incorporation, dissolution, or other change in the form
 
12           of the organization of the business or enterprise;
 
13      (4)  To invest and reinvest trust assets in accordance with
 
14           the provisions of the trust or as provided by law;
 
15      (5)  To deposit trust funds in a bank;
 
16      (6)  To acquire or dispose of an asset, for cash or on
 
17           credit, at public or private sale; and to manage,
 
18           develop, improve, exchange, partition, change the
 
19           character of, or abandon a trust asset or any interest
 

 
Page 2                                                     2646
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1           therein; and to encumber, mortgage, or pledge a trust
 
 2           asset for a term within or extending beyond the term of
 
 3           the trust, in connection with the exercise of any power
 
 4           vested in the trustee;
 
 5      (7)  To make ordinary or extraordinary repairs or
 
 6           alterations in buildings or other structures, to
 
 7           demolish any improvements, to raze existing or erect
 
 8           new party walls or buildings;
 
 9      (8)  To subdivide, develop, or dedicate land to public use;
 
10           or to make or obtain the vacation of plats and adjust
 
11           boundaries; or to adjust differences in valuation on
 
12           exchange or partition by giving or receiving
 
13           consideration; or to dedicate easements to public use
 
14           without consideration;
 
15      (9)  To enter for any purpose into a lease as lessor or
 
16           lessee with or without option to purchase or renew for
 
17           a term within or extending beyond the term of the
 
18           trust;
 
19     (10)  To enter into a lease or arrangement for exploration
 
20           and removal of minerals or other natural resources or
 
21           enter into a pooling or unitization agreement;
 
22     (11)  To grant an option involving disposition of a trust
 
23           asset, or to take an option for the acquisition of any
 
24           asset;
 

 
Page 3                                                     2646
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1     (12)  To vote a security, in person or by general or limited
 
 2           proxy;
 
 3     (13)  To pay calls, assessments, and any other sums
 
 4           chargeable or accruing against or on account of
 
 5           securities;
 
 6     (14)  To sell or exercise stock subscription or conversion
 
 7           rights; to consent, directly or through a committee or
 
 8           other agent, to the reorganization, consolidation,
 
 9           merger, dissolution, or liquidation of a corporation or
 
10           other business enterprise;
 
11     (15)  To hold a security in the name of a nominee or in other
 
12           form without disclosure of the trust, so that title to
 
13           the security may pass by delivery, but the trustee is
 
14           liable for any act of the nominee in connection with
 
15           the stock so held;
 
16     (16)  To insure the assets of the trust against damage or
 
17           loss, and the trustee against liability with respect to
 
18           third persons;
 
19     (17)  To borrow money to be repaid from trust assets or
 
20           otherwise; to advance money for the protection of the
 
21           trust, and for all expenses, losses, and liabilities
 
22           sustained in the administration of the trust or because
 
23           of the holding or ownership of any trust assets, for
 

 
Page 4                                                     2646
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1           which advances with any interest the trustee has a lien
 
 2           on the trust assets as against the beneficiary;
 
 3     (18)  To pay or contest any claim; to settle a claim by or
 
 4           against the trust by compromise, arbitration, or
 
 5           otherwise; and to release, in whole or in part, any
 
 6           claim belonging to the trust to the extent that the
 
 7           claim is uncollectible;
 
 8     (19)  To pay taxes, assessments, compensation of the trustee,
 
 9           and other expenses incurred in the collection, care,
 
10           administration, and protection of the trust;
 
11     (20)  To allocate items of income or expense to either trust
 
12           income or principal, as provided by chapter 557, the
 
13           Revised Uniform Principal and Income Act, including
 
14           creation of reserves out of income for depreciation,
 
15           obsolescence, or amortization, or for depletion in
 
16           mineral or timber properties;
 
17     (21)  To pay any sum distributable to a beneficiary under
 
18           legal disability, without liability to the trustee, by
 
19           paying the sum to the beneficiary or by paying the sum
 
20           for the use of the beneficiary either to a legal
 
21           representative appointed by the court, or if none, to a
 
22           relative;
 

 
 
 
Page 5                                                     2646
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1     (22)  To effect distribution of money and property (that may
 
 2           be made in kind on a pro rata or non-pro rata basis),
 
 3           in divided or undivided interests, and to adjust
 
 4           resulting differences in valuation;
 
 5     (23)  To employ persons, including attorneys, auditors,
 
 6           investment advisors, or agents, even if they are
 
 7           associated with the trustee, to advise or assist the
 
 8           trustee in performance of the trustee's administrative
 
 9           duties; to act without independent investigation upon
 
10           their recommendations; and instead of acting
 
11           personally, to employ one or more agents to perform any
 
12           act of administration, whether or not discretionary;
 
13     (24)  To prosecute or defend actions, claims, or proceedings
 
14           for the protection of trust assets and of the trustee
 
15           in the performance of trustee duties; [and]
 
16     (25)  To execute and deliver all instruments which will
 
17           accomplish or facilitate the exercise of the powers
 
18           vested in the trustee[.]; and
 
19     (26)  To divide, sever, or separate a single trust into two
 
20           or more separate trusts for administration or tax
 
21           purposes, including the allocation of the generation-
 
22           skipping transfer exemption; provided the terms of the
 

 
 
 
Page 6                                                     2646
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1           new trust provide, in the aggregate, for the same
 
 2           succession of interests and beneficiaries as are
 
 3           provided in the original trust."
 
 4      SECTION 2.  Section 560:2-707, Hawaii Revised Statutes, is
 
 5 amended to read as follows:
 
 6      "560:2-707  Survivorship with respect to future interests
 
 7 under terms of trust; substitute takers.(a)  Definitions.  In
 
 8 this section:
 
 9      "Alternative future interest" means an expressly created
 
10 future interest that can take effect in possession or enjoyment
 
11 instead of another future interest on the happening of one or
 
12 more events, including survival of an event or failure to survive
 
13 an event, whether an event is expressed in condition-precedent,
 
14 condition-subsequent, or any other form.  A residuary clause in a
 
15 will does not create an alternative future interest with respect
 
16 to a future interest created in a nonresiduary devise in the
 
17 will, whether or not the will specifically provides that lapsed
 
18 or failed devises are to pass under the residuary clause.
 
19      "Beneficiary" means the beneficiary of a future interest and
 
20 includes a class member if the future interest is in the form of
 
21 a class gift.
 
22      "Class member" includes an individual who fails to survive
 
23 the distribution date but who would have taken under a future
 

 
Page 7                                                     2646
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 interest in the form of a class gift had the individual survived
 
 2 the distribution date.
 
 3      "Distribution date", with respect to a future interest,
 
 4 means the time when the future interest is to take effect in
 
 5 possession or enjoyment.  The distribution date need not occur at
 
 6 the beginning or end of a calendar day, but can occur at a time
 
 7 during the course of a day.
 
 8      "Future interest" includes an alternative future interest
 
 9 and a future interest in the form of a class gift.
 
10      "Future interest under the terms of a trust" means a future
 
11 interest that was created by a transfer creating a trust or to an
 
12 existing trust or by an exercise of a power of appointment to an
 
13 existing trust, directing the continuance of an existing trust,
 
14 designating a beneficiary of an existing trust, or creating a
 
15 trust.
 
16      "Surviving beneficiary" or "surviving descendant" means a
 
17 beneficiary or a descendant who neither predeceased the
 
18 distribution date nor is deemed to have predeceased the
 
19 distribution date under section 560:2-702.
 
20      (b)  Survivorship required; substitute gift.  A future
 
21 interest under the terms of a trust executed after January 1,
 
22 1997 is contingent on the beneficiary's surviving the
 

 
 
 
Page 8                                                     2646
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 distribution date.  If a beneficiary of a future interest under
 
 2 the terms of a trust fails to survive the distribution date, the
 
 3 following apply:
 
 4      (1)  Except as provided in paragraph (4), if the future
 
 5           interest is not in the form of a class gift and the
 
 6           deceased beneficiary leaves surviving descendants, a
 
 7           substitute gift is created in the beneficiary's
 
 8           surviving descendants.  They take by representation the
 
 9           property to which the beneficiary would have been
 
10           entitled had the beneficiary survived the distribution
 
11           date;
 
12      (2)  Except as provided in paragraph (4), if the future
 
13           interest is in the form of a class gift, other than a
 
14           future interest to "issue", "descendants", "heirs of
 
15           the body", "heirs", "next of kin", "relatives", or
 
16           "family", or a class described by language of similar
 
17           import, a substitute gift is created in the surviving
 
18           descendants of any deceased beneficiary.  The property
 
19           to which the beneficiaries would have been entitled had
 
20           all of them survived the distribution date passes to
 
21           the surviving beneficiaries and the surviving
 
22           descendants of the deceased beneficiaries.  Each
 
23           surviving beneficiary takes the share to which the
 

 
Page 9                                                     2646
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1           surviving beneficiary would have been entitled had the
 
 2           deceased beneficiaries survived the distribution date.
 
 3           Each deceased beneficiary's surviving descendants who
 
 4           are substituted for the deceased beneficiary take by
 
 5           representation the share to which the deceased
 
 6           beneficiary would have been entitled had the deceased
 
 7           beneficiary survived the distribution date.  For the
 
 8           purposes of this paragraph, "deceased beneficiary"
 
 9           means a class member who failed to survive the
 
10           distribution date and left one or more surviving
 
11           descendants;
 
12      (3)  For the purposes of section 560:2-701, words of
 
13           survivorship attached to a future interest are not, in
 
14           the absence of additional evidence, a sufficient
 
15           indication of an intent contrary to the application of
 
16           this section.  Words of survivorship include words of
 
17           survivorship that relate to the distribution date or to
 
18           an earlier or an unspecified time, whether those words
 
19           of survivorship are expressed in condition-precedent,
 
20           condition-subsequent, or any other form;
 
21      (4)  If a governing instrument creates an alternative future
 
22           interest with respect to a future interest for which a
 
23           substitute gift is created by paragraph (1) or (2), the
 

 
Page 10                                                    2646
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1           substitute gift is superseded by the alternative future
 
 2           interest only if an expressly designated beneficiary of
 
 3           the alternative future interest is entitled to take in
 
 4           possession or enjoyment.
 
 5      (c)  More than one substitute gift; which one takes.  If,
 
 6 under subsection (b), substitute gifts are created and not
 
 7 superseded with respect to more than one future interest and the
 
 8 future interests are alternative future interests, one to the
 
 9 other, the determination of which of the substitute gifts takes
 
10 effect is resolved as follows:
 
11      (1)  Except as provided in paragraph (2), the property
 
12           passes under the primary substitute gift;
 
13      (2)  If there is a younger-generation future interest, the
 
14           property passes under the younger-generation substitute
 
15           gift and not under the primary substitute gift;
 
16      (3)  In this subsection:
 
17                "Primary future interest" means the future
 
18           interest that would have taken effect had all the
 
19           deceased beneficiaries of the alternative future
 
20           interests who left surviving descendants survived the
 
21           distribution date.
 
22                "Primary substitute gift" means the substitute
 
23           gift created with respect to the primary future
 
24           interest.
 

 
Page 11                                                    2646
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1                "Younger-generation future interest" means a
 
 2           future interest that:
 
 3                (A)  Is to a descendant of a beneficiary of the
 
 4                     primary future interest;
 
 5                (B)  Is an alternative future interest with
 
 6                     respect to the primary future interest;
 
 7                (C)  Is a future interest for which a substitute
 
 8                     gift is created; and
 
 9                (D)  Would have taken effect had all the deceased
 
10                     beneficiaries who left surviving descendants
 
11                     survived the distribution date except the
 
12                     deceased beneficiary or beneficiaries of the
 
13                     primary future interest.
 
14                "Younger-generation substitute gift" means the
 
15           substitute gift created with respect to the younger-
 
16           generation future interest.
 
17      (d)  If no other takers, property passes under residuary
 
18 clause or to transferor's heirs.  Except as provided in
 
19 subsection (e), if, after the application of subsections (b) and
 
20 (c), there is no surviving taker, the property passes in the
 
21 following order:
 
22      (1)  If the trust was created in a nonresiduary devise in
 
23           the transferor's will or in a codicil to the
 
24           transferor's will, the property passes under the
 

 
Page 12                                                    2646
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1           residuary clause in the transferor's will; for purposes
 
 2           of this section, the residuary clause is treated as
 
 3           creating a future interest under the terms of a trust;
 
 4      (2)  If no taker is produced by the application of paragraph
 
 5           (1), the property passes to the transferor's heirs
 
 6           under section 560:2-711.
 
 7      (e)  If no other takers and if future interest created by
 
 8 exercise of power of appointment.  If, after the application of
 
 9 subsections (b) and (c), there is no surviving taker and if the
 
10 future interest was created by the exercise of a power of
 
11 appointment:
 
12      (1)  The property passes under the donor's gift-in-default
 
13           clause, if any, which clause is treated as creating a
 
14           future interest under the terms of a trust; and
 
15      (2)  If no taker is produced by the application of paragraph
 
16           (1), the property passes as provided in subsection (d).
 
17           For purposes of subsection (d), "transferor" means the
 
18           donor if the power was a nongeneral power and means the
 
19           donee if the power was a general power. 
 
20      (f)  Notwithstanding the foregoing, if a revocable inter
 
21 vivos trust terminates on the death of the settlor of the trust
 
22 and all the assets are to be distributed outright, sections
 
23 560:2-603 and 560:2-604 shall determine whether a gift has lapsed
 
24 and who shall receive the property."
 

 
Page 13                                                    2646
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1      SECTION 3.  Section 560:3-905, Hawaii Revised Statutes, is
 
 2 amended to read as follows:
 
 3      "560:3-905  Penalty clause for contest.  A provision in a
 
 4 will or trust purporting to penalize any interested person for
 
 5 contesting the will or trust or instituting other proceedings
 
 6 relating to the probate or trust estate is unenforceable if
 
 7 probable cause exists for instituting proceedings." 
 
 8      SECTION 4.  Section 560:3-914, Hawaii Revised Statutes, is
 
 9 amended to read as follows:
 
10      "560:3-914  Disposition of unclaimed assets.  [If an heir,
 
11 devisee, or claimant cannot be found, the personal representative
 
12 shall distribute the share of the missing person, whether realty
 
13 or personalty, to that person's guardian of the property, if any,
 
14 otherwise to the State to become a part of the treasury of the
 
15 State under chapters 523A and 665, as appropriate.] When any real
 
16 or personal property remains in the hands of the personal
 
17 representative or trustee, after payment in the order specified
 
18 in section 560:3-805, and no heirs, devisees, or claimants of the
 
19 decedent, or beneficiaries of a trust, entitled to the property,
 
20 can be located after reasonable search and inquiry, the personal
 
21 representative or trustee, at the filing of the petition for
 
22 final accounts, or termination of the trust, shall report the
 
23 fact to the court, which shall forthwith enter an order
 

 
Page 14                                                    2646
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 authorizing the transfer of the property to the state director of
 
 2 finance, and the personal representative or trustee shall
 
 3 immediately transfer the property to the director of finance for
 
 4 disposition as provided in chapters 523A and 665, whichever is
 
 5 appropriate.  The state director of finance, at any time, may
 
 6 authorize the payment out of the general funds of any amount so
 
 7 forwarded to any person who establishes to the satisfaction of
 
 8 the director of finance that the person is legally entitled as an
 
 9 heir, devisee, or claimant of the decedent, or a beneficiary of a
 
10 trust, and the person shall be entitled to receive the amount out
 
11 of any moneys in the general revenues of the State not otherwise
 
12 appropriated, upon warrant drawn by the state comptroller."
 
13      SECTION 5.  Section 560:3-916, Hawaii Revised Statutes, is
 
14 amended to read as follows:
 
15      560:3-916  Apportionment of estate taxes.(a)  For
 
16 purposes of this section:
 
17      "Estate" means the gross estate of a decedent as determined
 
18 for the purpose of federal estate tax and the estate tax payable
 
19 to this State.
 
20      "Fiduciary" means personal representative or trustee.
 
21      "Person" means any individual, partnership, association,
 
22 joint stock company, corporation, government, political
 
23 subdivision, governmental agency, or local governmental agency.
 

 
Page 15                                                    2646
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1      "Person interested in the estate" means any person entitled
 
 2 to receive, or who has received, from a decedent or by reason of
 
 3 the death of a decedent any property or interest therein included
 
 4 in the decedent's estate.  It includes a personal representative,
 
 5 conservator, and trustee.
 
 6      "State" means any state, territory, or possession of the
 
 7 United States, the District of Columbia, and the Commonwealth of
 
 8 Puerto Rico.
 
 9      "Tax" means the federal estate tax and the additional
 
10 inheritance tax imposed by Hawaii and interest and penalties
 
11 imposed in addition to the tax.
 
12      (b)  Except as provided in subsection [(i)] (j) and, unless
 
13 the will otherwise provides, the tax shall be apportioned among
 
14 all persons interested in the estate.  The apportionment is to be
 
15 made in the proportion that the value of the interest of each
 
16 person interested in the estate bears to the total value of the
 
17 interests of all persons interested in the estate.  The values
 
18 used in determining the tax are to be used for that purpose.  If
 
19 the decedent's will directs a method of apportionment of tax
 
20 different from the method described in this chapter, the method
 
21 described in the will controls.
 
22      (c)  The expenses reasonably incurred by any fiduciary and
 
23 by other persons interested in the estate in connection with the
 

 
Page 16                                                    2646
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 determination of the amount and apportionment of the tax shall be
 
 2 apportioned as provided in subsection (b) and charged and
 
 3 collected as a part of the tax apportioned.  If the court finds
 
 4 it is inequitable to apportion the expenses as provided in
 
 5 subsection (b), it may direct apportionment equitably.
 
 6     [(c)] (d) (1)  The court in which venue lies for the
 
 7           administration of the estate of a decedent, on petition
 
 8           for the purpose may determine the apportionment of the
 
 9           tax;
 
10      (2)  If the court finds that it is inequitable to apportion
 
11           interest and penalties in the manner provided in
 
12           subsection (b), because of special circumstances, it
 
13           may direct apportionment thereof in the manner it finds
 
14           equitable;
 
15      (3)  If the court finds that the assessment of penalties and
 
16           interest assessed in relation to the tax is due to
 
17           delay caused by the negligence of the fiduciary, the
 
18           court may charge the fiduciary with the amount of the
 
19           assessed penalties and interest;
 
20      (4)  In any action to recover from any person interested in
 
21           the estate the amount of the tax apportioned to the
 
22           person in accordance with this chapter the
 
23           determination of the court in respect thereto shall be
 
24           prima facie correct.
 

 
Page 17                                                    2646
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1     [(d)] (e) (1)  The personal representative or other person in
 
 2           possession of the property of the decedent required to
 
 3           pay the tax may withhold from any property
 
 4           distributable to any person interested in the estate,
 
 5           upon its distribution to that person, the amount of tax
 
 6           attributable to that person's interest.  If the
 
 7           property in possession of the personal representative
 
 8           or other person required to pay the tax and
 
 9           distributable to any person interested in the estate is
 
10           insufficient to satisfy the proportionate amount of the
 
11           tax determined to be due from the person, the personal
 
12           representative or other person required to pay the tax
 
13           may recover the deficiency from the person interested
 
14           in the estate.  If the property is not in the
 
15           possession of the personal representative or the other
 
16           person required to pay the tax, the personal
 
17           representative or the other person required to pay the
 
18           tax may recover from any person interested in the
 
19           estate the amount of the tax apportioned to the person
 
20           in accordance with this chapter;
 
21      (2)  If property held by the personal representative is
 
22           distributed prior to final apportionment of the tax,
 
23           the distributee shall provide a bond or other security
 

 
Page 18                                                    2646
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1           for the apportionment liability in the form and amount
 
 2           prescribed by the personal representative.
 
 3     [(e)] (f) (1)  In making an apportionment, allowances shall
 
 4           be made for any exemptions granted, any classification
 
 5           made of persons interested in the estate and for any
 
 6           deductions and credits allowed by the law imposing the
 
 7           tax;
 
 8      (2)  Any exemption or deduction allowed by reason of the
 
 9           relationship of any person to the decedent or by reason
 
10           of the purposes of the gift inures to the benefit of
 
11           the person bearing such relationship or receiving the
 
12           gift; but if an interest is subject to a prior present
 
13           interest which is not allowable as a deduction, the tax
 
14           apportionable against the present interest shall be
 
15           paid from principal;
 
16      (3)  Any deduction for property previously taxed and any
 
17           credit for gift taxes or death taxes of a foreign
 
18           country paid by the decedent or the decedent's estate
 
19           inures to the proportionate benefit of all persons
 
20           liable to apportionment;
 
21      (4)  Any credit for inheritance, succession or estate taxes
 
22           or taxes in the nature thereof applicable to property
 
23           or interests includable in the estate, inures to the
 

 
Page 19                                                    2646
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1           benefit of the persons or interests chargeable with the
 
 2           payment thereof to the extent proportionately that the
 
 3           credit reduces the tax;
 
 4      (5)  To the extent that property passing to or in trust for
 
 5           a surviving spouse or reciprocal beneficiary or any
 
 6           charitable, public or similar purpose is not an
 
 7           allowable deduction for purposes of the tax solely by
 
 8           reason of an inheritance tax or other death tax imposed
 
 9           upon and deductible from the property, the property is
 
10           not included in the computation provided for in
 
11           subsection (b) [hereof], and to that extent no
 
12           apportionment is made against the property.  The
 
13           sentence immediately preceding does not apply to any
 
14           case if the result would be to deprive the estate of a
 
15           deduction otherwise allowable under section 2053(d) of
 
16           the Internal Revenue Code of 1986, as amended, of the
 
17           United States, relating to deduction for state death
 
18           taxes on transfers for public, charitable, or religious
 
19           uses.
 
20      [(f)] (g)  No interest in income and no estate for years or
 
21 for life or other temporary interest in any property or fund is
 
22 subject to apportionment as between the temporary interest and
 
23 the remainder.  The tax on the temporary interest and the tax, if
 

 
Page 20                                                    2646
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 any, on the remainder is chargeable against the corpus of the
 
 2 property or funds subject to the temporary interest and
 
 3 remainder.
 
 4      [(g)] (h)  Neither the personal representative nor other
 
 5 person required to pay the tax is under any duty to institute any
 
 6 action to recover from any person interested in the estate the
 
 7 amount of the tax apportioned to the person until the expiration
 
 8 of the three months next following final determination of the
 
 9 tax.  A personal representative or other person required to pay
 
10 the tax who institutes the action within a reasonable time after
 
11 the three-month period is not subject to any liability or
 
12 surcharge because any portion of the tax apportioned to any
 
13 person interested in the estate was collectible at a time
 
14 following the death of the decedent but thereafter became
 
15 uncollectible.  If the personal representative or other person
 
16 required to pay the tax cannot collect from any person interested
 
17 in the estate the amount of the tax apportioned to the person,
 
18 the amount not recoverable shall be equitably apportioned among
 
19 the other persons interested in the estate who are subject to
 
20 apportionment.
 
21      [(h)] (i)  A personal representative acting in another state
 
22 or a person required to pay the tax domiciled in another state
 
23 may institute an action in the courts of this State and may
 

 
Page 21                                                    2646
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 recover a proportionate amount of the federal estate tax, of an
 
 2 estate tax payable to another state or of a death duty due by a
 
 3 decedent's estate to another state, from a person interested in
 
 4 the estate who is either domiciled in this State or who owns
 
 5 property in this State subject to attachment or execution.  For
 
 6 the purposes of the action the determination of apportionment by
 
 7 the court having jurisdiction of the administration of the
 
 8 decedent's estate in the other state is prima facie correct.
 
 9      [(i)] (j)  If the liabilities of persons interested in the
 
10 estate as prescribed by this chapter differ from those which
 
11 result under the federal estate tax law, the liabilities imposed
 
12 by the federal law will control and the balance of this section
 
13 shall apply as if the resulting liabilities had been prescribed
 
14 herein."
 
15      SECTION 6.  Section 560:3-1201, Hawaii Revised Statutes, is
 
16 amended by amending subsection (a) to read as follows:
 
17      "(a)  Any person indebted to the decedent or having
 
18 possession of tangible personal property or an instrument
 
19 evidencing a debt, obligation, stock, chose in action, or other
 
20 intangible personal property belonging to the decedent shall make
 
21 payment of the indebtedness or deliver the tangible personal
 
22 property or an instrument evidencing the debt, obligation, stock,
 
23 chose in action, or other intangible personal property to a
 

 
Page 22                                                    2646
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 person or persons claimed to be the successor or successors of
 
 2 the decedent or to the department of human services where the
 
 3 department has paid for the decedent's burial pursuant to section
 
 4 346-15, upon being presented a death certificate for the decedent
 
 5 and an affidavit made by or on behalf of the claimed successor or
 
 6 successors or the department of human services stating that:
 
 7      (1)  The gross value of the decedent's estate in this State
 
 8           does not exceed [$60,000;] $100,000; except that any
 
 9           motor vehicles registered in the decedent's name may be
 
10           transferred regardless of value pursuant to this
 
11           section;
 
12      (2)  No application or petition for the appointment of a
 
13           personal representative is pending or has been granted
 
14           in this State; and
 
15      (3)  (A)  The claimed successor or successors are entitled
 
16                to the property and explaining the relationship of
 
17                the claimed successor or successors to the
 
18                decedent; or
 
19           (B)  The department of human services has paid for the
 
20                decedent's burial.
 
21 The affidavit of the department of human services shall have
 
22 priority over any other claim presented pursuant to this
 
23 section." 
 

 
Page 23                                                    2646
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1      SECTION 7.  Section 560:3-1205, Hawaii Revised Statutes, is
 
 2 amended to read as follows:
 
 3      "560:3-1205  Estates of [$60,000] $100,000 or less; clerk
 
 4 of court to administer.  If a person dies leaving property in
 
 5 this State of a total value not exceeding [$60,000,] $100,000 and
 
 6 a personal representative of the estate has not been appointed in
 
 7 the State, the clerk of the court of the judicial circuit in
 
 8 which the decedent was residing or domiciled at the time of the
 
 9 decedent's death or left property may, upon the verified petition
 
10 of the clerk or of any interested person, obtain an order
 
11 authorizing the clerk to administer the estate, and, as the
 
12 personal representative, the clerk shall collect and receive the
 
13 property and administer the same.  The order may be made without
 
14 notice or hearing, at the discretion of the court.  Except as
 
15 otherwise specifically required or authorized by law or where the
 
16 clerk may be interested as an heir, or devisee, no clerk of any
 
17 court shall act as personal representative of any estate where
 
18 the value of the same is in excess of [$60,000.] $100,000.  No
 
19 fees shall be allowed the clerk, except as set forth in section
 
20 560:3-1211."
 
21      SECTION 8.  Section 560:3-1211, Hawaii Revised Statutes, is
 
22 amended to read as follows:
 

 
 
 
Page 24                                                    2646
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1      "560:3-1211  Exemption from costs.  All proceedings under
 
 2 this part shall be free from all costs of court, except that the
 
 3 clerk may charge the actual expenses for advertising the notice
 
 4 specified in section 560:3-1206, the advertising, posting, or
 
 5 service fees required in carrying out any order of the court,
 
 6 including orders relating to the sale of real or personal
 
 7 property, and any expenses reasonably necessary for the
 
 8 preservation, disposal, distribution, and administration of the
 
 9 estate, together with a fee of three per cent of the market value
 
10 of the first [$60,000] $100,000 in the gross estate, the fee to
 
11 be paid into the treasury of the State as a government
 
12 realization from any available assets of the estate; provided
 
13 that if the administration is completed by another personal
 
14 representative on account of the size of the estate or for any
 
15 other reason, no fee shall be charged by the clerk."
 
16      SECTION 9.  Section 560:3-1212, Hawaii Revised Statutes, is
 
17 amended to read as follows:
 
18      "560:3-1212  Estates of persons leaving no known relatives.
 
19 Every coroner or medical examiner who is called to investigate
 
20 the death of any person leaving no known spouse or reciprocal
 
21 beneficiary, issue, parent, grandparent, or issue of grandparents
 
22 over the age of majority in the State, shall take immediate
 
23 charge of the decedent's personal effects and if in the
 

 
Page 25                                                    2646
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 discretion of the coroner the value of such personal effects is
 
 2 in excess of $2,500, forthwith deliver them to the clerk of the
 
 3 court of the judicial circuit in which such decedent died.
 
 4      If after ten days no person appears, competent to initiate
 
 5 appropriate probate proceedings, the clerk shall administer the
 
 6 estate pursuant to the provisions of this part; provided that if
 
 7 the decedent's estate is of a value exceeding [$60,000] $100,000,
 
 8 the clerk shall notify the judge of the circuit having charge of
 
 9 the probate calendar, and shall petition for the appointment of a
 
10 personal representative of such estate other than the clerk.  In
 
11 the meantime the clerk may take such steps as may be appropriate
 
12 to preserve and conserve the real and personal property of the
 
13 decedent.  All expenses in connection with the taking possession,
 
14 care, and conservation of the property and with such proceedings
 
15 shall be proper charges against the estate of the decedent.  The
 
16 corporation counsel or county attorney of each county shall
 
17 advise, assist, and represent as far as necessary any of such
 
18 officers in the performance of any act or the institution or
 
19 prosecution of any proceeding required by this section.  If the
 
20 decedent's estate is of a value not exceeding $2,500 and the
 
21 decedent has no known relatives or whose relatives have failed to
 
22 indicate any means of disposition of the estate, then the coroner
 

 
 
 
Page 26                                                    2646
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 or medical examiner having custody of the property shall dispose
 
 2 of the property in an appropriate manner, which may be any one of
 
 3 the following or a combination thereof:
 
 4      (1)  Where the estate consists only of money and is not in
 
 5           excess of $2,500 and expenditures have been made in
 
 6           connection with such death, to reimburse the
 
 7           appropriate city and/or county office that made the
 
 8           disbursement to defray said expenses;
 
 9      (2)  Where the estate consists of cash or personal
 
10           belongings of monetary value, or both, not exceeding
 
11           $2,500, to liquidate the personal belongings and apply
 
12           the proceeds, together with the cash, if the total does
 
13           not exceed $2,500, in accordance with paragraph (1);
 
14      (3)  Where the assets in the estate are of no monetary value
 
15           (unsalable) and in the best judgment and discretion of
 
16           the coroner or medical examiner can be used by some
 
17           charitable institution, to donate the assets to
 
18           whatever charitable institution is willing and able to
 
19           pick up the assets in question;
 
20      (4)  Where the assets have no value whatsoever or are in
 
21           such condition that, in the best judgment and
 
22           discretion of the coroner or medical examiner, a
 
23           charitable institution cannot use the properties, or
 

 
Page 27                                                    2646
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1           will not receive the properties, to destroy the same in
 
 2           any manner the coroner or medical examiner sees fit;
 
 3           and
 
 4      (5)  If under paragraphs (1) and (2), there are assets
 
 5           remaining, then the coroner or medical examiner shall
 
 6           forthwith forward the same to the state director of
 
 7           finance for disposition as provided in chapter 523A."
 
 8      SECTION 10.  This Act does not affect rights and duties that
 
 9 matured, penalties that were incurred, and proceedings that were
 
10 begun, before its effective date.
 
11      SECTION 11.  Statutory material to be repealed is bracketed.
 
12 New statutory material is underscored.
 
13      SECTION 12.  This Act shall take effect on July 1, 2000.