HRS §557A-405
How rental income and deposits are handled
When a trustee manages rental property, rent money (including lease cancellation or renewal fees) counts as income. Refundable deposits, like security deposits, are kept as principal and can't be given to beneficiaries until the trustee's lease obligations are done.
beneficiariestrustees
The statute, as written — Rental property
To the extent that a trustee accounts for receipts from rental property pursuant to this section, an amount received as rent of real or personal property, including an amount received for cancellation or renewal of a lease, shall be allocated to income. An amount received as a refundable deposit, including a security deposit or a deposit that is to be applied as rent for future periods, shall be added to principal and held subject to the terms of the lease and shall not be available for distribution to a beneficiary until the trustee's contractual obligations have been satisfied with respect to that amount.
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