HRS §557A-406
How interest and bond payments are split between income and principal
This section tells a trustee how to divide money from loans or bonds the trust owns. Interest payments are income. Money from selling or cashing in a bond is principal, unless the bond matures within a year, then the extra money is income. Some other sections have different rules.
trustees
The statute, as written — Obligation to pay money
(a) An amount received as interest, whether determined at a fixed, variable, or floating rate, on an obligation to pay money to the trustee, including an amount received as consideration for prepaying principal, shall be allocated to income without any provision for amortization of premium. (b) An amount received from the sale, redemption, or other disposition of an obligation to pay money to the trustee more than one year after it is purchased or acquired by the trustee, including an obligation whose purchase price or value when it is acquired is less than its value at maturity, shall be allocated to principal. If the obligation matures within one year after it is purchased or acquired by the trustee, an amount received in excess of its purchase price or its value when acquired by the trust shall be allocated to income. (c) This section shall not apply to obligations to which sections 557A-409 through 557A-412, 557A-414, and 557A-415 apply.
Sections this one refers to
§557A-409 How trust payments are split between income and principal
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