Haw. Code R. § 16-75-41 - Use or withdrawal of income or net capital gains from the trust account

(a) The trustee of the pre-need trust account shall permit withdrawal by the licensee of the income from the trust, or any net capital gains subject to the limitations described below:

(1) If the price of a pre-need funeral or interment services is fixed in a pre-need contract, no withdrawal of income or net capital gains can be made if the aggregate market value of the trust falls below five per cent of the principal amount then held in trust; or

(2) If the price of a pre-need funeral or interment services is to be determined at need, no withdrawal of income or net capital gains can be made if the withdrawal would reduce the market value of the trust fund below an amount equal to the sum of:

(A) All payments made under all contracts; plus

(B) Interest on the payments at a commercially reasonable rate. The trustee shall arrange for the income or any net capital gains to be applied to the principal of the trust when it finds the conditions described in paragraph (1) or (2) are present and shall continue to apply the income or any net capital gains to the principal until withdrawals of income or any net capital gains can be permitted by the licensee without limitations.

(b) Subject to the limitations specified in subsection (a) hereinabove, the trustee of the pre-need trust account shall permit the withdrawal by the licensee of any remaining surplus income, or any net capital gains from investments, under the following limitations.

(1) The trustee shall establish a reserve from which principal losses may be replaced by setting aside a reasonable percentage of surplus income, if any, or net capital gains from any investments; and

(2) The audited financial statements filed by licensee in accordance with section 441-24.5, HRS, and the actuarial reports filed by the licensee in accordance with section 441-24.6, HRS, for the fiscal or calendar year preceeding such withdrawal indicates that the funds deposited in the pre-need trust are sufficient to cover the claims of the pre-need trust participants.

For the purposes of this chapter, "net capital gains" means the amount by which the cumulative capital gains since the establishment of the pre-need trust account exceeds the sum of cumulative capital losses since the establishment of the account.

(c) The trustee of the perpetual care trust account shall permit withdrawal by the licensee of the income from the trust for the sole purpose of ordinary and necessary expenses of the care, maintenance, and embellishment of the cemetery.

Notes

Haw. Code R. § 16-75-41

[Eff 11/19/87; am and comp 1/21/92] (Auth: HRS § 441-19) (Imp: HRS §§ 441-39, 441-40)