Rule 26 Format and Content

COMMENTARY:

This rule is partially the result of concerns raised by the First Circuit Court and discussed by an ad hoc committee composed of attorneys, accountants, masters, the attorney general's office, and all Hawaiʻi trust companies in the fall of 1991. No agreement was reached by that committee as to any one form of accounting, but the need for the element described in items (1)-(5) of the rule were believed important. This rule does not mandate any form of detailed accounting, leaving that to the fiduciary's discretion. By requiring the additional exhibits (1)-(3) and any auditor's reports, the precise form of the accounting is less important; the summary sheets will provide the information at a glance that most interested parties want, while the detailed accounting is available for those wishing to delve into the minutiae of the detailed transactions. This rule attempts to achieve a balance between that detail and ease of understanding.

This rule will result in greater work for fiduciaries in producing the additional pages required by (1)-(3), but those are anticipated to be only a few pages in length, and the added time and cost to produce them should be offset by the time and cost saved

in challenges raised because a beneficiary cannot understand all of the detail.

Of great concern to the First Circuit Court and the committee in 1991 was decreasing the amount of paper circulated with an accounting. A suggestion was that the fiduciary file with the court only the summaries of (1)-(3) and any auditor's reports under (5), retaining the detailed accounting and giving it only to the master, attorney general, and any other interested party who requested it. Masters and the attorney general's office objected to any accounting system that did not provide a full and complete copy of the detailed accounting to them; the trust companies objected to not providing the detailed accounting to the court, because the trust companies rely on the court records for storage and do not save all detailed accountings in their own records. No consensus was reached by the committee, therefore, on the content of the accounting filed with the court and presented to beneficiaries.

The requirement for a copy of the controlling trust documents once every five calendar years is adopted in recognition that trust accountings can sometimes be quite lengthy and over time fill many volumes of files. By having copies of the controlling documents filed on a regular basis, the court and interested persons will not have to dig back too deeply in the files to locate the controlling documents.