Insured Accounts, Custodians, Annuities and Trusts for a Child's Settlement in Hawaii

By the FigureMyTax Editorial Team · How we calculate

Hawaii lets a court approve a deposit, an annuity or a trust for a child's settlement in the child's best interest, and lets a payer transfer up to $10,000 a year to a parent, guardian, custodian or federally insured account in the child's name.

The payer's options up to $10,000 a year

Under HRS 560:5-104, someone who must transfer money to a minor, and does not know that a conservator has been appointed or sought, may transfer up to $10,000 a year to (1) the person with the care and custody of the minor with whom the minor lives, (2) a guardian, (3) a custodian under the Uniform Transfers to Minors Act or a custodial trustee, or (4) a federally insured institution as a deposit in an interest-bearing account or certificate in the sole name of the minor, with notice to the minor. The payer is not responsible for its proper application.

How the recipient must use it

A guardian or person who receives money under (1) or (2) may apply it only to the support, care, education, health and welfare of the minor, may not derive a personal financial benefit except reimbursement of necessary expenses, must preserve any excess for the child's future, and must transfer any balance to the minor on emancipation or at majority.

What a court can add

A court may authorize, direct or ratify the payment, delivery, deposit or retention of funds, the purchase of an annuity, the making of a contract for life care or training and education, and the establishment of a suitable trust, including a Uniform Custodial Trust Act trust, if it is in the minor's best interest, and may appoint a special conservator to carry it out (560:5-412).

An annuity or structured settlement

The trade-off is predictability and protection against spending everything at once, against less flexibility if needs change. The statute lists an annuity as an arrangement a court may approve.

What we did not find

We found no Hawaii statute that requires a blocked, court-restricted account, and we did not read the Probate Rules on how a court orders the money held. Ask the court what it will require. Then read why and when a court gets involved and what we found about attorney fees, and see what is left in the Hawaii minor's settlement calculator.

This is general information, not legal advice, and the state comparisons above are illustrative, not an exhaustive survey. Confirm how Hawaii's rules apply to your specific case with a licensed Hawaii attorney.