Rule 107 - Deposit and Investment of Funds(a) Bond.(1) The court may require a guardian of the property to furnish a bond to insure the guardian's faithful discharge of all duties according to law, with sureties as it shall specify. The bond shall be in an amount determined by the court. The court in lieu of sureties on a bond, may accept other security for the performance of the bond, including a pledge of securities or a mortgage of land. (2) For conservatorships, the court may require a conservator to furnish bond in an amount as set forth in HRS § 560:5-415. If the court has required the conservator to furnish bond and the value of the estate in the conservator's control significantly increases or decreases, the court may order an appropriate adjustment in the amount of bond at the time of the conservator's regular accounting. COMMENTARY:
Rule 107(a)(1) of this Rule reflects the language of former HRS § 560:5-411.
(b) Reduction or Elimination of Bond Requirement. The court may consider reducing or eliminating the requirement for bond in the following situations: (1) Where the bulk or all of the estate in the conservator's control will be deposited in a federally-insured financial institution located in the State of Hawai'i in the names of the conservator and the conservator's attorney or law firm, the signatures of both the conservator and such attorney, or a representative of the law firm, being required for withdrawal purposes. (2) Other arrangements as counsel may suggest wherein the estate in the conservator's control will be adequately protected, without involvement of the court clerk. COMMENTARY:
This rule when adopted in 1995, echoed the then current requirements of a First Circuit Court Probate Memo which was an attempt to eliminate the former role of the clerk of the court in having to counter-sign all guardianship withdrawals by substituting the guardian's attorney in the role formerly held by the clerk of the court. This rule now clarifies that the actual attorney, or any member of the law firm representing the conservator, may be so empowered to facilitate signatures by the attorney.
(c) Deposit of Funds. Unless otherwise ordered by the court, the conservator shall establish 2 accounts for the conservatorship funds as follows: (1) Such amount or amounts approved by the court for regular expenses of the protected person and the conservator may be deposited in an interest-bearing checking or savings account with a federally-insured financial institution located in the State of Hawai'i in the name of the conservator as conservator of the protected person, the signature of only the conservator being necessary for withdrawal purposes. (2) The balance of the funds of the conservatorship estate may be deposited in a separate interest-bearing checking and/or savings account with a federally-insured financial institution located in the State of Hawai'i in the name of the conservator as conservator of the protected person. The attorney for the conservator shall be responsible for ensuring that the accounts of the conservatorship are established as required by this Rule. COMMENTARY:
This rule allows a conservatorship to have 2 accounts: one for regular approved expenditures and another to hold all other funds. The rule requires conservatorship accounts to be interest-bearing (unless otherwise ordered by the court), so that maximum advantage can be had to the estate. All such accounts must be in a federally-insured financial institution in the State of Hawai'i to ensure the court has jurisdiction over the funds.
Where the funds of the conservatorship are so large as to exceed the insured amount provided by the financial institution, the court may order that additional accounts be maintained at additional financial institutions, so as to provide the maximum insurance on deposits possible. Where the conservatorship funds are so large that multiple accounts are required, however, the conservator may suggest to the court that a more formal and flexible investment policy be adopted, allowing funds to be invested in securities or mutual funds.
(d) Investment of Assets. Where the assets of the conservatorship estate are sufficiently large in amount, a corporate fiduciary, and with prior court authority, an individual conservator may invest conservatorship assets in securities, mutual funds, common trusts funds, or other investments that provide a higher return than a financial institution account with adequate security of investment. COMMENTARY:
Where the assets of the conservatorship are significant in amount, depositing all funds in a bank account may be unreasonable. This rule allows the court to permit more diversity of investment as long as the assets are invested in reasonably safe vehicles. The rule is automatically approved for corporate fiduciaries, but individual fiduciaries would have to have specific court authority.
(e) Setting Forth Plan in Petition. All budgets, investment plans, and account arrangement plans must be set forth in the petition by which the plan is proposed to the court. Every petition for appointment of a conservator shall set forth a proposed investment plan consistent with this Rule. COMMENTARY:
By requiring the petitioner to think out the overall plan of investment, distribution, and administration prior to the filing of the petition, Rules 107 and 108 of this Rule will lead to better fiduciary administration and greater efficiency in the courts by shortening the time needed for court review and evaluation of the conservatorship plans. A budget is required by statute. HRS § 560:5-403(b)(9).
Amended April 28, 2006, effective 7/1/2006; further amended April 20, 2020, effective 7/1/2020; amended August 13, 2020, effective 8/13/2020.