14-7426

14-7426. Disbursements from principal

A. A trustee shall make the following disbursements from principal:

1. The remaining one-half of the disbursements described in section 14-7425,
paragraphs 1 and 2.

2. All of the trustee's compensation calculated on principal as a fee for
acceptance, distribution or termination and disbursements made to prepare property for
sale.

3. Payments on the principal of a trust debt.

4. Expenses of a proceeding that concerns primarily principal, including a
proceeding to construe the trust or to protect the trust or its property.

5. Premiums paid on a policy of insurance not described in section 14-7425,
paragraph 4 of which the trust is the owner and beneficiary.

6. Estate, inheritance and other transfer taxes, including penalties, apportioned
to the trust.

7. Disbursements related to environmental matters, including reclamation, assessing
environmental conditions, remedying and removing environmental contamination, monitoring
remedial activities and the release of substances, preventing future releases of
substances, collecting amounts from persons liable or potentially liable for the costs of
those activities, penalties imposed under environmental laws or regulations and other
payments made to comply with those laws or regulations, statutory or common law claims by
third parties and defending claims based on environmental matters.

B. If a principal asset is encumbered with an obligation that requires income from
that asset to be paid directly to the creditor, the trustee shall transfer from principal
to income an amount equal to the income paid to the creditor in reduction of the
principal balance of the obligation.