[§557A-502]  Disbursements from principal. 
(a)  Unless otherwise governed by statutory fees or unless the instrument
provides for it, a trustee shall make the following disbursements from
principal:



(1)  The remaining one-half of the disbursements
described in section 557A-501(1) and (2);



(2)  All of the trustee's compensation calculated on
principal as an acceptance, distribution, or termination fee, 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)  Insurance premiums paid on a policy not described
in section 557A-501(4) of which the trust is the owner and beneficiary;



(6)  Estate, inheritance, and other transfer taxes,
including penalties, apportioned to the trust; and



(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, rules, or regulations
and other payments made to comply with those laws, rules, 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 obligation's principal
balance. [L 2000, c 191, pt of §1]