Disbursement from principal.

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  • (1) Subject to Section 22-3-505, and except as otherwise provided in Subsection 22-3-601(3)(b) or (c), a fiduciary shall disburse from principal:
    • (a) the balance of the disbursements described in Subsections 22-3-501(1) and (3), after application of Subsection 22-3-501(2);
    • (b) the fiduciary's compensation calculated on principal as a fee for acceptance, distribution, or termination;
    • (c) a payment of an expense to prepare for or execute a sale or other disposition of property;
    • (d) a payment on the principal of a trust debt;
    • (e) a payment of an expense of an accounting, judicial or nonjudicial proceeding, or other matter that involves primarily principal, including a proceeding to construe the terms of the trust or protect property;
    • (f) a payment of a premium for insurance, including title insurance, not described in Subsection 22-3-501(4), of which the fiduciary is the owner and beneficiary;
    • (g) a payment of an estate or inheritance tax or other tax imposed because of the death of a decedent, including penalties, apportioned to the trust; and
    • (h) a payment:
      • (i) related to environmental matters, including:
        • (A) reclamation;
        • (B) assessing environmental conditions;
        • (C) remedying and removing environmental contamination;
        • (D) monitoring remedial activities and the release of substances;
        • (E) preventing future releases of substances;
        • (F) collecting amounts from persons liable or potentially liable for the costs of activities described in Subsections (1)(h)(i)(A) through (E);
        • (G) penalties imposed under environmental laws or regulations;
        • (H) other actions to comply with environmental laws or regulations;
        • (I) statutory or common law claims by third parties; and
        • (J) defending claims based on environmental matters; and
      • (ii) for a premium for insurance for matters described in Subsection (1)(h)(i).
  • (2) If a principal asset is encumbered with an obligation that requires income from the asset to be paid directly to a creditor, the fiduciary 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.




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