Disbursement from principal.

75A-5-502. Disbursement from principal.

(1) Subject to Section, and except as otherwise provided in Subsectionor (c), a fiduciary shall disburse from principal: 75A-5-505 75A-5-601(3)(b) the balance of the disbursements described in Subsectionsand (3), after application of Subsection; 75A-5-501(1) 75A-5-501(2) the fiduciary's compensation calculated on principal as a fee for acceptance, distribution, or termination; a payment of an expense to prepare for or execute a sale or other disposition of property; a payment on the principal of a trust debt; 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; a payment of a premium for insurance, including title insurance, not described in Subsection, of which the fiduciary is the owner and beneficiary; 75A-5-501(4) 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 a payment: 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 activities described in Subsections (1)(h)(i)(A) through (E); penalties imposed under environmental laws or regulations; other actions to comply with environmental laws or regulations; statutory or common law claims by third parties; and defending claims based on environmental matters; and 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.