Section 8726.1 Of Article 2. Care Of Active Cemeteries From California Health And Safety Code >> Division 8. >> Part 3. >> Chapter 5. >> Article 2.

. The trustee of the endowment care fund shall create a reserve from which principal losses may be replaced by setting aside a reasonable percentage of the income from the fund. The trustee may also set aside out of income or net capital gains from investments, reserves for future maintenance, repair or restoration of property or embellishments in the cemetery which may be necessary or desirable as a result of wear, deterioration, accident, damage or destruction. The total amount of such reserves for maintenance, repair and replacement shall not at any time exceed 10 percent of the endowment care fund. "Net capital gains," as used in this section, means the amount by which cumulative capital gains since the establishment of the endowment care fund exceed the sum of cumulative capital losses since the establishment of the endowment care fund and capital gains previously set aside in reserve. Additions to the reserve in any year from capital gains shall not exceed one-half the difference between the capital gains and the capital losses during the year. Any capital gains not set aside in reserve shall be a part of the principal of the endowment care fund.