Section 16371 Of Article 6. Allocation Of Disbursements During Administration Of Trust From California Probate Code >> Division 9. >> Part 4. >> Chapter 3. >> Article 6.
16371
. (a) A trustee shall make the following disbursements from
principal:
(1) Except as otherwise ordered by the court, the remaining
one-half of the disbursements described in subdivisions (a) and (b)
of Section 16370.
(2) Except as otherwise ordered by the court, 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
subdivision (d) of Section 16370 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.