§ 37A-5-502. Disbursements from principal. - North Carolina Statutes

§ 37A‑5‑502. Disbursements from principal.

(a)        A trustee shallmake the following disbursements from principal:

(1)        The remaining one‑halfof the disbursements described in G.S. 37A‑5‑501(1) and G.S. 37A‑5‑501(2);

(2)        All of the trustee'scompensation calculated on principal as a fee for acceptance, distribution, ortermination and disbursements made to prepare property for sale;

(3)        Payments on theprincipal of a trust debt;

(4)        Expenses of aproceeding that concerns primarily principal, including a proceeding toconstrue the trust or to protect the trust or its property;

(5)        Premiums paid on apolicy of insurance not described in G.S. 37A‑5‑501(4) of which thetrust is the owner and beneficiary;

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

(7)        Disbursementsrelated to environmental matters, including reclamation, assessingenvironmental conditions, remedying and removing environmental contamination,monitoring remedial activities and the release of substances, preventing futurereleases of substances, collecting amounts from persons liable or potentiallyliable for the costs of those activities, penalties imposed under environmentallaws or regulations and other payments made to comply with those laws orregulations, statutory or common‑law claims by third parties, anddefending claims based on environmental matters.

(b)        If a principalasset is encumbered with an obligation that requires income from that asset tobe paid directly to the creditor, the trustee shall transfer from principal toincome an amount equal to the income paid to the creditor in reduction of theprincipal balance of the obligation. (2003‑232, s. 2.)