55-277.26 - Disbursements from principal. - Virginia Statutes

§ 55-277.26. Disbursements from principal.

A. A trustee shall make the following disbursements from principal:

1. The remaining one-half of the disbursements described in subdivisions 1and 2 of § 55-277.25;

2. All of the trustee's compensation calculated on principal as a fee foracceptance, distribution, or termination, and disbursements made to prepareproperty for sale;

3. Payments on the principal of a trust debt;

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

5. Premiums paid on a policy of insurance not described in subdivision 4 of §55-277.25 of which the trust is the owner and beneficiary;

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

7. Disbursements related to environmental matters, including reclamation,assessing environmental conditions, remedying and removing environmentalcontamination, monitoring remedial activities and the release of substances,preventing future releases of substances, collecting amounts from personsliable or potentially liable for the costs of those activities, penaltiesimposed under environmental laws or regulations and other payments made tocomply with those laws or regulations, statutory or common law claims bythird parties, and defending claims based on environmental matters.

B. If a principal asset is encumbered with an obligation that requires incomefrom that asset to be paid directly to the creditor, the trustee shalltransfer from principal to income an amount equal to the income paid to thecreditor in reduction of the principal balance of the obligation.

(1999, c. 975.)