55-277.28 - Transfers from income to reimburse principal. - Virginia Statutes

§ 55-277.28. Transfers from income to reimburse principal.

A. If a trustee makes or expects to make a principal disbursement describedin this section, the trustee may transfer an appropriate amount from incometo principal in one or more accounting periods to reimburse principal or toprovide a reserve for future principal disbursements.

B. Principal disbursements to which subsection A applies include thefollowing, but only to the extent that the trustee has not been and does notexpect to be reimbursed by a third party:

1. An amount chargeable to income but paid from principal because it isunusually large, including extraordinary repairs;

2. A capital improvement to a principal asset, whether in the form of changesto an existing asset or the construction of a new asset, including specialassessments;

3. Disbursements made to prepare property for rental, including tenantallowances, leasehold improvements, and broker's commissions;

4. Periodic payments on an obligation secured by a principal asset to theextent that the amount transferred from income to principal for depreciationis less than the periodic payments; and

5. Disbursements described in subdivision A 7 of § 55-277.26.

C. If the asset whose ownership gives rise to the disbursements becomessubject to a successive income interest after an income interest ends, atrustee may continue to transfer amounts from income to principal as providedin subsection A.

(1999, c. 975.)