RSA 564-C:5-504 · Transfers from Income to Reimburse Principal

564-C:5-504 Transfers from Income to Reimburse Principal. –

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(a)

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

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(b)

Principal disbursements to which subsection (a) applies include the following, but only to the extent that the trustee has not been and does not expect to be reimbursed by a third party:

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(1)

an amount chargeable to income but paid from principal because it is unusually large, including extraordinary repairs;

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(2)

a capital improvement to a principal asset, whether in the form of changes to an existing asset or the construction of a new asset, including special assessments;

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(3)

disbursements made to prepare property for rental, including tenant allowances, leasehold improvements, and broker's commissions;

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(4)

periodic payments on an obligation secured by a principal asset to the extent that the amount transferred from income to principal for depreciation is less than the periodic payments; and

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(5)

disbursements described in RSA 564-C:5-502(a)(7).

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(c)

If the asset whose ownership gives rise to the disbursements becomes subject to a successive income interest after an income interest ends, a trustee may continue to transfer amounts from income to principal as provided in subsection (a). Source. 2006, 320:68, eff. Aug. 19, 2006.

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