Utah Code 75A-5-505. Reimbursement of principal from income
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(1) If a fiduciary makes or expects to make a principal disbursement described in Subsection (2), the fiduciary may transfer an appropriate amount from income to principal in one or more accounting periods to reimburse principal or provide a reserve for future principal disbursements.
Terms Used In Utah Code 75A-5-505
- Fiduciary: A trustee, executor, or administrator.
- Fiduciary: includes :(8)(a) a trustee, trust director as defined in Section
75-12-102 , personal representative, life tenant, holder of a term interest, and person acting under a delegation from a fiduciary;(8)(b) a person that holds property for a successor beneficiary whose interest may be affected by an allocation of receipts and expenditures between income and principal; and(8)(c) if there are two or more co-fiduciaries, all co-fiduciaries acting under the terms of the trust and applicable law. See Utah Code 75A-5-102- Income: includes a part of receipts from a sale, exchange, or liquidation of a principal asset to the extent provided in Part 4, Allocation of Receipts. See Utah Code 75A-5-102
- Income interest: includes the right of a current beneficiary to use property held by a fiduciary. See Utah Code 75A-5-102
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Principal: means property held in trust for distribution to, production of income for, or use by a current or successor beneficiary. See Utah Code 75A-5-102
- Property: includes both real and personal property. See Utah Code 68-3-12.5
- Successive interest: means the interest of a successor beneficiary. See Utah Code 75A-5-102
(2) To the extent that a fiduciary has not been and does not expect to be reimbursed by a third party, principal disbursements to which Subsection (1) applies include:(2)(a) an amount chargeable to income but paid from principal because income is not sufficient;(2)(b) the cost of an improvement to principal, regardless of whether the improvement is a change to an existing asset or the construction of a new asset, including a special assessment;(2)(c) a disbursement made to prepare property for rental, including tenant allowances, leasehold improvements, and commissions;(2)(d) a periodic payment 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 payment; and(2)(e) a disbursement described in Subsection75A-5-502 (1).(3) If an asset whose ownership gives rise to a principal disbursement becomes subject to a successive interest after an income interest ends, the fiduciary may continue to make transfers under Subsection (1).