Sec. 41. (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 (1) or more accounting periods to reimburse principal or to provide a reserve for future principal disbursements.
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Terms Used In Indiana Code 30-2-14-41
- income: means money or property that a fiduciary receives as current return from a principal asset. See Indiana Code 30-2-14-4
- income interest: means the right of an income beneficiary to receive all or part of net income, whether the terms of the trust require it to be distributed or authorize it to be distributed in the trustee's discretion. See Indiana Code 30-2-14-6
- 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 that is held in trust for distribution to a remainder beneficiary when the trust terminates or that will remain perpetually vested in the trustee. See Indiana Code 30-2-14-10
- Property: includes personal and real property. See Indiana Code 1-1-4-5
- Trustee: A person or institution holding and administering property in trust.
- trustee: includes an original, additional, or successor trustee, whether or not appointed or confirmed by a court. See Indiana Code 30-2-14-13
(1) an amount chargeable to income but paid from principal because it is unusually large, including extraordinary repairs;
(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;
(3) disbursements made to prepare property for rental, including tenant allowances, leasehold improvements, and broker’s commissions;
(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
(5) disbursements described in section 39(a)(7) of this chapter.
(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).
As added by P.L.84-2002, SEC.2.
