Michigan Laws 555.902 – Principal disbursements
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(1) A trustee shall make the following disbursements from principal:
(a) The remaining 1/2 of the disbursements described in section 501(a) and (b).
Terms Used In Michigan Laws 555.902
- Common law: The legal system that originated in England and is now in use in the United States. It is based on judicial decisions rather than legislative action.
- Income: means money or property that a fiduciary receives as current return from a principal asset. See Michigan Laws 555.502
- 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 a remainder beneficiary when the trust terminates. See Michigan Laws 555.502
- 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 Michigan Laws 555.502
(b) All of the trustee‘s compensation calculated on principal as a fee for acceptance, distribution, or termination, and disbursements made to prepare property for sale.
(c) Payments on the principal of a trust debt.
(d) Expenses of a proceeding that concerns primarily principal, including a proceeding to construe the trust or to protect the trust or its property.
(e) Premiums paid on a policy of insurance not described in section 501(d) of which the trust is the owner and beneficiary.
(f) Estate, inheritance, and other transfer taxes, including penalties, apportioned to the trust.
(g) Disbursements related to environmental matters, including reclamation, assessing environmental conditions, remedying and removing environmental contamination, monitoring remedial activities and the release of substances, preventing future releases of substances, collecting amounts from persons liable or potentially liable for the costs of those activities, penalties imposed under environmental laws or regulations and other payments made to comply with those laws or regulations, statutory or common law claims by third parties, and defending claims based on environmental matters.
(2) If a principal asset is encumbered with an obligation that requires income from that asset to be paid directly to the creditor, the trustee shall transfer from principal to income an amount equal to the income paid to the creditor in reduction of the principal balance of the obligation.