Montana Code 72-34-451. Transfer from income to principal in anticipation of principal disbursement
72-34-451. Transfer from income to principal in anticipation of principal disbursement. (1) 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.
Terms Used In Montana Code 72-34-451
- Income: means money or property that a fiduciary receives as current return from a principal asset. See Montana Code 72-34-422
- Income interest: means the right of an income beneficiary to receive all or part of net income, whether the trust requires it to be distributed or authorizes it to be distributed in the trustee's discretion. See Montana Code 72-34-422
- 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.
- Property: means real and personal property. See Montana Code 1-1-205
- Trustee: A person or institution holding and administering property in trust.
(2)Principal disbursements to which subsection (1) 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:
(a)an amount chargeable to income but paid from principal because it is unusually large, including extraordinary repairs;
(b)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;
(c)disbursements made to prepare property for rental, including tenant allowances, leasehold improvements, and broker’s commissions;
(d)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
(e)disbursements described in 72-34-449(1)(g).
(3)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 (1).