North Dakota Code 59-04.2-27 – (504) Transfers from income to reimburse principal
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 North Dakota Code 59-04.2-27
- following: when used by way of reference to a chapter or other part of a statute means the next preceding or next following chapter or other part. See North Dakota Code 1-01-49
- 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: includes property, real and personal. See North Dakota Code 1-01-49
- 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 subdivision g of subsection 1 of section 59-04.2-25.
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.