New York Laws
Part 5 - Allocation of Disbursements During Administration of Trust
11-A-5.2 - Disbursements From Principal

(a) A trustee shall make the following disbursements from principal:
(1) the remaining two-thirds of the disbursements described in
paragraph 11-A-5.1 (1);
(2) 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;
(3) payments on the principal of a trust debt;
(4) except as provided in paragraph 11-A-5.1 (2), all expenses for
accountings, judicial proceedings or other matters that involve both the
income and remainder interests or that concern primarily principal,
including a proceeding to construe the trust or to protect the trust or
its property;
(5) premiums paid on a policy of insurance not described in paragraph
11-A-5.1 (4) of which the trust is the owner and beneficiary;
(6) estate, inheritance, and other transfer taxes, including
penalties, apportioned to the trust; and
(7) 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.
(b) 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.

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