2006 New York Code - Disbursements From Principal

 
  § 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.