PROB § 16364

(a) If a fiduciary makes or expects to make a principal disbursement described in subdivision (b), the fiduciary may transfer an appropriate amount from income to principal in one or more accounting periods to reimburse principal or provide a reserve for future principal disbursements.

(b) To the extent a fiduciary has not been, and does not expect to be, reimbursed by a third party, principal disbursements to which subdivision (a) applies include all of the following:

(1) An amount chargeable to income but paid from principal because income is not sufficient.

(2) The cost of an improvement to principal, whether a change to an existing asset or the construction of a new asset, including a special assessment.

(3) A disbursement made to prepare property for rental, including tenant allowances, leasehold improvements, and commissions.

(4) A periodic payment on an obligation secured by a principal asset, to the extent the amount transferred from income to principal for depreciation is less than the periodic payment.

(5) A disbursement described in subdivision (a) of Section 16361.

(c) If an asset whose ownership gives rise to a principal disbursement becomes subject to a successive interest after an income interest ends, the fiduciary may continue to make transfers under subdivision (a).