N.Y. Estates, Powers & Trusts Law § 11-a-5.4: Transfers from income to reimburse principal

§ 11-A-5.4 Transfers from income to reimburse principal

(a) 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.

(b) Principal disbursements to which paragraph (a) 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:

(1) an amount chargeable to income but paid from principal because it

is unusually large, including extraordinary repairs;

(2) 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;

(3) disbursements made to prepare property for rental, including

tenant allowances, leasehold improvements, and broker's commissions;

(4) 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

(5) disbursements described in subparagraph 11-A-5.2 (a)(7).

(c) 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 paragraph (a).