New Jersey § 3b:19b-25

§ 3b:19b-25.

a. A trustee shall make the following disbursements from principal: (1) commissions allowed by law to a trustee on principal receipts or distributions

or on termination of the trust estate; (2) the remaining one-half of the fees paid to banks and other financial institutions

for custodial services, if properly chargeable to the trust; (3) fees paid to banks and other financial institutions and registered investment

advisors for investment advisory or investment management services, if properly chargeable

to the trust; (4) costs of investing and reinvesting principal and payments on the principal of

an indebtedness, including a mortgage or security interest amortized by periodic payments

of principal; (5) extraordinary repairs or expenses incurred in making a capital improvement, including

special assessments, and disbursements made to prepare property for sale; (6) court costs, attorneys' fees, accountants' fees and other fees, incurred on an

accounting or judicial proceeding or in maintaining or defending any action to construe

a will or a trust, protect it or the trust estate, or assure the title of any property,

unless properly chargeable to income under subsection c. of section 24 of this act

or the court otherwise directs; (7) premiums paid on an insurance policy not described in subsection d. of section

24 of this act of which the trust is the owner and beneficiary; (8) estate, inheritance and other transfer taxes, including penalties apportioned

to the trust; (9) 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 cost 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; and (10) if an estate or inheritance tax is levied in respect of a trust in which both

an income beneficiary and remainderman have an interest, any amount apportioned to

the trust, including penalties, even though the income beneficiary also has rights

in the principal. 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.