New Mexico § 46-3A-502 - Disbursements from principal

§ 46-3A-502. Disbursements from principal

(a) A trustee shall make the following disbursements from principal: (1) the remaining one-half of the disbursements described in Section 501(1) and (2); (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) expenses of a proceeding that concerns 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 Section 501(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.