Disbursement from principal.

(1) Subject to Section 75A-5-505, and except as otherwise provided in Subsection 75A-5-601(3)(b) or (c), a fiduciary shall disburse from principal: (a) the balance of the disbursements described in Subsections 75A-5-501(1) and (3), after application of Subsection 75A-5-501(2); (b) the fiduciary's compensation calculated on principal as a fee for acceptance, distribution, or termination; (c) a payment of an expense to prepare for or execute a sale or other disposition of property; (d) a payment on the principal of a trust debt; (e) a payment of an expense of an accounting, judicial or nonjudicial proceeding, or other matter that involves primarily principal, including a proceeding to construe the terms of the trust or protect property; (f) a payment of a premium for insurance, including title insurance, not described in Subsection 75A-5-501(4), of which the fiduciary is the owner and beneficiary; (g) a payment of an estate or inheritance tax or other tax imposed because of the death of a decedent, including penalties, apportioned to the trust; and (h) a payment: (i) related to environmental matters, including: (A) reclamation; (B) assessing environmental conditions; (C) remedying and removing environmental contamination; (D) monitoring remedial activities and the release of substances; (E) preventing future releases of substances; (F) collecting amounts from persons liable or potentially liable for the costs of activities described in Subsections (1)(h)(i)(A) through (E); (G) penalties imposed under environmental laws or regulations; (H) other actions to comply with environmental laws or regulations; (I) statutory or common law claims by third parties; and (J) defending claims based on environmental matters; and (ii) for a premium for insurance for matters described in Subsection (1)(h)(i). (2) If a principal asset is encumbered with an obligation that requires income from the asset to be paid directly to a creditor, the fiduciary 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.