386.496 Transfers from income to reimburse principal.
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/ky/chapter-386/386-496A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
(1)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
(1)or more accounting periods to reimburse principal or to provide a reserve
for future principal disbursements.
(2)Principal disbursements to which subsection
(1)of this section 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:
(a)An amount chargeable to income but paid from principal because it is
unusually large, including extraordinary repairs;
(b)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;
(c)Disbursements made to prepare property for rental, including tenant
allowances, leasehold improvements, and broker's commissions;
(d)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
(e)Disbursements described in KRS 386.492(1)(g).
(3)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 subsection
(1)of this
section.