(1) Subject to s. 738.505, and except as otherwise provided in s. 738.601(3)(b), a fiduciary shall disburse all of the following from principal: (a) The balance of the disbursements described in s. 738.501(1) and (3), after application of s. 738.501(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 s. 738.501(4) of which the fiduciary is the owner and beneficiary. (g) A payment of estate, inheritance, and other transfer taxes, including penalties, apportioned to the trust. (h) A payment related to environmental matters including: 1. Reclamation; 2. Assessing environmental conditions; 3. Remedying and removing environmental contamination; 4. Monitoring remedial activities and the release of substances; 5. Preventing future releases of substances; 6. Collecting amounts from persons liable or potentially liable for the costs of the activities described in subparagraphs 1.-5.; 7. Penalties imposed under environmental laws or regulations; 8. Other actions to comply with environmental laws or regulations; 9. Statutory or common law claims by third parties; and 10. Defending claims based on environmental matters. (i) A payment of a premium for insurance for matters described in paragraph (h). (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 must transfer from principal to income an amount equal to the income paid to the creditor in reduction of the principal balance of the obligation.
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