Section 35-6-502 - Disbursements from principal(a) A trustee shall make the following disbursements from principal: (1) The remaining one-half (½) of the disbursements described in § 35-6-501(1) and (2); however, if in the judgment of the trustee, the charging of a part or all of that portion of the compensation described under § 35-6-501(1) to principal is impracticable because of the lack of sufficient principal cash and readily marketable intangible personal property, or inadvisable because of the nature of the assets, then that part or all of the compensation must be paid out of income so long as the adjustment does not violate § 35-6-104(c). The decision of the trustee to pay a larger portion or all of the compensation out of income is conclusive, and the income of the trust is not entitled to reimbursement from principal at any subsequent time or times;(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 § 35-6-501(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.Amended by 2021 Tenn. Acts, ch. 420, s 18, eff. 7/1/2021.