§ 15-1.2-505 — Reimbursement of principal from income

Colorado § 15-1.2-505

• Jurisdiction: Colorado
• Title 15: Probate,
• Art.: Uniform Fiduciary Income and Principal Act

Text

(1) If a fiduciary
makes or expects to make a principal disbursement described in subsection (2) of
this section, the fiduciary may transfer an appropriate amount from income to
principal in one or more accounting periods to reimburse principal or provide a
reserve for future principal disbursements.

(2) To the extent a fiduciary has not been and does not expect to be
reimbursed by a third party, principal disbursements to which subsection (1) of this
section applies include:

(a) An amount chargeable to income but paid from principal because income
is not sufficient;

(b) The cost of an improvement to principal, whether a change to an existing
asset or the construction of a new asset, including a special assessment;

(c) A disbursement made to prepare property for rental, including tenant
allowances, leasehold improvements, and commissions;

(d) A periodic payment on an obligation secured by a principal asset, to the
extent the amount transferred from income to principal for depreciation is less than
the periodic payment; and

(e) A disbursement described in section 15-1.2-502 (1).

(3) If an asset whose ownership gives rise to a principal disbursement
becomes subject to a successive interest after an income interest ends, the
fiduciary may continue to make transfers under subsection (1) of this section.

Legislative History

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 834, � 1, effective January 1, 2022.