Trusts 

Iowa Code > Title XV > Subtitle 4 > Chapter 637 > § 637.504. Transfers from income to reimburse principal

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 or more accounting periods to reimburse principal or to provide a reserve for future principal disbursements.

2.  Principal disbursements to which subsection 1 applies include all of 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 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.

e .  Disbursements described in section 637.502, subsection 1 , paragraph "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 .

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