Disbursement from principal.

(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.