Montana Code Annotated 1997

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     72-34-416. Charges against income and principal. (1) The following charges shall be made against income:
     (a) ordinary expenses incurred in connection with the administration, management, or preservation of the trust property, including:
     (i) regularly recurring taxes assessed against any portion of the principal;
     (ii) water rates;
     (iii) premiums on insurance taken upon the interests of the income beneficiary, remainder beneficiary, or trustee;
     (iv) interest paid by the trustee; and
     (v) ordinary repairs;
     (b) a reasonable allowance for depreciation on property subject to depreciation under generally accepted accounting principles, but no allowance may be made for depreciation on that portion of any real property used by a beneficiary as a residence or for depreciation of any property held by the trustee on July 1, 1983, for which the trustee was not then making an allowance for depreciation;
     (c) not less than one-half of court costs, attorney fees, and other fees on periodic judicial accounting, unless the court directs otherwise;
     (d) court costs, attorney fees, and fees on other accountings or judicial proceedings if the matter primarily concerns the income interest, unless the court directs otherwise;
     (e) not less than one-half of the trustee's regular compensation, whether based on a percentage of principal or income, and all expenses reasonably incurred for current management of principal and application of income, unless the court directs otherwise; and
     (f) any tax levied upon receipts defined as income under part 4 or the trust instrument and payable by the trustee.
     (2) If charges against income are of unusual amount, the trustee may, by means of reserves or other reasonable means, charge them over a reasonable period of time and withhold from distribution sufficient sums to regularize distributions.
     (3) The following charges shall be made against principal:
     (a) (i) trustee's compensation not chargeable to income under subsections (1)(d) and (1)(e);
     (ii) special compensation of trustees;
     (iii) expenses reasonably incurred in connection with principal, court costs, and attorney fees primarily concerning matters of principal; and
     (iv) trustee's compensation computed on principal as an acceptance, distribution, or termination fee;
     (b) charges not provided for in subsection (1), including:
     (i) the costs of investing and reinvesting principal;
     (ii) the payments on principal of an indebtedness, including a mortgage amortized by periodic payments of principal;
     (iii) expenses for preparation of property for rental or sale; and
     (iv) unless the court directs otherwise, expenses incurred in maintaining or defending any action to construe the trust or protect it or the property or assure the title of any trust property;
     (c) extraordinary repairs or expenses incurred in making a capital improvement to principal, including special assessments, but a trustee may establish an allowance for depreciation out of income to the extent permitted by 72-34-409 and by subsection (1)(b) of this section;
     (d) any tax levied upon profit, gain, or other receipts allocated to principal, notwithstanding denomination of the tax as an income tax by the taxing authority; and
     (e) if an estate or inheritance tax is levied in respect to a trust in which both an income beneficiary and a remainder beneficiary have an interest, any amount apportioned to the trust, including interest and penalties, even though the income beneficiary also has rights in the principal.
     (4) Regularly recurring charges payable from income shall be apportioned to the same extent and in the same manner that income is apportioned under 72-34-405.

     History: En. Sec. 150, Ch. 685, L. 1989.

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