(1) Subject to Section 75A-5-505, and except as otherwise provided in Subsection 75A-5-601(3)(b) or (c), a fiduciary shall disburse from principal:
(a) the balance of the disbursements described in Subsections 75A-5-501(1) and (3), after application of Subsection 75A-5-501(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 Subsection 75A-5-501(4), of which the fiduciary is the owner and beneficiary;
(g) a payment of an estate or inheritance tax or other tax imposed because of the death of a decedent, including penalties, apportioned to the trust; and
(h) a payment:
(i) related to environmental matters, including:
(A) reclamation;
(B) assessing environmental conditions;
(C) remedying and removing environmental contamination;
(D) monitoring remedial activities and the release of substances;
(E) preventing future releases of substances;
(F) collecting amounts from persons liable or potentially liable for the costs of activities described in Subsections (1)(h)(i)(A) through (E);
(G) penalties imposed under environmental laws or regulations;
(H) other actions to comply with environmental laws or regulations;
(I) statutory or common law claims by third parties; and
(J) defending claims based on environmental matters; and
(ii) for a premium for insurance for matters described in Subsection (1)(h)(i).
(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 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.