Probate Code section 16364
(a)
If a fiduciary makes or expects to make a principal disbursement described in subdivision (b), 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.(b)
To the extent a fiduciary has not been, and does not expect to be, reimbursed by a third party, principal disbursements to which subdivision (a) applies include all of the following:(1)
An amount chargeable to income but paid from principal because income is not sufficient.(2)
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.(3)
A disbursement made to prepare property for rental, including tenant allowances, leasehold improvements, and commissions.(4)
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.(5)
A disbursement described in subdivision (a) of Section 16361.(c)
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 subdivision (a).
Source:
Section 16364, https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=PROB§ionNum=16364. (accessed May 19, 2025).