16355. A trustee shall allocate to principal:
(a) To the extent not allocated to income under this chapter,
assets received from a transferor during the transferor's lifetime, a
decedent's estate, a trust with a terminating income interest, or a
payer under a contract naming the trust or its trustee as
(b) Subject to any contrary rules in this article and in Articles
5.1 (commencing with Section 16350) and 5.3 (commencing with Section
16360), money or other property received from the sale, exchange,
liquidation, or change in form of a principal asset, including
(c) Amounts recovered from third parties to reimburse the trust
because of disbursements described in paragraph (7) of subdivision
(a) of Section 16371 or for other reasons to the extent not based on
the loss of income.
(d) Proceeds of property taken by eminent domain, but a separate
award made for the loss of income with respect to an accounting
period during which a current income beneficiary had a mandatory
income interest is income.
(e) Net income received in an accounting period during which there
is no beneficiary to whom a trustee may or must distribute income.
(f) Other receipts allocated to principal as provided in Article
5.3 (commencing with Section 16360).
16356. Unless the trustee accounts for receipts from rental
property pursuant to Section 16352, the trustee shall allocate to
income an amount received as rent of real or personal property,
including an amount received for cancellation or renewal of a lease.
An amount received as a refundable deposit, including a security
deposit or a deposit that is to be applied as rent for future
periods, shall be added to principal and held subject to the terms of
the lease, and is not available for distribution to a beneficiary
until the trustee's contractual obligations have been satisfied with
respect to that amount.
16357. (a) An amount received as interest, whether determined at a
fixed, variable, or floating rate, on an obligation to pay money to
the trustee, including an amount received as consideration for
prepaying principal, shall be allocated to income without any
provision for amortization of premium.
(b) An amount received from the sale, redemption, or other
disposition of an obligation to pay money to the trustee more than
one year after it is purchased or acquired by the trustee, including
an obligation whose purchase price, or its value when it is otherwise
acquired, is less than its value at maturity, shall be allocated to
principal. If the obligation matures within one year after it is
purchased or acquired by the trustee, an amount received in excess of
its purchase price, or its value when it is otherwise acquired,
shall be allocated to income.
(c) This section does not apply to an obligation to which Section
16361, 16362, 16363, 16364, 16366, or 16367 applies.
16358. (a) Except as otherwise provided in subdivision (b), a
trustee shall allocate to principal the proceeds of a life insurance
policy or other contract in which the trust or its trustee is named
as beneficiary, including a contract that insures the trust or its
trustee against loss for damage to, destruction of, or loss of title
to a trust asset. The trustee shall allocate dividends on an
insurance policy to income if the premiums on the policy are paid
from income, and to principal if the premiums are paid from
(b) A trustee shall allocate to income proceeds of a contract that
insures the trustee against loss of occupancy or other use by an
income beneficiary, loss of income, or, subject to Section 16352,
loss of profits from a business.
(c) This section does not apply to a contract to which Section