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May 1, 2005 12:00 PM
The Funding Dilemma
Executors face a painful dilemma in deciding when to satisfy a pecuniary bequest. If they make distributions too quickly, creditors may hold them liable for disposing of funds needed to pay debts. If they make distributions too slowly, beneficiaries are likely to become disgruntled and seek other opportunities to challenge their conduct. (Happy beneficiaries forgive executors' mistakes; unhappy beneficiaries play “gotcha” at the first sign of trouble.) Delayed beneficiaries may have added cause to be upset: Interest normally accrues on the amount due to them, and the Internal Revenue Service may disallow estate tax deductions for this interest.
However angry beneficiaries may get, though, executors should keep in mind that state courts are generally more indulgent of executors who take their time. The Jan. 30, 2004 Turner decision by the federal district court in Texas continues this trend, by supporting an estate's deduction of the interest that accrues during a delay in the payment of a pecuniary bequest.
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Topics of Interest
| Estate Tax | Donor Advised Funds |
| GSTs | Family Offices |
| Private Foundations | Life Insurance |
| 2010 Tax Act News | Industry Trends Surveys |
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