lrnich[at]sbcglobal.net wrote:

- quote -

Stated another way, each of the 4 children who did not get
an inheritance advance is due a "cash bequest" amount of
$140,000, distributed before the 5th child gets anything.
This distribution is based on the current value of estate
assets and after all taxes and expenses have been paid.
Whether the value of the assets has appreciated or declined
since the date of death is immaterial, the "guaranteed"
amount to each of the 4 heirs is $140,000, period.

- quote -

I agree, each of the 4 children were "promised" a bequest of
$140,000 from the total estate assets. The value of the
estate on DOD is irrelevant.

- quote -

Naturally, he would argue this way, but that defies the
intent of the trust/will that each of the others actually
receive $140,000 before he gets to participate in the
distribution of any assets. Would he/she argue the same way
if the stock had APPRECIATED by $60,000 between the DOD and
the date of distribution?

- quote -

I was involved in a similar situation when my mother died.
My sibling had borrowed a large sum of money several years
previously and there still remained a balance due of about
$40,000 when she died. Her Will specified that each of the
other siblings would each receive a "cash bequest" equal to
the unpaid balance, with the remaining estate assets divided
among all three heirs. Valuation of the assets on any
particular date was irrelevant, only whether there was
enough in the estate account (after taxes and expenses) to
make such distributions.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

Suppose a parent with 5 children dies, leaving an estate
(held in her trust) consisting of stocks valued at $500 K on
the date of death, a small amount of cash to cover expenses,
and a house to be sold with proceeds expected to be about
$200 K. Several years earlier, the parent had made a "gift"
or "inheritance advance" of $140 K to one of the children (a
gift tax return was filed), and the trust specifies that
this child shall receive $140 K less inheritance than the
other four children, who will share equally upon the death
of the parent. In other words, the 5th child will only
receive 1/5 of that portion of the estate that exceeds
4(140) or $560 K.

By the time the trustee distributes the stock to the other
four children, the value has declined to $440 K, and each
receives $110 K in stock. These four children say that the
"valuation date" as far as the parent's intent is concerned,
is the date of distribution, and each is due another $30 K
from the sale of the house before the 5th child begins to
get his cut. The 5th child says that the valuation date
should be the date of death-the IRS valuation date. He
claims that each of the other four children really received
($500 K)/4 or $125 K in stock, and each is only due another
$15 K from the sale of the house before the 5th child begins
to get his cut, which gives the 5th child more and the other
four less.

The trust is silent about the valuation date for determining
the $140 K difference. Is there any precedent or ruling
that addresses this issue?

Thanks in advance,

Lois

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >