Special Provisions for Distribution Under Florida’s Probate Statute

by | Mar 13, 2013

Special Provisions for Distribution Under Florida’s Probate Statute

PART VIII

SPECIAL PROVISIONS FOR

DISTRIBUTION

733.801 Delivery of devises and distributive shares.

733.802 Proceedings for compulsory payment of devises or distributive interest.

733.803 Encumbered property; liability for payment.

733.805 Order in which assets abate.

733.806 Advancement.

733.808 Death benefits; disposition of proceeds.

733.809 Right of retainer.

733.810 Distribution in kind; valuation.

733.811 Distribution; right or title of distributee.

733.812 Improper distribution or payment; liability of distributee or payee.

733.813 Purchasers from distributees protected.

733.814 Partition for purpose of distribution.

733.815 Private contracts among interested persons.

733.816 Disposition of unclaimed property held by personal representatives.

733.817 Apportionment of estate taxes.

 

733.801 Delivery of devises and distributive shares.—

(1) No personal representative shall be required to pay or deliver any devise or distributive share or to surrender possession of any land to any beneficiary until the expiration of 5 months from the granting of letters.

(2) Except as otherwise provided in the will, the personal representative shall pay as an expense of administration the reasonable expenses of storage, insurance, packing, and delivery of tangible personal property to a beneficiary.

 

733.802 Proceedings for compulsory payment of devises or distributive interest.—

(1) Before final distribution, no personal representative shall be compelled:

(a) To pay a devise in money before the final settlement of the personal representative’s accounts,

(b) To deliver specific personal property devised, unless the personal property is exempt personal property,

(c) To pay all or any part of a distributive share in the personal estate of a decedent, or

(d) To surrender land to any beneficiary,

unless the beneficiary establishes that the property will not be required for the payment of debts, family allowance, estate and inheritance taxes, claims, elective share of the surviving spouse, charges, or expenses of administration or to provide funds for contribution or to enforce equalization in case of advancements.

(2) An order directing the surrender of real property or the delivery of personal property by the personal representative to the beneficiary shall be conclusive in favor of bona fide purchasers for value from the beneficiary or distributee as against the personal representative and all other persons claiming by, through, under, or against the decedent or the decedent’s estate.

(3) If the administration of the estate has not been completed before the entry of an order of partial distribution, the court may require the person entitled to distribution to give a bond with sureties as prescribed in s. 45.011, conditioned on the making of due contribution for the payment of devises, family allowance, estate and inheritance taxes, claims, elective share of the spouse, charges, expenses of administration, and equalization in case of advancements, plus any interest on them.

 

733.803 Encumbered property; liability for payment.—The specific devisee of any encumbered property shall be entitled to have the encumbrance on devised property paid at the expense of the residue of the estate only when the will shows that intent. A general direction in the will to pay debts does not show that intent.

(1) Funds or property designated by the will shall be used to pay debts, family allowance, exempt property, elective share charges, expenses of administration, and devises, to the extent the funds or property is sufficient. If no provision is made or the designated fund or property is insufficient, the funds and property of the estate shall be used for these purposes, and to raise the shares of a pretermitted spouse and children, except as otherwise provided in subsections (3) and (4), in the following order:

(a) Property passing by intestacy.

(b) Property devised to the residuary devisee or devisees.

(c) Property not specifically or demonstratively devised.

(d) Property specifically or demonstratively devised.

(2) Demonstrative devises shall be classed as general devises upon the failure or insufficiency of funds or property out of which payment should be made, to the extent of the insufficiency. Devises to the decedent’s surviving spouse, given in satisfaction of, or instead of, the surviving spouse’s statutory rights in the estate, shall not abate until other devises of the same class are exhausted. Devises given for a valuable consideration shall abate with other devises of the same class only to the extent of the excess over the amount of value of the consideration until all others of the same class are exhausted. Except as herein provided, devises shall abate equally and ratably and without preference or priority as between real and personal property. When property that has been specifically devised or charged with a devise is sold or used by the personal representative, other devisees shall contribute according to their respective interests to the devisee whose devise has been sold or used. The amounts of the respective contributions shall be determined by the court and shall be paid or withheld before distribution is made.

(3) Section 733.817 shall be applied before this section is applied.

(4) In determining the contribution required under s. 733.607(2), subsections (1)-(3) of this section and s. 736.05053(2) shall be applied as if the beneficiaries of the estate and the beneficiaries of a trust described in s. 733.707(3), other than the estate or trust itself, were taking under a common instrument.

 

733.806 Advancement.—If a person dies intestate, property that the decedent gave during lifetime to an heir is treated as an advancement against the heir’s share of the estate only if declared in a contemporaneous writing by the decedent or acknowledged in writing by the heir. The property advanced shall be valued at the time the heir came into possession or enjoyment of the property or at the time of the death of the decedent, whichever first occurs. If the recipient of the property does not survive the decedent, the property shall not be taken into account in computing the intestate share to be received by the recipient’s descendants unless the declaration or acknowledgment provides otherwise.

 

733.808 Death benefits; disposition of proceeds.—

(1) Death benefits of any kind, including, but not limited to, proceeds of:

(a) An individual life insurance policy;

(b) A group life insurance policy;

(c) A benefit plan as defined by s. 710.102;

(d) An annuity or endowment contract; and

(e) A health or accident policy,

may be made payable to the trustee under a trust agreement or declaration of trust in existence at the time of the death of the insured, employee, or annuitant or the owner of or participant in the benefit plan. The death benefits shall be held and disposed of by the trustee in accordance with the terms of the trust as they appear in writing on the date of the death of the insured, employee, annuitant, owner, or participant. It shall not be necessary to the validity of the trust agreement or declaration of trust, whether revocable or irrevocable, that it have a trust corpus other than the right of the trustee to receive death benefits.

(2) Death benefits of any kind, including, but not limited to, proceeds of:

(a) An individual life insurance policy;

(b) A group life insurance policy;

(c) A benefit plan as defined in s. 710.102;

(d) An annuity or endowment contract; and

(e) A health or accident policy,

may be made payable to the trustee named, or to be named, in a written instrument that is admitted to probate as the last will of the insured, the owner of the policy, the employee, owner, or participant covered by the plan or contract, or any other person, whether or not the will is in existence at the time of designation. Upon the admission of the will to probate, the death benefits shall be paid to the trustee, to be held, administered, and disposed of in accordance with the terms of the trust or trusts created by the will.

(3) In the event no trustee makes proper claim to the proceeds from the insurance company or other obligor within a period of 6 months after the date of the death of the insured, employee, annuitant, owner, or participant, or if satisfactory evidence is furnished to the insurance company or obligor within that period that there is, or will be, no trustee to receive the proceeds, payment shall be made by the insurance company or obligor to the personal representative of the person making the designation, unless otherwise provided by agreement with the insurer or obligor during the lifetime of the insured, employee, annuitant, owner, or participant.

(4) Death benefits payable as provided in subsection (1), subsection (2), or subsection (3), unless paid to a personal representative under the provisions of subsection (3), shall not be deemed to be part of the decedent’s estate, and shall not be subject to any obligation to pay the expenses of the administration and obligations of the decedent’s estate or for contribution required from a trust under s. 733.607(2) to any greater extent than if the proceeds were payable directly to the beneficiaries named in the trust.

(5) The death benefits held in trust may be commingled with any other assets that may properly come into the trust.

(6) This section does not affect the validity of any designation of a beneficiary of proceeds previously made that designates as beneficiary the trustee of any trust established under a trust agreement or declaration of trust or by will.

 

733.809 Right of retainer.—The amount of a noncontingent indebtedness due from a beneficiary to the estate or its present value, if not due, may be offset against that beneficiary’s interest. However, that beneficiary shall have the benefit of any defense that would be available in a direct proceeding for recovery of the debt.

 

733.810 Distribution in kind; valuation.—

(1) Assets shall be distributed in kind unless:

(a) A general power of sale is conferred;

(b) A contrary intention is indicated by the will or trust; or

(c) Disposition is made otherwise under the provisions of this code.

(2) Any pecuniary devise, family allowance, or other pecuniary share of the estate or trust may be satisfied in kind if:

(a) The person entitled to payment has not demanded cash;

(b) The property is distributed at fair market value as of its distribution date; and

(c) No residuary devisee has requested that the asset remain a part of the residuary estate.

(3) When not practicable to distribute undivided interests in a residuary asset, the asset may be sold.

(4) When the fiduciary under a will or trust is required, or has an option, to satisfy a pecuniary devise or transfer in trust, to or for the benefit of the surviving spouse, with an in-kind distribution, at values as finally determined for federal estate tax purposes, the fiduciary shall, unless the governing instrument otherwise provides, satisfy the devise or transfer in trust by distribution of assets, including cash, fairly representative of the appreciated or depreciated value of all property available for that distribution, taking into consideration any gains and losses realized from a prior sale of any property not devised specifically, generally, or demonstratively.

(5) A personal representative or a trustee is authorized to distribute any distributable assets, non-pro rata among the beneficiaries subject to the fiduciary’s duty of impartiality.

 

733.811 Distribution; right or title of distributee.—If a distributee receives from a fiduciary an instrument transferring assets in kind, payment in distribution, or possession of specific property, the distributee has succeeded to the estate’s interest in the assets as against all persons interested in the estate. However, the fiduciary may recover the assets or their value if the distribution was improper.

 

733.812 Improper distribution or payment; liability of distributee or payee.—A distributee or a claimant who was paid improperly must return the assets or funds received, and the income from those assets or interest on the funds since distribution or payment, unless the distribution or payment cannot be questioned because of adjudication, estoppel, or limitations. If the distributee or claimant does not have the property, its value at the date of disposition, income thereon, and gain received by the distributee or claimant must be returned.

 

733.813 Purchasers from distributees protected.—If property distributed in kind, or a security interest in that property, is acquired by a purchaser or lender for value from a distributee, the purchaser or lender takes title free of any claims of the estate and incurs no personal liability to the estate, whether or not the distribution was proper. The purchaser or lender need not inquire whether a personal representative acted properly in making the distribution in kind.

 

733.814 Partition for purpose of distribution.—When two or more beneficiaries are entitled to distribution of undivided interests in any property, the personal representative or any beneficiary may petition the court before the estate is closed to partition the property in the same manner as provided by law for civil actions of partition. The court may direct the personal representative to sell any property that cannot be partitioned without prejudice to the owners and that cannot be allotted equitably and conveniently.

 

733.815 Private contracts among interested persons.—Subject to the rights of creditors and taxing authorities, interested persons may agree among themselves to alter the interests, shares, or amounts to which they are entitled in a written contract executed by them. The personal representative shall abide by the terms of the contract, subject to the personal representative’s obligation to administer the estate for the benefit of interested persons who are not parties to the contract, and to pay costs of administration. Trustees of a testamentary trust are interested persons for the purposes of this section. Nothing in this section relieves trustees of any duties owed to beneficiaries of trusts.

 

733.816 Disposition of unclaimed property held by personal representatives.

(1) In all cases in which there is unclaimed property in the hands of a personal representative that cannot be distributed or paid because of the inability to find the lawful owner or because no lawful owner is known or because the lawful owner refuses to accept the property after a reasonable attempt to distribute it and after notice to that lawful owner, the court shall order the personal representative to sell the property and deposit the proceeds and cash already in hand, after retaining those amounts provided for in subsection (4), with the clerk and receive a receipt, and the clerk shall deposit the funds in the registry of the court to be disposed of as follows:

(a) If the value of the funds is $500 or less, the clerk shall post a notice for 30 days at the courthouse door giving the amount involved, the name of the personal representative, and the other pertinent information that will put interested persons on notice.

(b) If the value of the funds is over $500, the clerk shall publish the notice once a month for 2 consecutive months in a newspaper of general circulation in the county.

After the expiration of 6 months from the posting or first publication, the clerk shall deposit the funds with the Chief Financial Officer after deducting the clerk’s fees and the costs of publication.

(2) Upon receipt of the funds, the Chief Financial Officer shall deposit them to the credit of the State School Fund, to become a part of the school fund. All interest and all income that may accrue from the money while so deposited shall belong to the fund. The funds so deposited shall constitute and be a permanent appropriation for payments by the Chief Financial Officer in obedience to court orders entered as provided by subsection (3).

(3) Within 10 years from the date of deposit with the Chief Financial Officer, on written petition to the court that directed the deposit of the funds and informal notice to the Department of Legal Affairs, and after proof of entitlement, any person entitled to the funds before or after payment to the Chief Financial Officer and deposit as provided by subsection (1) may obtain a court order directing the payment of the funds to that person. All funds deposited with the Chief Financial Officer and not claimed within 10 years from the date of deposit shall escheat to the state for the benefit of the State School Fund.

(4) The personal representative depositing assets with the clerk is permitted to retain from the funds a sufficient amount to pay final costs of administration chargeable to the assets accruing between the deposit of the funds with the clerk of the court and the order of discharge. Any funds so retained which are surplus shall be deposited with the clerk prior to discharge of the personal representative.

(5)(a) If a person entitled to the funds assigns the right to receive payment or part payment to an attorney or private investigative agency which is duly licensed to do business in this state pursuant to a written agreement with that person, the Department of Financial Services is authorized to make distribution in accordance with the assignment.

(b) Payments made to an attorney or private investigative agency shall be promptly deposited into a trust or escrow account which is regularly maintained by the attorney or private investigative agency in a financial institution located in this state and authorized to accept these deposits.

(c) Distribution by the attorney or private investigative agency to the person entitled to the funds shall be made within 10 days following final credit of the deposit into the trust or escrow account at the financial institution, unless a party to the agreement protests the distribution in writing before it is made.

(d) The department shall not be civilly or criminally liable for any funds distributed pursuant to this subsection, provided the distribution is made in good faith.

 

733.817 Apportionment of estate taxes.—

(1) For purposes of this section:

(a) “Fiduciary” means a person other than the personal representative in possession of property included in the measure of the tax who is liable to the applicable taxing authority for payment of the entire tax to the extent of the value of the property in possession.

(b) “Governing instrument” means a will, trust agreement, or any other document that controls the transfer of an asset on the occurrence of the event with respect to which the tax is being levied.

(c) “Gross estate” means the gross estate, as determined by the Internal Revenue Code with respect to the federal estate tax and the Florida estate tax, and as that concept is otherwise determined by the estate, inheritance, or death tax laws of the particular state, country, or political subdivision whose tax is being apportioned.

(d) “Included in the measure of the tax” means that for each separate tax that an interest may incur, only interests included in the measure of that particular tax are considered. The term “included in the measure of the tax” does not include any interest, whether passing under the will or not, to the extent the interest is initially deductible from the gross estate, without regard to any subsequent reduction of the deduction by reason of the charge of any part of the applicable tax to the interest. The term “included in the measure of the tax” does not include interests or amounts that are not included in the gross estate but are included in the amount upon which the applicable tax is computed, such as adjusted taxable gifts with respect to the federal estate tax. If an election is required for deductibility, an interest is not “initially deductible” unless the election for deductibility is allowed.

(e) “Internal Revenue Code” means the Internal Revenue Code of 1986, as amended from time to time.

(f) “Net tax” means the net tax payable to the particular state, country, or political subdivision whose tax is being apportioned, after taking into account all credits against the applicable tax except as provided in this section. With respect to the federal estate tax, “net tax” is determined after taking into account all credits against the tax except for the credit for foreign death taxes.

(g) “Nonresiduary devise” means any devise that is not a residuary devise.

(h) “Nonresiduary interest” in connection with a trust means any interest in a trust which is not a residuary interest.

(i) “Recipient” means, with respect to property or an interest in property included in the gross estate, an heir at law in an intestate estate, devisee in a testate estate, beneficiary of a trust, beneficiary of an insurance policy, annuity, or other contractual right, surviving tenant, taker as a result of the exercise or in default of the exercise of a general power of appointment, person who receives or is to receive the property or an interest in the property, or person in possession of the property, other than a creditor.

(j) “Residuary devise” has the meaning set forth in s. 731.201.

(k) “Residuary interest,” in connection with a trust, means an interest in the assets of a trust which remain after provision for any distribution that is to be satisfied by reference to a specific property or type of property, fund, sum, or statutory amount.

(l) “Revocable trust” means a trust as described in s. 733.707(3).

(m) “State” means any state, territory, or possession of the United States, the District of Columbia, and the Commonwealth of Puerto Rico.

(n) “Tax” means any estate tax, inheritance tax, generation skipping transfer tax, or other tax levied or assessed under the laws of this or any other state, the United States, any other country, or any political subdivision of the foregoing, as finally determined, which is imposed as a result of the death of the decedent, including, without limitation, the tax assessed pursuant to s. 4980A of the Internal Revenue Code. The term also includes any interest and penalties imposed in addition to the tax. Unless the context indicates otherwise, the term “tax” means each separate tax.

(o) “Temporary interest” means an interest in income or an estate for a specific period of time or for life or for some other period controlled by reference to extrinsic events, whether or not in trust.

(p) “Tentative Florida tax” with respect to any property means the net Florida estate tax that would have been attributable to that property if no tax were payable to any other state in respect of that property.

(q) “Value” means the pecuniary worth of the interest involved as finally determined for purposes of the applicable tax after deducting any debt, expense, or other deduction chargeable to it for which a deduction was allowed in determining the amount of the applicable tax. A lien or other encumbrance is not regarded as chargeable to a particular interest to the extent that it will be paid from other interests. The value of an interest shall not be reduced by reason of the charge against it of any part of the tax.

(2) An interest in protected homestead shall be exempt from the apportionment of taxes.

(3) The net tax attributable to the interests included in the measure of each tax shall be determined by the proportion that the value of each interest included in the measure of the tax bears to the total value of all interests included in the measure of the tax. Notwithstanding the foregoing:

(a) The net tax attributable to interests included in the measure of the tax by reason of s. 2044 of the Internal Revenue Code shall be determined in the manner provided for the federal estate tax in s. 2207A of the Internal Revenue Code, and the amount so determined shall be deducted from the tax to determine the net tax attributable to all remaining interests included in the measure of the tax.

(b) The foreign tax credit allowed with respect to the federal estate tax shall be allocated among the recipients of interests finally charged with the payment of the foreign tax in reduction of any federal estate tax chargeable to the recipients of the foreign interests, whether or not any federal estate tax is attributable to the foreign interests. Any excess of the foreign tax credit shall be applied to reduce proportionately the net amount of federal estate tax chargeable to the remaining recipients of the interests included in the measure of the federal estate tax.

(c) The reduction in the Florida tax on the estate of a Florida resident for tax paid to other states shall be allocated as follows:

1. If the net tax paid to another state is greater than or equal to the tentative Florida tax attributable to the property subject to tax in the other state, none of the Florida tax shall be attributable to that property.

2. If the net tax paid to another state is less than the tentative Florida tax attributable to the property subject to tax in the other state, the net Florida tax attributable to the property subject to tax in the other state shall be the excess of the amount of the tentative Florida tax attributable to the property over the net tax payable to the other state with respect to the property.

3. Any remaining net Florida tax shall be attributable to property included in the measure of the Florida tax exclusive of property subject to tax in other states.

4. The net federal tax attributable to the property subject to tax in the other state shall be determined as if it were located in the state.

(d) The net tax attributable to a temporary interest, if any, shall be regarded as attributable to the principal that supports the temporary interest.

(4)(a) Except as otherwise effectively directed by the governing instrument, if the Internal Revenue Code, including, but not limited to, ss. 2032A(c)(5), 2206, 2207, 2207A, 2207B, and 2603, applies to apportion federal tax against recipients of certain interests, all net taxes, including taxes levied by the state attributable to each type of interest, shall be apportioned against the recipients of all interests of that type in the proportion that the value of each interest of that type included in the measure of the tax bears to the total of all interests of that type included in the measure of the tax.

(b) The provisions of this subsection do not affect allocation of the reduction in the Florida tax as provided in this section with respect to estates of Florida residents which are also subject to tax in other states.

(5) Except as provided above or as otherwise directed by the governing instrument, the net tax attributable to each interest shall be apportioned as follows:

(a) For property passing under the decedent’s will:

1. The net tax attributable to nonresiduary devises shall be charged to and paid from the residuary estate whether or not all interests in the residuary estate are included in the measure of the tax. If the residuary estate is insufficient to pay the net tax attributable to all nonresiduary devises, the balance of the net tax attributable to nonresiduary devises shall be apportioned among the recipients of the nonresiduary devises in the proportion that the value of each nonresiduary devise included in the measure of the tax bears to the total of all nonresiduary devises included in the measure of the tax.

2. The net tax attributable to residuary devises shall be apportioned among the recipients of the residuary devises included in the measure of tax in the proportion that the value of each residuary devise included in the measure of the tax bears to the total of all residuary devises included in the measure of the tax.

(b) For property passing under the terms of any trust other than a trust created in the decedent’s will:

1. The net tax attributable to nonresiduary interests shall be charged to and paid from the residuary portion of the trust, whether or not all interests in the residuary portion are included in the measure of the tax. If the residuary portion of the trust is insufficient to pay the net tax attributable to all nonresiduary interests, the balance of the net tax attributable to nonresiduary interests shall be apportioned among the recipients of the nonresiduary interests in the proportion that the value of each nonresiduary interest included in the measure of the tax bears to the total of all nonresiduary interests included in the measure of the tax.

2. The net tax attributable to residuary interests shall be apportioned among the recipients of the residuary interests included in the measure of the tax in the proportion that the value of each residuary interest included in the measure of the tax bears to the total of all residuary interests included in the measure of the tax.

(c) The net tax attributable to an interest in protected homestead shall be apportioned against the recipients of other interests in the estate or passing under any revocable trust in the following order:

1. Class I: Recipients of interests not disposed of by the decedent’s will or revocable trust that are included in the measure of the federal estate tax.

2. Class II: Recipients of residuary devises and residuary interests that are included in the measure of the federal estate tax.

3. Class III: Recipients of nonresiduary devises and nonresiduary interests that are included in the measure of the federal estate tax.

The net tax apportioned to a class, if any, pursuant to this paragraph shall be apportioned among the recipients in the class in the proportion that the value of the interest of each bears to the total value of all interests included in that class.

(d) In the application of this subsection, paragraphs (a), (b), and (c) shall be applied to apportion the net tax to the recipients of the estate and the recipients of the decedent’s revocable trust as if all recipients, other than the estate or trusts themselves, were taking under a common instrument.

(e) The net tax imposed under s. 4980A of the Internal Revenue Code shall be apportioned among the recipients of the interests included in the measure of that tax in the proportion that the value of the interest of each bears to the total value of all interests included in the measure of that tax.

(f) The net tax that is not apportioned under paragraphs (a), (b), and (c), including, but not limited to, the net tax attributable to interests passing by intestacy, jointly held interests passing by survivorship, insurance, properties in which the decedent held a reversionary or revocable interest, and annuities, shall be apportioned among the recipients of the remaining interests that are included in the measure of the tax in the proportion that the value of each such interest bears to the total value of all the remaining interests included in the measure of the tax.

(g) If the court finds that it is inequitable to apportion interest, penalties, or both, in the manner provided in paragraphs (a)-(f), the court may assess liability for the payment thereof in the manner it finds equitable.

(h)1. To be effective as a direction for payment of tax in a manner different from that provided in this section, the governing instrument must direct that the tax be paid from assets that pass pursuant to that governing instrument, except as provided in this section.

2. If the decedent’s will provides that the tax shall be apportioned as provided in the decedent’s revocable trust by specific reference to the trust, the direction in the revocable trust shall be deemed to be a direction contained in the will and shall control with respect to payment of taxes from assets passing under both the will and the revocable trust.

3. A direction in the decedent’s will to pay tax from the decedent’s revocable trust is effective if a contrary direction is not contained in the trust agreement.

4. For a direction in a governing instrument to be effective to direct payment of taxes attributable to property not passing under the governing instrument from property passing under the governing instrument, the governing instrument must expressly refer to this section, or expressly indicate that the property passing under the governing instrument is to bear the burden of taxation for property not passing under the governing instrument. A direction in the governing instrument to the effect that all taxes are to be paid from property passing under the governing instrument whether attributable to property passing under the governing instrument or otherwise shall be effective to direct the payment from property passing under the governing instrument of taxes attributable to property not passing under the governing instrument.

5. If there is a conflict as to payment of taxes between the decedent’s will and the governing instrument, the decedent’s will controls, except as follows:

a. The governing instrument shall be given effect with respect to any tax remaining unpaid after the application of the decedent’s will.

b. A direction in a governing instrument to pay the tax attributable to assets that pass pursuant to the governing instrument from assets that pass pursuant to that governing instrument shall be effective notwithstanding any conflict with the decedent’s will, unless the tax provision in the decedent’s will expressly overrides the conflicting provision in the governing instrument.

(6) The personal representative or fiduciary shall not be required to transfer to a recipient any property reasonably anticipated to be necessary for the payment of taxes. Further, the personal representative or fiduciary shall not be required to transfer any property to the recipient until the amount of the tax due from the recipient is paid by the recipient. If property is transferred before final apportionment of the tax, the recipient shall provide a bond or other security for his or her apportioned liability in the amount and form prescribed by the personal representative or fiduciary.

(7)(a) The personal representative may petition at any time for an order of apportionment. If no administration has been commenced at any time after 90 days from the decedent’s death, any fiduciary may petition for an order of apportionment in the court in which venue would be proper for administration of the decedent’s estate. Formal notice of the petition for order of apportionment shall be given to all interested persons. At any time after 6 months from the decedent’s death, any recipient may petition the court for an order of apportionment.

(b) The court shall determine all issues concerning apportionment. If the tax to be apportioned has not been finally determined, the court shall determine the probable tax due or to become due from all interested persons, apportion the probable tax, and retain jurisdiction over the parties and issues to modify the order of apportionment as appropriate until after the tax is finally determined.

(8)(a) If the personal representative or fiduciary does not have possession of sufficient property otherwise distributable to the recipient to pay the tax apportioned to the recipient, whether under this section, the Internal Revenue Code, or the governing instrument, if applicable, the personal representative or fiduciary shall recover the deficiency in tax so apportioned to the recipient:

1. From the fiduciary in possession of the property to which the tax is apportioned, if any; and

2. To the extent of any deficiency in collection from the fiduciary, or to the extent collection from the fiduciary is excused pursuant to subsection (9) and in all other cases, from the recipient of the property to which the tax is apportioned, unless relieved of this duty as provided in subsection (9).

(b) In any action to recover the tax apportioned, the order of apportionment shall be prima facie correct.

(c) In any action for the enforcement of an order of apportionment, the court shall award taxable costs as in chancery actions, including reasonable attorney’s fees, and may award penalties and interest on the unpaid tax in accordance with equitable principles.

(d) This subsection shall not authorize the recovery of any tax from any company issuing insurance included in the gross estate, or from any bank, trust company, savings and loan association, or similar institution with respect to any account in the name of the decedent and any other person which passed by operation of law on the decedent’s death.

(9)(a) A personal representative or fiduciary who has the duty under this section of collecting the apportioned tax from recipients may be relieved of the duty to collect the tax by an order of the court finding:

1. That the estimated court costs and attorney’s fees in collecting the apportioned tax from a person against whom the tax has been apportioned will approximate or exceed the amount of the recovery;

2. That the person against whom the tax has been apportioned is a resident of a foreign country other than Canada and refuses to pay the apportioned tax on demand; or

3. That it is impracticable to enforce contribution of the apportioned tax against a person against whom the tax has been apportioned in view of the improbability of obtaining a judgment or the improbability of collection under any judgment that might be obtained, or otherwise.

(b) A personal representative or fiduciary shall not be liable for failure to attempt to enforce collection if the personal representative or fiduciary reasonably believes it would have been economically impracticable.

(10) Any apportioned tax that is not collected shall be reapportioned in accordance with this section as if the portion of the property to which the uncollected tax had been apportioned had been exempt.

(11) Nothing in this section shall limit the right of any person who has paid more than the amount of the tax apportionable to that person, calculated as if all apportioned amounts would be collected, to obtain contribution from those who have not paid the full amount of the tax apportionable to them, calculated as if all apportioned amounts would be collected, and that right is hereby conferred. In any action to enforce contribution, the court shall award taxable costs as in chancery actions, including reasonable attorney’s fees.

(12) Nothing herein contained shall be construed to require the personal representative or fiduciary to pay any tax levied or assessed by any foreign country, unless specific directions to that effect are contained in the will or other instrument under which the personal representative or fiduciary is acting.

Author:
Barry E. Haimo, Esq.
Haimo Law
Strategic Planning With Purpose
Email: barry@haimolaw.com
LinkedIn: http://www.linkedin.com/in/bhaimo
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