PR issued NQ MF check & distributes money to beneficaries

[AZ-Tax]

Personal Rep of Estate had non qualified mutual fund (MF) issue check to him/PR. PR, also heir/bene, now plans to divide gross amt by 5 and issue checks to each heir. Any advantages of the PR instructing the MF to go this route vs instructing the MF to issue a check to each heir or instructing MF to issue a check to the Estate?

[Burke]

Assuming none of the heirs were listed as beneficiaries (or TOD designations, etc) with the Mutual Fund custodian, it can be handled either way. It is still a distribution from the estate, and is used to figure DNI and taxable income passing through to the benes on the 1041. I frankly prefer that it go into the Estate account and then distributed to
the heirs by the PR after all debts have been settled. It's cleaner. Often the MF custodian wants to open up new accounts in the heirs' names, in which case it is still treated as a distribution from the estate for tax and accounting purposes. There is no tax advantage to either method over the other.

[AZ-Tax]

Does PR endorse check over to Estate?

Assuming none of the heirs were listed as beneficiaries (or TOD designations, etc) with the Mutual Fund custodian, it can be handled either way. It is still a distribution from the estate, and is used to figure DNI and taxable income passing through to the benes on the 1041. I frankly prefer that it go into the Estate account and then distributed to the heirs by the PR after all debts have been settled. It's cleaner. Often the MF custodian wants to open up new accounts in the heirs' names, in which case it is still treated as a distribution from the estate for tax and accounting purposes. There is no tax advantage to either method over the other.

Custodian? I was not aware a MF custodian would be involved in a non-qualified investment. The deceased's Will instructed all assets be divided equally among all benes. Does the PR endorse the check over to the Estate? Was the MF issuing a check to each bene not an option if instructed by the PR along with a copy of the Will?

[Burke]

There is no estate bank account? Who took care of final expenses? There is nothing left to be done to settle? If there is an estate account, it should be deposited into that. When I said custodian, I meant the brokerage or financial institution that held the mutual fund. They may not wish to distribute the funds. It is the PR's responsibility. All they needed was the court appointment document to make the check out to him, but it should have been made payable to the Estate. Regardless of what the will says about distributions, it should state that expenses and taxes are paid first.

[AZ-Tax]

Yes, there is a Estate check acct.

There is no estate bank account? Who took care of final expenses? There is nothing left to be done to settle? If there is an estate account, it should be deposited into that. When I said custodian, I meant the brokerage or financial institution that held the mutual fund. They may not wish to distribute the funds. It is the PR's responsibility. All they needed was the court appointment document to make the check out to him, but it should have been made payable to the Estate. Regardless of what the will says about distributions, it should state that expenses and taxes are paid first.

Yes, there is a Estate check acct and why the MF didn't issue the check payable to the Estate is beyond me.

[Burke]

It happens all the time. I just have the PR/Executor endorse it and deposit it into the Estate account. Done. And keep a copy of it.