Surrogate Edward McCarty III
Executor Katz sought advice and direction regarding the sale of estate propertyshares of voting and non-voting stock in a privately-owned family business. Decedent bequeathed the voting and non-voting stock to a marital trust for the benefit of his spouse, Monica, who was to receive the net income. The estate proposed to sell 1,000 shares of the voting stock to decedent’s three sons’ trusts, and 3,000 shares of the non-voting stock to each of the three sons. Katz noted court approval was required to qualify the sale transactions for an exception to the self-dealing excise tax. He claimed the sale was in the best interest of the estate, the marital trust and the foundation, noting the marital trust itself would not produce a reasonable income for Monica. Katz stated the sale of the assets in exchange for cash would regularize the income and permit the trustee to diversify the assets in the marital trust. The court agreed noting in the event the marital trust was forced to dispose of assets after the estate terminated for federal income tax purposes, the exception would no longer be available, and disposition of the assets would be made to non-family members. Thus, it approved Katz’s petition as in the best interests of the estate.
