Fiduciaries May Not Impair the Marital Deduction

Tennessee has a statute on it:

No executor, trustee or other fiduciary may take, or refuse to take, any action, or make or retain any investment, the result of which would defeat an otherwise available marital deduction under the Internal Revenue Code (26 U.S.C.), or under the laws of this state, if the obvious and expressed intent of the testator or settlor was to take advantage of this deduction. After May 23, 1977, this section applies to all acts or investments, by all executors, trustees or other fiduciaries, as to all wills and trusts, whenever these instruments were executed or created.

This statute could prove useful in cases when a non-spouse executor or trustee–typically a child of the decedent and step-child of the surviving spouse–is being difficult. Although the statute describes no penalty, violation of the rule would be evidence of breach of fiduciary duty, which could lead to removal or a surcharge.

Source: T.C.A. § 35-50-112

Posted by Joel D. Roettger, JD, LLM, EPLS

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